Media: Russia and Belarus agree on partial unification

Russia and Belarus have agreed to partially unify their economies, and in fact we are talking about creating a confederal state, the Kommersant newspaper wrote on September 16.

Photo: president.gov.by

In Minsk, they suggested that the article should be regarded as “idle journalistic cliches.” Independence is sacred, and no joint governing bodies are being created because the countries are not ready for this, said the press secretary of the President of Belarus Natalya Eismont, writes Air force.

Kommersant published some details of the economic integration program between Russia and Belarus with reference to a document that was initialed (that is, pre-agreed) by Prime Ministers Dmitry Medvedev and Sergei Rumas on September 6.

“We are talking about a rather radical project: this is partial economic integration at a level no less than that of the European Union, and in a number of issues similar to confederal or even federal states,” wrote the newspaper’s deputy editor-in-chief Dmitry Butrin.

“We are talking about the absorption of the heavily nationalized economy of Russia almost entirely by the state economy of Belarus at the management level,” the article says.

According to the publication, the document stipulates the following provisions:

• adoption of a single Tax Code from April 1 to 2021;
• the creation of a single regulator of the markets for electricity, gas, oil and oil products (FEC);
• customs policy integration;
• common principles of banking and financial supervision;
• agreements on common principles of “special economic measures” (apparently, this means a common sanctions policy);
• Mutual cancellation of roaming from June 1 to 2020.

The most important thing that is supposed to be combined is tax systems, says original article. Based on the document, it is impossible to say from which year it will come into force - however, if from the 1 of January 2022 of the year in the Union State the issues related to general and national subjects of jurisdiction and the Tax Code of the Russian Federation are differentiated (as is standard in the confederation) may change in 2022 year.

Since January 2022, two states within the Union State also intend to pursue a “coordinated policy” in the labor market and in the field of social protection, but in the latter case only “rapprochement of the level” of social guarantees and in the future “equal rights” of citizens of the two countries is promised, the newspaper notes .

Areas that are absolutely not affected by the Program of Action: this is defense, state security, the court, law enforcement and issues of the Ministry of Internal Affairs, education, health care, science, as well as directly state administration, that is, the internal structure of the executive branch in Russia and Belarus, as well as powers (and the very existence) of the executive power of the Union State. However, the parties agreed that “other provisions of the treaty” on the Union State may also be discussed.

Deadlines, unfavorable conditions

There are no specifics in the document about how these measures will be implemented, Kommersant admits.

For example, it is unclear how the joint customs policy will differ from the current policy within the framework of the Eurasian Economic Community, and also what exactly the consolidation of tax codes consists of while maintaining separate budgets.

The conditions are unrealistic and the most surprising thing about this article is the timing, senior analyst at Alpari Eurasia Vadim Iosub told the BBC: “When they write that within one to one and a half years it will be possible to unify the Civil Code, the fiscal system, the banking and customs systems and so on, this is fantastic.”

On the subject: Bloomberg: Vladimir Putin plans to stay in power after 2024 and unite Russia and Belarus

In addition, for Belarus, such integration will be disadvantageous in many respects, Iosub believes.

“The most striking example is this: in Belarus they are relying on an internal IT offshore, which is called the Hi-Tech Park. Year after year, he increases foreign exchange earnings on a scale that is significant for Belarus. The unification of budget and tax codes will make it impossible for such internal offshore companies to exist,” says the expert.

We can also conclude from the article that Belarus will actually have to subscribe to all Russian counter-sanctions, and this is fraught with risks of additional sanctions against Minsk, Yosub says.

If a unified regulator of the fuel and energy complex market is created, it is not clear who will manage it, political observer Artem Shraibman writes in his telegram channel.

“If Belarus and Russia [lead] as equals, Moscow will not accept this. If it is proportional to the weight of countries, Minsk will not accept this. Everything else is simple negotiations between the capitals, that is, the same thing that exists today,” the expert notes. “The drain adds virtually nothing new to what we knew before,” he adds.

“Only the specific course of the negotiations, which, based on the experience of September 2019, are unlikely to be public, will show how this risk for Russia is consistent with the tasks of integration with an economy 29 times smaller,” concludes Dmitry Butrin in his article for Kommersant.

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What do the authorities say?

The draft integration program will become a program only when the presidents sign it, Natalya Eismont, press secretary of the President of Belarus, told the Nasha Niva publication.

“We would propose to evaluate all the high-profile terms used in the above article - confederation, federation, and so on - as idle journalistic cliches,” she said.

The basis of any processes is the thesis of the independence of Belarus and Russia, the press secretary said: “This is sacred! The red flags are the sovereignty and independence of each country. In integration processes, we take those steps that are economically feasible. No joint bodies are being created - the countries are not ready for this.”

The Kremlin also commented on the Kommersant publication.

“So far the [integration] plan has not been published or disclosed, so all this information is purely preliminary,” said Russian Presidential Press Secretary Dmitry Peskov.

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