2.30–3.30 p.m. on March 16, 2006, Ministry of Foreign Affairs of Belarus, Minsk
- I think you are already quite aware of the article that I am pursuing. We came here because, ironically, Belarus is a pretty small country, and yet we have president of my country commenting about it. Obviously, there is something bigger at stake here. Could you comment on that?
- To answer your question I would first say that yes, Belarus is not a large country, but it is indeed an important country, which sits at a strategic crossroads in Europe. This is one of the reasons for this attention.
And we I say “at a strategic crossroads”, I have in mind a couple of things. First of all, if you, for example, take a ruler and apply it to the map from Berlin to Moscow, it will not go through Kiev, Riga or Vilnius, it will go through Belarus.
Another issue is that Belarus carries a lot of strategic transit. We carry 50% of the Russian oil exports bound for Western Europe and 20% of its European-bound gas exports.
On top of that, we are the country which has a very independent foreign policy. Not many countries afford, as you know, an independent foreign policy. When I say “independent”, I mean independent from Washington, Brussels or Moscow. Foreign policy decisions of Minsk are made here in Minsk, not in other places.
We also have a very strong-minded president who is a strong personality, which attracts attention worldwide. And we have probably an unusually strong economic and social record after the collapse of the Soviet Union, which also attracts important attention because we achieve it in what may be called an unorthodox way, not according to IMF recipes.
The attention you mentioned, which is international, we welcome, to the extent that it is a benign attention. When it comes to foreign financing of political processes inside the country, we, as any other country in the world, do not welcome that. We don’t welcome that in the same way as the United States does not welcome it, in fact prohibits it, according to the federal laws. So we do the same. So, benign attention, again, is welcome.
- Do you feel that there have been attempts to influence the outcome of the election by outside forces?
- It’s correct. You need not hear it in the interview, you can read an article in the “New York Times”, which says a lot about that.
- And you are referring to the activities of the National Democratic Institute?
- And others, among others. I refer to foreign financing of political and electoral processes in Belarus, which is inadmissible by the laws of any country. In fact, it strikes me as strange that the United States institutions which are financed by the US congress and government are engaging in activities, which is prohibited in the United States proper.
- Basically, what they say, what these countries and organizations say, when you ask them about this, they say that “we are definitely not involved in any kind of political activity. We are, you know, supporting democratic process, promoting independent media, teaching political parties how to develop and how to campaign". Is this kind of activity prohibited as well?
- Let us make things clear. First of all, it is unfortunately not true that some of the countries you mentioned support only a “process”. They indeed made public their views on particular candidates, either expressing their dislike of a particular candidate, in this case the incumbent president, or their preference for a particular candidate from the opposition, which in itself is an interference. Which is not allowed in the normal, civilized international practice.
Secondly, activities of institutions, NGOs could be different. Let me quote from the United States law which says, “A foreign national shall not direct, dictate, control, or directly or indirectly participate in the decision-making process of any person such as corporation, labor organization, political committee or political organization with regard to such person’s federal or non-federal election-related activities”. So, a very wide definition. Anything related to electoral activities is prohibited from foreign involvement and financing. This is exactly what institutions like National Democratic Endowment do, or try to do in Belarus.
And, thirdly, if an NGO, including an international NGO, engages in fully transparent, fully legal according to the Belarusian laws, and beneficial from the point of view of the country activities in Belarus, they are welcome to do so. This is the answer to your question.
- You mentioned at the beginning of your first answer, in general, the sort of strategic assets and values that exist with Belarus that naturally merit the international interest. But, specifically, when George Bush says that he is attempting to advance the cause of democracy and freedom in countries like Belarus, former Yugoslavia, Iraq, the rest of the Arab world, do you really take him at his word that really what he is trying to do, or are there specific United States’ interests at stake in a place like Belarus? Which is the true agenda behind this talk of democracy as this?
- First of all, we, of course, respect the achievement of the United States in democracy over the 200 years of democracy building in your country, although I have to observe that this democracy is not flawless, to put it mildly.
You asked me about the real agenda behind that. I can assume that there can be some strategic issues, which are also pursued by the Unites States worldwide.
In particular, I could assume that speaking of this region, the United States may be interested in bringing countries of this region closer to Euro-Atlantic axis. It is public knowledge that those who are within the Euro-Atlantic axis are countries which are, to put it mildly, heavily influenced by the United States. So, probably, bringing these countries under such influence could be one of the elements, issues of this agenda you mentioned.
Secondly, I believe it is a declared goal of the United States not to allow or to prevent the emergence of an entity in the area of the former Soviet Union which will be in a position to challenge the United States. This is of course a strategic goal.
Belarus as well as Russia are countries which are working to have an important integration structure in this area. We are not trying to resurrect the former Soviet Union, it would have been stupid and unrealistic, but we would like a meaningful integration in this geography which will be and should be no less successful than integration in the west of Europe. And we have all the resources and abilities to achieve such a success. And, probably, countries like Belarus who are proponents or engines of such integration deserve special attention from Washington, which is the case with Belarus.
- Speaking of that, it seems like this Russian-Belarus union has been something that has been talked about for quite a long time, and yet the practical progress in it has been quite minimal. How do you see this union progressing? What form could it achieve in the long run, including the talk of possibly having a single currency?
- To start with the second part of the question about what form it could achieve, I would emphasize that Belarus is all in favor of tight and deep integration with Russia, as well as with other countries of the region. It is not only Russia. But independence and sovereignty of Belarus are non-negotiable. So, we are talking about integration of independent states, not about merging one state into another state. That’s not the goal. It will not happen. Full stop.
You are not right that the union with Russia, between Belarus and Russia, did very small progress. To give you a very simple and, in my view, a very illustrative example, I would mention trade between Belarus and Russia. Belarus is trading partner number two for huge Russia, and it’s only 10 million people. It’s trading partner number two for Russia. We yield only to Germany. Our trade with Russia is larger than China’s trade with Russia. It’s about 18 billion dollars. None of the other countries of the former Soviet Union has such a trade with Russia. And this trade increased, I believe, five times over the last 10 years.
- You are talking about the two-way trade, right?
- It’s a two-way trade. So this is a direct and very important result of this integration effort.
Other areas. We are very close to having a common tariff with Russia for third countries. We are about 90% of the way in forging uniform harmonized tariff regime as applied to third countries. And it’s not only on paper, it works. And these 90% of tariffs do work already for third countries, which is a huge achievement in itself. Because, if you would look at another integration structure in this area, which is Eurasia Economic Community, then there you have the share of common tariffs of only 45%. So we are twice as large in this area as they are.
The movement of goods, people, finances, and services between Belarus and Russia is free. We have what is called the four freedoms, which is actually the goal of this union. We look now to try to achieve equal conditions for our economic agents, both Russian agents here in Belarus and Belarusian in Russia, to have equal conditions. That is our goal.
Of course, we are looking at full freedom of not only movement of people, but also equal access to health services, equal access to education, equal taxation, equal social services for citizens of both countries on the territories of each other. And we are making important advances in this respect. For example, about two months ago in Saint-Petersburg our two presidents signed four or five major agreements on equality of treatment between the citizens of two countries.
So, we are well advanced in this union, and not only on paper, not just in terms of treaties and agreements, but in real life terms. You get on a train in Minsk and you go to Moscow, and nobody asks for your passport, as you go between the two countries. It’s an achievement also, and an indication of a real union.
We are also talking about the needs to have more integration in areas, above all like energy, transportation, military cooperation, and science and technology cooperation. These are areas which offer themselves as priorities in our building up of the union.
In terms of joint currency or single currency, this continues to be a goal, but, in our view, this should be like a roof on top of the house. We need first to build all the walls, and then we need to put the roof. So the currency will come as the roof, not as the foundation.
- Obviously, the entire world’s attention was fixed on Ukraine. They have an agreement, and he is probably going to come back and visit us again some time in the future. Belarus in the past has had serious conflicts with Russia over gas pricing, and it has recently undertaken discussions aimed at having reasonable price for gas, getting some kind of order. How do you see long-term energy pricing stability for Belarus, given that, at some point, most people believe that Russia is going to have to go to market pricing for its gas for everybody, and it’s going to be a part of the world trade? And the fact that all those agreements for gas issue has been talked about. As I understand it has not been signed yet.
- Of course this is a very important issue of, what you might call energy security of the country. You are right we are enjoying preferable prices for gas from Russia. For oil we pay world market prices to Russia. And, of course, we are not naive. We do not expect that this will continue forever. It is obvious to everybody in Belarus that prices for gas will gradually increase, and at some point in the future Russia will come to trade in gas, including internally, at world prices.
For us, the major issue is not so much the price for gas as such, but the issue is whether we get gas at the same price as Russian economic agents (companies, firms).
As long as the price for gas in Moscow and Smolensk is the same as it is in Minsk, it is acceptable. And this is a reflection of what I mentioned to you before. We are working to have equal conditions for our enterprises in Belarus and Russia.
We understand that over time these prices will be going up, and up, and up. It’s okay, our economy will be in a position to gradually accommodate that. Conceptually we are prepared towards that. We are working, of course, with Russia within the structure of our integration effort to have what we call “energy balances” up to year 2020, where we could see how much gas and oil we are going to get from Russia. This is also an element of security.
At the same time we work to decrease our dependency on supplies of energy from Russia. In particular, the government has set a goal in five years time to decrease our dependency on energy imports from Russia by 25% by investing in alternative sources of energy and local fuels.
Looking at the problem of energy security, we see it through the prism of a comprehensive set of measures, not just negotiating with Russia, but an overall set of measures.
- Do you plan to sign the gas transit facility agreement with Russia?
- There are ongoing negotiations on the gas transit facilities, and that’s about all I can tell you.
- In the long run, you know, I am not an economist, but while you have been enjoying this very beneficial trade relationship with Russia, a lot has been due to high energy prices and the fact that there is a lot of money in the Russian market to buy Belarusian goods. But the analysts that I have talked to say that is not a reliable thing to depend on in the future for two reasons.
Number one: at the moment Russia has so much money that they are able to look around the world as a shopper for goods, and the cheapest goods available at the closest looking.
Number two: oil prices do go down. They no longer have all this pricing. Belarus will be well advised to think about European markets. It raises the question of potential vulnerability of the Belarusian economy.
- Basically your analysts are right, and if you would look at the trends in our trade, then you would observe that the ratio of exports going to Russia, on the one hand, and to the European Union, on the other hand, was consistently changing over time. Initially Russia was this big, and the European Union was this small. Last year the European Union accounted for 44% of our exports. And Russia accounted for about 40%. So there is already a balance between two markets.
By definition, if we sell to Europe successfully, it means our goods are competitive. So we are already in that market. And I could also add that we had aggressively tried to attack other markets like Southeast Asia, China, the Gulf countries, and even Latin America. Recently, we started selling agricultural machinery to Argentina. We, for example, provide about 50% of microchips to the Southeast Asia market.
So we are not only in Russia, we are in other places too. But we would very much like to continue to have a very solid presence in the Russian market. It is natural. And even if and when the Russians have less money, going back to the point of the analysts, it should be cheaper for them to buy in Belarus than to buy in the United States.
- And one last question on Russia. When we were talking about international interest in the Ukrainian elections, Russia was very much criticized for having been perceived to have played too big of an interfering role in those elections. Have you sensed that Russia has taken anything like more than just a close interest in your elections?
- I am not prepared to comment on the Russian or any other’s position on a third country like Ukraine. In terms of our relationship with Russia, I can tell you that we have an excellent relationship between the two countries, between the two governments, and between the two presidents. Full stop.
- This strays a little bit to the economic sphere, but it very much ties into what we were talking about, the nature of the Belarus’ economy. It is said you have had very little progress in moving to the market economy. Is this still a goal of Belarus to move to the market economy?
- You have to be clear about the terms. You say “very little progress”. Progress, in my view, should be measures by issues like percentage of growth of GNP, percentage of growth in real incomes of the population, percentage of accessibility of schooling, health services, etc. All of this shows extremely important progress in Belarus over the last 15 years. And that has been achieved because we did not rush into what has been called shock therapy of the economy.
We are adepts of a different style of reform. Not just a slower reform, but a different type of reform. So in 15 years, we have achieved very important progress. We are the first country in the former Soviet Union to break through the 1990 GNP level, and we are now at 116% of 1990 GNP level, the pre-collapse level. For your information, Russia is at about 80 to 85%, with all the oil prices. Ukraine is probably at 60 to 65%, and Moldova is probably at 30 to 35%. This is to indicate what real progress means.
This does not mean that we are married in a deadlock, so to say, to this particular type of economy we have. Recently we had a major congress here in Belarus on discussing the views and concepts of the next 5 years of the country. At that congress the President indicated that the resources of this mode cannot continue forever. And we have to tap into the resources of small and medium entrepreneurship. And the government is working on exactly this now. But we are going to do it not in a shock therapy way, but in a gradual, level-headed manner, as we did before. We hope we are going to be as successful as we were before.
- That is a small and medium entrepreneurship. What about big factories, oil refineries?
- It’s very simple. If the oil refineries which we are having now are bringing golden eggs to the country, why should we dispose of them to anyone else? One point.
Second point: if a small or middle enterprise grows into a gigantic enterprise, it’s welcome to do so. The government will be happy to see it. This is our approach.
- The tendency of large state-owned companies is usually not a mater of growth. They are usually not very efficiently run. And for the most part the conventional wisdom it that you cannot really grow an economy without investments. You have the issue of the young people who are talking about going out into the streets on Sunday, some of them, who say, “It’s fine. My farther has a job at that factory, and his grandfather had a job at this factory, and my father's brother has a job at that factory. But the factory is now at full employment level, and I have a brother and a sister, and we have nowhere to go to work. How do you deal with this issue?
- First of all, our big enterprises are growing at a very fast pace. For the last eight years, the GNP growth which is produced basically by these huge enterprises was each and every year anywhere between 6 and 10% annually, all the time. If we would look at industry, it would be 15 to 20% annually. This is more than impressive. If you would look at the pace in the United States or Europe, it would be 10 times lower.
Unemployment in Belarus is 1,5 per cent. And we are growing. We have too little working hands to fill the vacancies. So no trouble for young people to find jobs, and well-paid jobs in this country. In this country emigration is much smaller than immigration. People, including the youth, prefer to stay in this country. Other people come to live in this country, because this is a nice country. So, they need not worry about that. And they do not basically worry about that.
Real incomes grow at about 15% annually for people. Especially if this is a young educated professional, he or she will get much more than average salaries.
And we are speaking about involvement in the world, we are a very open economy. We trade with the whole of the world. If you check the ratio between our foreign trade volume and our GNP volume, and this is called the indicator of the openness of the economy, we are within the top 10 countries in Europe in openness of the economy.
We welcome foreign investment, but we do not welcome it at any price. If we would put up tomorrow one of our oil refineries for sale, there will be people queuing, probably, up to Paris and London to buy it, but we are not doing that, because it works fine. If they wish to invest in a new production in Belarus, they are welcome. And so far we were on our own very successful in raising investment for this country. What we achieved for 15 years, which I mentioned to you, we did probably 90% on our own investment.
We welcome foreign investment. But we are not going to crawl and beg for it.
- Do you see Belarus eventually as a member of the European Union, or that’s just another goal?
- This is not a goal for the moment, because strategically speaking, the European Union cannot offer us now what our eastern vector offers us, in terms of oil, gas, prices, markets, etc.
We have a good constructive relationship with NATO. We don’t believe NATO is a direct military threat to Belarus. We want to have good neighborliness relations with NATO, and NATO is in our boundaries. We cooperate with NATO on issues, which are of mutual interest via the partnership for this programme. So we have a constructive meaningful relationship to the extent which corresponds to their interests and our interests.
- If there are demands from within the opposition and within some conservative circles in the United States, that if these elections are not fair, the international community should retaliate with economic sanctions and expanding visa ban for Belarusian officials
- First of all, in my view it is unnatural, to put it mildly, that well in advance of the elections, people in Washington and Brussels have already made their verdict on the elections. It’s laughable.
On the sanctions issue, of course any country has the right to govern its own visa policies. But it’s also strange that the EU and the United States try to limit travel of people from Belarus. What about the Helsinki commitments about the freedom of travel? Are they afraid about Belarusian officials traveling in Europe and the United States? We cannot understand that.
If they would adopt such a measure, most probably we will respond in kind. We are a nation which respects itself.
If we are talking about economic sanctions, then I can tell you these sanctions generally don’t work, worldwide, nowhere. And it will hurt people. If the United States and Brussels want to hurt people, it’s another story.
- The top foreign policy issue in my nation’s attention is, of course, Iran. It’s well-known that the level of cooperation between Iran and Belarus increased, that, according to German intelligence, Belarus’ scientists were actively helping Iran in enriching uranium. The United Nations is going to have to decide in the very near future how to handle the Iran issue. Can you tell me, what is Belarus’ attitude to this?
- A couple of things I would like to mention in this respect.
First of all, we have a very good relationship with Iran. Iran is a friendly country and an important market for us. We don’t see why we should stop working in the Iranian market.
Secondly, Belarus never ever in its arms trade violated the United Nations sanctions. Iran is not under sanctions.
Thirdly, I cannot comment on any speculation, including German intelligence sources. They never report it to me.
Fourthly, Belarus is one of the major proponents and supporters, and, in fact, contributors to the non-proliferation regime in the world. When the Soviet Union collapsed, Belarus was the first of the Soviet Union nuclear heir to say that we don’t want the nuclear arsenal that we had. And it was largely on our initiative that Lisbon protocol had evolved at the time. So Belarus is a major factor in non-proliferation in the world.
And, lastly, our position specifically on the Iran situation is very simple. Iran has the right to do anything which is allowed by the Non-Proliferation Treaty. Full stop.