31 August 2013, 08:40

Belarus-Russian potassium conflict more than a business one

Уралкалий

Belarus's authorities are threatening to open a criminal case against Russian MP Suleyman Kerimov, who is the main stockholder of the Russian company “Uralkaliy” (which means “Ural potassium”).

On Monday, the head of the “Uralkaliy” company Vladislav Baumgertner was arrested in Belarus's capital Minsk.

Both Mr. Kerimov and Mr. Baumgertner are being charged by Belorussian authorities of abuse of power.

Analysts are claiming that it wouldn't be an exaggeration to say that this business conflict has already grown into a political one.

At present, Suleyman Kerimov's foundation is holding a little more than 20% of “Uralkaliy's” stocks. Belarus's Investigating Committee is claiming that Mr. Kerimov, together with several other Russian citizens, has been engaged in financial machinations in “Belorusskaya Kaliynaya Kompaniya” (Belorussian Potassium Company). This is a joint Belorussian-Russian company that sells fertilizers abroad.

Belarus's authorities have already declared an official accusation against “Uralkaliy's” head Vladislav Baumgertner. They are charging him of abuse of power and inflicting a $ 100 mln-worth damage to Belarus's economy.

Mr. Baumgertner's arrest came as a shock for Russia's authorities. In fact, Belarus's authorities have called him to Minsk – and took him hostage. The Russian businessman was arrested after a meeting with Belarus's Prime Minister Mikhail Myasnikovich.

“This fact is turning Mr. Baumgertner's arrest into a political scandal,” Russian expert in Ukrainian and Belorussian affairs Bogdan Bezpalko says.

“Being in a conflict with “Uralkaliy”, Belarus, in fact, is in a conflict with the Russian state,” Mr. Bezpalko says, “because Russia has to defend the interests of its business structures. In this case, there is evidently more than a business conflict. This is already a conflict between the interests of the Russian and the Belorussian states.”

The pretext for this conflict was the fact that in July, “Uralkaliy” withdrew from the Belorussian Potassium Company, which united “Uralkaliy” and the Belorussian company “Belaruskaliy”. The Russian company had found that its Belorussian colleagues had been secretly selling their production to other countries, although this was banned by an official agreement between the two companies.

As a result of this “divorce”, Belorussian producers of potassium lost a considerable part of their markets, which was a very feasible damage for the Belorussian economy. In fact, “Belaruskaliy” is a state-controlled company.

“For Belarus's President Alexander Lukashenko, this was like a personal offence,” Belorussian political analyst Alexander Klaskovsky says.

“For Mr. Lukashenko and other Belorussian leaders, this was a serious financial loss – and a serious damage to their power, because money always means power. This is why they are now trying to punish Russia so toughly. President Lukashenko is known as a man who is not very ceremonious with enemies or rivals, be it Belorussian citizens or foreigners. In fact, Belorussian leaders are used to looking upon nearly the entire world as upon enemies.”

“However, in the story with Baumgertner and Kerimov, besides the rather irrational motives of revenge, Belarus's leaders are being guided by a quite rational motive of bringing this conflict to the political level,” Alexander Klaskovsky continues. “The arrest of such a high-ranking Russian businessman is a challenge to Russia's authorities. President Putin has not yet made any official reaction to this story, but the Belorussian side is obviously waiting for what his reaction will be.”

Well, President Putin has not probably reacted yet– but Russian Deputy Prime Minister Arkady Dorkovich has already said that Russia may probably overview some aspects of its relations with Belarus. At the same time, Russia's Deputy Finance Minister Sergey Shatalov has given it to understand to the Belorussian side that Belarus's chances for getting a new loan from the Eurasian Economic Community (an economic alliance between several former Soviet states) are now rather low.

Russia has also announced that it is reducing its supplies of oil to Belarus and introducing a tougher control over the quality of Belorussian agricultural products that are imported to Russia. Information has appeared that the head of Rospotrebnadzor (Russian government agency that controls the quality of imported goods) Gennady Onischenko has already discovered suspicious additions in Belorussian milk and recommended to limit the imports of Belorussian pork.

Analyst Bogdan Bezpalko says: "Russia has many possible ways to close its markets for Belorussian goods. At present, Russia is practically the only country to which Belarus (as well as Ukraine) sells its goods. This is practically the only way for Belarus to keep its economy more or less afloat. In the EU countries, hardly anyone would buy Belorussian goods."

It can be added that 70% of all the goods that Belarus now exports is meat and milk products that it exports to Russia. Belarus's authorities have expected to earn more than $ 4 bln from this experts. Now, this has become quite an unreliable prospective.

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