President of Belarus Lukashenko rules out union with Russia, borrows $600 million from China

The Belarusian government is concluding negotiations to borrow $600 million from China, announced Belarusian Deputy Finance Minister Andrei Belkovets.

“Initially we were counting on a loan from the Russian Federation,” Belkovets noted, while talking at the Fitch conference in Minsk. The loan would have been roughly the same amount - $630 million.

But the money was tied up. On April 1, after several rounds of intergovernmental talks following President Lukashenko’s visit to the Kremlin bearing a bag of potatoes, Russian Finance Minister Anton Siluanov said that the funds were ready for allocation and that the intergovernmental agreement had been signed.

But the following day, Siluanov was contradicted by Kremlin Spokesperson Dmitry Peskov, who said that the matter was still being considered, and that statements would be made at a later date.

Another three months have passed since then, but no such statements have been made. “The matter of getting a Russian loan has been delayed somewhat, but as an alternative we have found an option with Chinese creditors,” Belkovets said on Tuesday.

According to him, the funds will be provided by the China Development Bank, and negotiations were concluded on Tuesday 9 July.

Russia links financing to further integration. But Minsk is only prepared to integrate in the context of the already signed union treaty, which “cannot be broken”, Lukashenko said on Tuesday.

As for the possibility of unifying the two countries, which, according to Bloomberg, the Kremlin is considering as a way to prolong Vladimir Putin’s term in office, “there’s no need to even talk” about it, Lukashenko remarked.

For now, the integration process, which Minsk considers inextricably linked to compensation for a Russian tax maneuver that ruined Belarus’s opportunity to resell Russian oil at a tidy profit, has been suspended.

“The talk group encountered a certain issue, the government promises, even Prime Minister Medvedev, to give the commands, the orders, to resolve the issues,” Lukashenko noted, “They have promised, forgotten, promised again, forgotten.”

Belarus needs external financing so it can make repayments on its foreign debt, because the country’s economy does not generate enough foreign currency.

By the end of 2019, Belarus must repay $3.2 billion, of which $1.1 billion is interest and $2.1 billion the principal amount, which must either be refinanced or paid off.

Belarus was planning to use a new Russian loan to repay a previous loan from Moscow.

  Russia, Lukashenko, Belarus, Siluanov, Medvedev, Putin, Peskov