Russia declares trade war on Belarus

Tensions between Russia and Belarus are heating up in the wake of a tax maneuver by Moscow that deprived Minsk of millions in oil resale profits. The situation has been further aggravated by  Belarusian President Alexander Lukashenko’s refusal to allow Russia to deploy a military airbase in the country, refusal to transition to the Russian ruble, and apparent refusal to let his country become part of Russia, which would have enabled Vladimir Putin to remain in power after 2024.

In response to Minsk’s decision to raise its tariffs for Russian oil transit to Europe by 23%, Moscow has decided to cut off Belarusian fruit producers from the Russian market. As of 12 April, Russia will ban the import of apples and pears from Belarus.

In the first week of April, Russian customs authorities arrested 39 vehicles with sanctioned produce that lacked the necessary phytosanitary certification, 36 of them containing apples or pears, the Russian regulatory authority reported.

“The service connects the present situation to the previously imposed restrictions on the re-export of fruit and vegetable produce from the Belarusian Republic. These confirmed the illegitimacy of the phytosanitary certificates issued by Belarus that were accepted earlier,” the department added.

The decision was made five days after Transneft president Nikolay Tokarev announced that Belarus had informed his company of its intentions to raise oil transit tariffs by a further 23%. This would be the second tariff hike in 2019: there was a 7.6% increase in January this year and a 6.7% increase last year.

Tokarev said that the matter would be discussed by the governments of both countries. The last attempt at negotiations, when Lukashenko came to the Kremlin bearing three sacks of potatoes for Putin, did not have any significant results.

The dispute began with a tax maneuver in the Russian oil sector. Russia currently does not charge an export tariff on the oil it sends to Belarus. This allows Minsk to resell some of the oil abroad and pocket its own export tariff. However, by 2024 Russia intends to abolish the export tariff entirely, and instead raise resource extraction taxes.

As a result, Belarus will no longer get discounted oil which it can resell at a profit, depriving it of $300-400 million in revenue in 2019 alone.

Unless Belarus is compensated for these losses, Russia could lose its only ally in the West, Lukashenko warned Putin in one of their meetings.

Russia has categorically refused to compensate Belarus for its losses. According to Russian Finance Minister Anton Siluanov, the tax policy is Russia’s internal affair.

  Russia, Belarus, Lukashenko, Moscow, Siluanov