Will Belarus crush Polish apples? Expert comments on integration with Russia
MIKHAS ILYIN, Euroradio
18 September 2019, 13:57
Details of the economic integration of Belarus and Russia published by the Russian newspaper Kommersant have caused a storm in the Belarusian media and social networks. And rightly so. According to the Russian publication, the program of economic integration provides for a partial unification of the two economic systems from January 2021. Moreover, some economic integration will be at the same level as in the European Union, and, in some aspects, similar to that of a confederate or even federal state.
Was there a document?
Vadzim Iosub, senior analyst of Alpari, expresses doubts about the authenticity of the document under discussion:
"On the one hand, Kommersant is one of the authoritative Russian media, on the other hand, it was the Kommersant that was known to publish some bogus stories earlier concerning the Belarusian-Russian relations. Two years ago, when there were quite poignant negotiations on oil, gas, price formula, etc., Kommersant had a series of stories on these issues, which were not confirmed in the future".
The article itself does not contain a screenshot of the document received by Kommersant from its source or a single quote from it.
Dmitry Butrin, deputy editor-in-chief of the Kommersant newspaper and author of the text, refuses to provide Euroradio with the document he is writing about. Well, he may have his own reasons. Dmitry admits that the integration plan is more ambitious than expected.
I don't think we can literally fulfill this integration plan," says the expert. "I don't think this story will go exactly as it is written. This is a very ambitious plan, and it is not done like this at all.
To integrate within a year and a half
"Even if one tries to take seriously what is stated in the article, there are absolutely unrealistic terms for harmonization of the Civil Code, tax system and banking regulation. Vadzim Yosub continues:
"We know that when we have one tax change, it is necessary for the accounting department to change its work, the tax office issues dozens of explanations on the nuances of how these taxes are calculated, it is necessary to make changes in the program and so on. This is when you need to change one of the two hundred taxes. But what is changing the entire tax system? It is not at all clear how it will be implemented".
Like Vadzim Yosub, Dmitry Butrin has questions about the timing of the integration plan.
"For example, roadmaps [on merging industry regulation. - Euroradio] should be prepared by November 1, 2019. This is surprising, because it is not the right time, it is not done so quickly. It is impossible to write such road maps so quickly".
According to Dmitry Butrin, the implementation of the plan in question will take at least twice as long. He recalls that the Belarusian-Russian negotiations always have a peculiar shade to them: the parties promise each other one thing, but in the end they get much less.
"It's clear that Belarus won't be able to get control over the Russian "shop". However, the participation of Belarusian officials in decision-making in such a way that they are satisfied with it, apparently, is the goal that will be at the center of negotiations. But I don't understand how it will be decided from the legal point of view, either".
To unite the ununiteable
The author of "Ekanomika" telegram channel draws attention to the fact that the unification of the tax legislation calls into question the existence of the Belarusian High Technology Park. The introduction of a unified policy of sanctions and counter-sanctions means a serious deterioration of relations with European and American customers," he writes. "The Belarusian IT-business is almost entirely outsourced to wealthy customers in the EU and the U.S. There are very few product companies, they are often sold to investors in the West".
Vadzim Yosub also recalls the existence of projects with preferential tax treatment in Belarus:
"What about our free economic zones? What about our "Great Stone"? What about our High Technology Park?" the analyst asks.
There are also many differences in the field of banking regulation.
"For example, we guarantee the return of deposits in any amount with all interest, in any currency. In Russia, however, limited amounts are insured. I think that a serious part of Belarusian depositors are depositors precisely because they count on a full guarantee. If we switch to the Russian approach, a certain part of depositors will run from banks".
Then what is that all for? And where is the hurry coming from?
According to Yosub, the information presented in the article can be partly invented. But there may be the second option, quite regular for Belarus:
"This is when Belarus wants to get acceptable oil prices, acceptable gas prices, compensation for "tax maneuver" and access to the Russian market here and now (roughly speaking, by the end of the year), and in return to make a promise and play them again.
So far, the project has raised more questions than answers.
"Harmonization of the customs legislation - what is it? Is it a rejection of Georgian and Moldovan wines? Is it a rejection of European cheese? Does it mean using bulldozers to crush Polish apples?"
The article itself compares the situation with that in the European Union. And it is indicated that it will be a closer economic integration. But it should be remembered that between the Coal and Steel Union and the European Union the process participants harmonized their legislation for several decades.
18 September 2019, 13:57
Photo: Reuters
Was there a document?
Vadzim Iosub, senior analyst of Alpari, expresses doubts about the authenticity of the document under discussion:
"On the one hand, Kommersant is one of the authoritative Russian media, on the other hand, it was the Kommersant that was known to publish some bogus stories earlier concerning the Belarusian-Russian relations. Two years ago, when there were quite poignant negotiations on oil, gas, price formula, etc., Kommersant had a series of stories on these issues, which were not confirmed in the future".
The article itself does not contain a screenshot of the document received by Kommersant from its source or a single quote from it.
Dmitry Butrin, deputy editor-in-chief of the Kommersant newspaper and author of the text, refuses to provide Euroradio with the document he is writing about. Well, he may have his own reasons. Dmitry admits that the integration plan is more ambitious than expected.
I don't think we can literally fulfill this integration plan," says the expert. "I don't think this story will go exactly as it is written. This is a very ambitious plan, and it is not done like this at all.
To integrate within a year and a half
"Even if one tries to take seriously what is stated in the article, there are absolutely unrealistic terms for harmonization of the Civil Code, tax system and banking regulation. Vadzim Yosub continues:
"We know that when we have one tax change, it is necessary for the accounting department to change its work, the tax office issues dozens of explanations on the nuances of how these taxes are calculated, it is necessary to make changes in the program and so on. This is when you need to change one of the two hundred taxes. But what is changing the entire tax system? It is not at all clear how it will be implemented".
Like Vadzim Yosub, Dmitry Butrin has questions about the timing of the integration plan.
"For example, roadmaps [on merging industry regulation. - Euroradio] should be prepared by November 1, 2019. This is surprising, because it is not the right time, it is not done so quickly. It is impossible to write such road maps so quickly".
According to Dmitry Butrin, the implementation of the plan in question will take at least twice as long. He recalls that the Belarusian-Russian negotiations always have a peculiar shade to them: the parties promise each other one thing, but in the end they get much less.
"It's clear that Belarus won't be able to get control over the Russian "shop". However, the participation of Belarusian officials in decision-making in such a way that they are satisfied with it, apparently, is the goal that will be at the center of negotiations. But I don't understand how it will be decided from the legal point of view, either".
To unite the ununiteable
The author of "Ekanomika" telegram channel draws attention to the fact that the unification of the tax legislation calls into question the existence of the Belarusian High Technology Park. The introduction of a unified policy of sanctions and counter-sanctions means a serious deterioration of relations with European and American customers," he writes. "The Belarusian IT-business is almost entirely outsourced to wealthy customers in the EU and the U.S. There are very few product companies, they are often sold to investors in the West".
Vadzim Yosub also recalls the existence of projects with preferential tax treatment in Belarus:
"What about our free economic zones? What about our "Great Stone"? What about our High Technology Park?" the analyst asks.
There are also many differences in the field of banking regulation.
"For example, we guarantee the return of deposits in any amount with all interest, in any currency. In Russia, however, limited amounts are insured. I think that a serious part of Belarusian depositors are depositors precisely because they count on a full guarantee. If we switch to the Russian approach, a certain part of depositors will run from banks".
Then what is that all for? And where is the hurry coming from?
According to Yosub, the information presented in the article can be partly invented. But there may be the second option, quite regular for Belarus:
"This is when Belarus wants to get acceptable oil prices, acceptable gas prices, compensation for "tax maneuver" and access to the Russian market here and now (roughly speaking, by the end of the year), and in return to make a promise and play them again.
So far, the project has raised more questions than answers.
"Harmonization of the customs legislation - what is it? Is it a rejection of Georgian and Moldovan wines? Is it a rejection of European cheese? Does it mean using bulldozers to crush Polish apples?"
The article itself compares the situation with that in the European Union. And it is indicated that it will be a closer economic integration. But it should be remembered that between the Coal and Steel Union and the European Union the process participants harmonized their legislation for several decades.
