Belarus should not expect big gains from Customs Union, expert says

Belarus needs considerable investments in the manufacturing industry, but the participation in the union will not give it such, Leanid Zlotnikaw said, suggesting that...

Belarus should not expect big gains from its membership in the Customs Union with Kazakhstan and Russia, Minsk-based economist Leanid Zlotnikaw said in an interview with BelaPAN on Monday.

Earlier in the day, the leaders of the three countries signed in Kazakhstan's Astana documents launching the union.

Belarus needs considerable investments in the manufacturing industry, but the participation in the union will not give it such, Mr. Zlotnikaw said, suggesting that the domestic industry would “only lose,” if barriers to Russian imports were removed.

The expert warned that Belarusian companies would not be able to compete with rivals in Russia where he noted foreign companies had invested much and built a number of plants.

He said that the union would create a “kind of confined space” resulting into restricted access to new technologies, cheap foreign spare parts and components, and quality equipment. “The import duty rates average out at around 10 percent,” he said. “They are several times lower in developed countries.”

As for the plans of the leaders of the three states to establish a single economic zone, Mr. Zlotnikaw said that he would welcome the move if it led to an increased market competition. “Even if our enterprises feel worse, this will accelerate reforms,” he said.

But Belarus could see a rising number of workers moving to Russia, he said. “Russia has a shortage of skilled workers almost in every industry,” he said. “It will pay skilled staff three or four times more than they are paid here,” he warned.

Besides, he said, it will be impossible for Belarus any longer to resist inflows of Russian capital and pursue an “independent economic policy.”

Tax payments into the Belarusian public treasury may drop, because the authorities will have to harmonize the rates with Russia where they are lower, Mr. Zlotnikaw added.

Political expert Valery Karbalevich told BelaPAN that Alyaksandr Lukashenka's decision to sign documents launching the Customs Union of Belarus, Kazakhstan and Russia means a "complete and unconditional surrender under Russian pressure."

Russia was firm on the matter and ignored Belarus' call for abolishing the duty for it, Mr. Karbalevich said. "But after the gas war, after high-profile interviews with Western TV channels, after all this Lukashenka comes to Astana and signs everything, de jure backing down on his claims," he said.