World Economy

Russia to Back Belarusian Economy

Russia to Back Belarusian EconomyRussia to Back Belarusian Economy

Early into the election campaign in Belarus, the Kremlin has already demonstrated support for President Alexander Lukashenko at political and international levels.

However, the Russian leadership has signaled to the Belarusian authorities that their financial support will be very limited in the first stage and only if economic situation seriously deteriorates. Nevertheless, the Kremlin is likely to support Lukashenko regardless of ifs and buts, EuroBelarus reported.

Last week, the presidents of Russia and Belarus met in Ufa, where they discussed Russia-Belarusian relations. During the meeting, the presidents focused on bilateral cooperation in trade, economy and investment, talked about deepening cultural and humanitarian contacts and cooperation within the framework of the Union State of Russia and Belarus, the Customs Union and the Eurasian Economic Union.

Belarus’ major interest in Russo-Belarusian relations is to receive guarantees of Russia’s support for Belarusian economy during the presidential campaign. While meeting with Putin, Lukashenko emphasized how important it was to resolve bilateral cooperation issues in financial and economic spheres in the near future.

According to Putin’s Press Secretary Dmitry Peskov, during the bilateral meeting in Ufa, the presidents also discussed financial and credit cooperation between Minsk and Moscow, however, without detailed consideration.

 Additional Loan

During the Russian government meeting, Russian Finance Minister Siluanov confirmed that Russia was ready to provide financial support for Minsk and transfer the second tranche of the loan–a total of $760 million: “[the decision] will be approved Wednesday and the transfer will be made in July”.

According to Siluanov, Belarus had requested additional $3 billion loan from Russia, allocation of which had been questioned by the minister: “We shall continue to work on this request, taking into consideration the implementation of the previous program, which has not been implemented in full”.

Officially, Minsk expects the Kremlin to “understand” and refinance previous Russian loans, which are due in 2015. This year, Moscow has already allocated $110 million loan for Belarus to repay the interest on the Russian loan issued in 2010.

The Kremlin intends to support Lukashenko in the elections, even thought it seeks to increase the price of such support. Russia hopes to use Belarus’ economic difficulties to tighten control over the Belarusian economy and privatize the most attractive Belarusian state assets.