Asia, Africa and Latin America: Trade diversification despite crises?

Sergei Bohdan

Summary

In 2020, Belarus relations with developing countries were negatively affected by the pandemic and the domestic and foreign policy crisis after the August Presidential election. This led to a reduction in direct contacts, but, according to official data, it did not prevent the achievement of the goals set for the diversification of foreign trade. In addition, Minsk was able to rely on open political support from Beijing for the first time in the face of Western pressure, but did not receive it from the rest of the so-called “far arc” countries.

Problems in the western direction did not lead to any activation of Belarusian diplomacy in the direction of the former Third World, and the Belarusian leadership despised this direction even in its rhetoric.

Trends:

Belarusian relations with developing countries began to wither at the end of the decade. The year 2020 has put a clear question mark on most of them. The subjective factor also played a role: to a large extent, relations with developing non-Western states continued to be based on the activity of the country’s top leadership. Therefore, the restrictions on contacts in connection with the pandemic and the involvement of the Belarusian leadership in the election campaign and the further political crisis further undermined this political course.

Even the rhetoric about the countries of the “far arc”, which was previously an obligatory part of the official discourse of the Belarusian leaders, was reduced to a minimum. President Lukashenka was not forced to return to it by the serious deterioration of relations with the West – a constant reason to look for friends in other areas. At a regular meeting on foreign policy issues on November 17, the Belarusian leader limited himself to a brief mentioning of the “multi-vector” nature of the Belarusian policy.

Geography: China and the Middle East

The main partner among the countries of the former Third World, undoubtedly, was China, cooperation with which will be discussed below. In addition, there have been only a few notable contacts in the Middle East. The Belarusian foreign policy managed to combine interaction with the warring countries there, collaborating with Turkey, on the one hand, and Egypt and the United Arab Emirates, on the other. The visit of President Lukashenka to Egypt on February 19–20 was not accompanied by the signing of significant documents, but given the close ties of the Egyptian regime with wealthy Arab monarchies (able to finance projects in third countries), it was a logical step.

Minsk also continued its long-standing policy of developing relations with large Middle Eastern businesses. On October 1, Alexander Lukashenka met with the Chairman of the Board of Directors of the large Emirati Company Emaar Properties, Muhammad Ali al-Abbar. The meeting, which was probably devoted to construction projects, was held in the presence of the Prime Minister, the chairman of the Minsk City Executive Committee and the Assistant to the President for National Security.

Relations with Latin American countries have been reduced to a minimum. For example, trade with Venezuela again amounted to a small amount – about a million US dollars (mainly Belarusian exports), despite the presence of the Belarusian embassy there.

There was also limited cooperation with Africa, cooperation with which remained within the competence of the Presidential Affairs Department – the decision to initiate such liability was made two year ago. In November, during a meeting between Alexander Lukashenka and Viktar Sheiman, an announcement was made about some “even if not large-scale” changes in the sale of equipment. Minsk tries to work there with the participation of third parties, as Mr. Sheiman announced that regional banking organizations with which Belarus cooperates in Africa start to finance joint projects.1 Wealthy third countries in the Middle East, such as the United Arab Emirates, can also pay for such projects. This is indirectly evidenced by the data that emerged after the arrest in the Congo of one of the businessmen involved in the Belarusian-African cooperation.2

Who supported Minsk after the elections?

In 2020, cooperation with China reached a qualitatively new level, because for the first time in the history of relations between Minsk and Beijing, the latter brought political aspects to the fore and demonstrated its support for the Belarusian leadership. According to Belarusian state institutions, Chinese President Xi Jinping was the first head of state to congratulate Alexander Lukashenka on his re-election on August 10, ahead of Vladimir Putin.

It was not only Lukashenka himself who expressed gratitude for the Chinese support during the crisis. On September 4, Defense Minister Viktar Khrenin, during a joint meeting of the defense ministers of the CIS, SCO and CSTO countries in Moscow, thanked the “military-political leadership” China, as well as Russia, for this assistance.3

Chinese support probably went beyond political statements, but also included technical and advisory components. This is indirectly indicated by the fact of a telephone conversation on November 23 between the Minister of Internal Affairs Ivan Kubrakoŭ and the Minister of Public Security of the People’s Republic of China Zhao Kezhi. It is important that the Chinese media were not only the first to publish the fact of the conversation, but also quoted the words of their minister that the Chinese side is strongly opposed to the attempts of external forces to provoke division and unrest in the Belarusian society.

It is noteworthy that, in addition to China, none of the countries of the “far arc” decided to demonstrate support for the leadership of Belarus after the elections. Only Turkey, Venezuela, Vietnam, Syria, and Cuba (the latter with a significant week's delay) sent simple congratulations – in that order. This indicates the failure of the policy of building solidarity with the countries of the developing world, which has been much discussed in Minsk since the late 1990s.

However, this is not surprising, because the Belarusian leadership also stayed away from the policy of solidarity in its relations with non-Western and non-post-Soviet countries. On May 5, Prime Minister Siarhiej Rumas took part in the summit of the contact group of the Non-Aligned Movement “United against COVID-19”. He refrained from sharp political statements and even clear support for the ideology of this international association, limiting himself to calls to prevent the rupture of cooperative ties, supply chains, the termination of international trade and investment, to support social guarantees, etc.4

It is noteworthy that even after the elections, when the international situation of Minsk deteriorated sharply due to the reaction of the West and Western allies to the events in Belarus, the political aspects of cooperation with developing countries remained pushed aside, and Prime Minister Raman Haloŭchanka was ordered to hold to account the Foreign Ministry first of all for the “economic component”, because the main task of representative offices abroad is “to promote our products in all markets. Export is the main task for the work of the diplomatic corps”.5

A clear illustration of the fact that even demonstrative criticism of the United States by the Belarusian authorities does not lead to changes in their real policy was the Foreign Ministry’s emphasis on the apolitical nature of relations with Washington’s well-known opponent on the international arena – Iran. The Belarusian diplomats stressed “the mutual intention to strengthen the Belarusian-Iranian relations with an emphasis on cooperation in the cultural, educational and agricultural sectors.”6

Strategic steps

In August, the Council of Ministers noted among its achievements not only the increase in the positive balance of foreign trade in goods and services in 2020, but also the success in implementing the “export formula”, according to which the supply of goods and services should go to the markets of the EAEU, the European Union and the countries of Asia, Africa and Latin America in approximately equal shares. According to official data, the ratio reached 50%, 17% and 33%, respectively.7 This achievement is especially remarkable against the background of a reduction in the share of Belarusian non-potassium exports in the case of the largest markets of China and India.

The importance of diversification should be emphasized both at the level of the entire Belarusian economy and at the level of its individual sectors. For example, according to Deputy Prime Minister Alexander Subocin, it was due to the diversification of sugar exports to Asia, Africa and Latin America that the Belarusian sugar industry was able to mitigate the problem of lower prices and overproduction in the EAEU. In particular, Russia’s share in exports almost halved (from 73.3% in 2019 to 39.6% in 2020). For the first time, Belarusian sugar factories have implemented a quota for supplies to China in the amount of 20 thousand tons. Also, for the first time, deliveries were made to Africa – 8.3 thousand tons worth USD 2.5 million. However, this is only five percent of the volume delivered to the Russian Federation.8

Another modest but strategically important step was the purchase of 87 million tons of oil from Saudi Arabia for the first time in late April. The raw material was delivered to the country via Klaipeda in mid-May. At the same time, it turned out that Minsk is looking for opportunities to test its new missile in Saudi Arabia (although also in China and some post-Soviet states).

Trade: China overtook Ukraine

In 2020, China took the second place (after Russia) in the list of Belarusian trade partners, switching places with Ukraine, which became the third. This does not cause euphoria among Belarusian officials, who recognize the existing difficulties, and in March, President Lukashenka spoke about overcoming a certain “break”, which official commentators attributed to the epidemic (although he spoke about the need to “overcome a certain gap” in general).9

Indeed, the negative balance in trade with China in 2020 remained huge – USD 3,033 million – although it decreased by 4.1% compared to the previous year. In part, this could be achieved due to the easing that Beijing has recently continued to provide to Belarusian companies, which allowed in 2020 to increase exports to China to USD 1,196 million (in 2019 – USD 1,034 million). A certain reduction in Chinese import also played a role in this.

The problem of a huge trade deficit was regularly raised by the Belarusian side, and the Chinese government reacted to it in a certain way. There are grounds to consider the Chinese assistance to Belarus in this context. For example, as part of the fight against the coronavirus, China sent 110 tons of medical cargo and two machines for the production of masks to Belarus. In addition, in June, First Deputy Prime Minister Mikalai Snapkoŭ (until early 2020 ambassador to China) announced: “During 8 years till 2015, we generally received technical and economic assistance from the PRC in the amount of USD 130 million. Since 2015, after the meeting of our leaders, we have received USD 130 million of technical and economic assistance annually... This is only technical and economic assistance, without investment, trade and economic sphere, social and political aspects”.10 A new example of this assistance was the start of construction of a national football stadium and an international-standard swimming pool in Minsk on June 30, for which China irrevocably allocated about USD 240 million.

In December, at a meeting of the Intergovernmental Committee on Cooperation, M. Snapkoŭ noted the “positive dynamics” in trade with China, achieved due to the change in the structure of exports. Indeed, the share of potash fertilizers in Belarusian exports decreased from 81% in 2015 to 43% in 2020, and even despite price fluctuations, this is an achievement. Exports of other goods last year amounted to USD 443 million (128%), primarily due to a twofold increase in the supply of agricultural and woodworking products. This was made possible thanks to the accreditation of 12 more Belarusian food producers for export to China, and the extension of the accreditation of Belarusian dairy baby food.11

It is worth noting that Minsk pursues a less ambitious course in relations with China than in relations with other countries of this group. For example, speaking about priority measures to expand economic ties Belarusian officials not only declare the supply of agricultural products as a “new export driver” and seek to create joint production facilities for processing Belarusian raw materials on the territory of the People’s Republic of China. This indicates the modesty of the goals, although it is a step forward compared to the simple export of raw materials. But it is noteworthy that the task of exporting finished products with a high share of added value has not yet been set at all, despite the fact that initially developing countries were considered as the most promising market for products of the Belarusian industry.

The search for money: on empty paths?

In the spring, Belarus began working with a number of foreign and international financial institutions to borrow money to support the country's banking system in the face of the pandemic. Next to the Western institutions on the list were the China Development Bank and also the de facto Chinese-run Asian Infrastructure Investment Bank. Minsk tried to get USD 350 million from the latter, but the case was not approved until the end of the year.

The only known example of raising funds was the March agreement to receive an external state debt from the Kuwait Fund for Arab Economic Development for the reconstruction of the clinical hospital No. 3 in Hrodna into a regional clinical dispensary in 2020–2025. The 24-year loan was approximately USD 28 million.12

The difficulties in finding external financing are also explained by the statements made on November 30 by Prime Minister R. Haloŭchanka at a video conference of the Council of Heads of Government of the Shanghai Cooperation Organization (SCO), dedicated to cooperation in trade, economic and investment spheres. He not only supported the expansion of the powers of the observer countries in the SCO and called for the creation of a mechanism for consultations on nuclear energy issues, but also called for the creation of a financial institution within the SCO “independent of the decisions and actions of Western structures”, which would be engaged in lending and issuing stabilization loans.13

Goodbye, weapons?

There were also almost no relations in the military and military-technical fields, which was a significant component of relations with developing countries. The most important exception to this trend was again China. Although the planned Belarusian-Chinese military exercises were canceled, Defense Minister Viktar Khrenin held telephone talks with his Chinese counterpart Wei Fenghe on May 14. In late June, the Chinese Defense Ministry handed over medical equipment and personal protective equipment to the Belarusian military. Belarusian representatives also took part in joint events of the CIS, the SCO and the CSTO, which allowed them to establish relations with their Chinese colleagues and with the military of other Asian countries.

The only notable non-Chinese contact in this area was a video conference between the Chairman of the State Military Industry Committee, Dmitry Pantus, and the Chairman of the Defense Industry Presidium of the Turkish Presidential Administration, Ismail Demir, on July 17. Indirect signs indicate that the topic of the talks could be joint developments, including the missile industry.

Conclusion

The powerful crises of 2020 revealed the peculiar nature of Belarusian relations with the developing countries of Asia, Africa and Latin America. Despite many years of effort, there are few examples of consistently built and maintained relationships. Despite the problems in relations with the West, non-Western countries – even those that themselves have problems with the West – did not provide Minsk with any noticeable support.

At the same time, the Belarusian government has achieved two things that may be of fundamental importance for the future of the Belarusian state. Firstly, it has practically proven that foreign trade can be seriously diversified at the expense of the developing world even though it might be not quite sustainable. Secondly, for the first time, China demonstrated its political support for the Belarusian leadership in times of crisis.

Since relations with non-Western and non-post-Soviet countries were a means of reducing dependence on ties not only with the West, but also with Russia, the recent revolutionary reorientation of Minsk towards closer ties with Moscow may lead to a decrease in the activity of the Belarusian side in the former Third World. In any case, Minsk has no chance of achieving better results in this area without revising its previous policy, developing not just new methods, but strategies and visions, supported by a more professional and expert approach to the development of such relations.

A separate case is the relationship with the PRC, which the Belarusian leadership would like to see as its benefactor and protector in the longer term, rather than the Russian Federation. Perhaps the experience of 2020 will push Minsk to further strengthen its policy of rapprochement with Beijing, especially since the latter has finally begun to reciprocate the Belarusian leadership’s demonstration of strategic sympathies towards China.