Updated at 11:30,08-12-2016

Economist: 10-15% of Belarusian Enterprises to Close down due to CES

Belarusian economist Leonid Zaika believes that the Common Economic Space, which started its work on January 1, 2012, "can lead to shutdown of the plants in Belarus, which would be non-competitive compared with similar companies in Russia and Kazakhstan".

"It could make 10-15% of Belarusian companies or their products unclaimed," he said.

"In return, rivals’ products with a lower price will become beneficial to consumers. The unemployment risks will be eliminated by labor migration to Russia, which will pay three times more. I don’t rule out the risk of the budget replenishment due to the loss of VAT. There may be problems with employment and keeping a number of state enterprises AA. But this is the reality of the market economy," said the expert.

According to Leonid Zaika, the main advantage of Belarus' membership in the CES is "cheap gas and the oil market access", as "in 2011 we used to buy oil in Azerbaijan and Venezuela, spending a few billion and thus affecting the fx rate", reports Euramost.org.

Zaika: CES will fully operate only in 2018

"In Belarus, there are no other options, how to hold on to this project (CES). The country won't enter the EU; no one expects it there. No need even to talk about it within the next five years. It’s profitable for the Belarusian political elite to get gas at $160 and have access to oil. It is no doubt beneficial, especially for those sitting in the office", stressed the economist.

He noted that "the CES might work more or less systematically by 2018-2019." Until that time, according to him, "there will be some adaptation, the interaction of regulations both within the Customs Union and the WTO."

"The political result is important, above all, for the Russian authorities. Russia, finally, after 20 years, has created a more or less predictable and realistic economic union. Moreover, it is quite inexpensive to manage, if one subsidies $3-5 billion in year to Belarus. But it enables the Kremlin to keep Belarus in its system, gradually crushing the Ukraine. "Nord Stream" has been put in operation, the Belarusian pipe have been purchased, so the Ukraine is now losing its unique ability to be a major gas transit country. Therefore, Moscow controls national-patriots," said Leonid Zaika.

On January 1, 2012, the Common Economic Space (CES), established on the basis of the Customs Union of Belarus, Kazakhstan and Russia, started its work. As part of the CES, business entities of the three countries are guaranteed freedom of movement of goods, services, capital and labor, as well as equal working conditions.

Currently, all the CES members ratified 17 major international agreements to ensure full operation of the new entity. In particular, the barriers were legally lifted on crude oil, refined petroleum products and electricity. In addition, the parties agreed on pricing and tariff policy in the field of transportation.