How Russian money keeps Belarus afloat | Europe | News and current affairs from across the continent | DW

How Russian money keeps Belarus afloat |  Europe |  News and current affairs from across the continent |  DW

“Over the past 20 years, gas prices in Belarus only rose twice to European levels; each time, Belarus halted payments , demanding a discount,” said Sergey Kondratiev of Moscow’s Institute for Energy and Finance Foundation. The research institute estimates Russia has subsidized oil to Belarus to the tune of $35 billion, and gas to the equivalent of $19 billion between 2011 and 2020. Russia has subsidized the energy sector by selling cheap gas Cheap loans, preferential market access

Experts divide Russia’s monetary contributions to Minsk into two categories: one legal and one covert. Neither is driven by economics and both have put a strain on Russia’s state budget. Discounted oil and gas

The most obvious subsidy, analysts say, occurs within Belarus’ energy sector — which receives cheap Russian gas and has tariffs waived on oil destined for Belarusian refineries.  Russia has been subsidizing its neighbor for years. Between 2005 and 2015, Moscow pumped $106 billion into the Belarus economy, according to the International Monetary Fund (IMF).

Certain sectors of Belarus’ economy enjoy preferential treatment in the Russian market Russia has also granted Belarus special access to its market. Not even other members of the Eurasian Economic Union (EAEU) enjoy such favorable terms as companies from Belarus do. Observers argue this preferential treatment guarantees the survival of entire business sectors within Belarus, especially within the food and engineering industries. It remains unclear how Minsk spends loans not earmarked for specific projects. Bogdan Bespalko, a member of Russia’s Council for Interethnic Relations — a body linked to President Vladimir Putin’s office — suspects they are used to pay off old debts. “A large portion of the latest $500 million loan was taken to repay money owed to Russian corporations,” Bespalko pointed out.

“Belarus received both a very long grace period when it came to repaying the money, as well as the possibility to repay the loan at a discounted rate,” said Kondratiev. “Belarus would not have received such favorable conditions on the open market.” Cheap — and legal — loans are another means by which Russia has been able to prop up Belarus. Moscow continues to extend payment deadlines and is constantly revising the terms and conditions of the loans. Russia, for example, lent Belarus $10 billion to build a nuclear power plant in 2011.

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