Xi Jinping (L) and Alexander Lukashenko (R) in Minsk on May 10, 2015. SERGEI GAPON/AFP/Getty Images
On Sunday, China and Belarus signed an estimated $15.7 billion in deals, one of which commits Belarus to supplying over 4 million metric tons of potash (a fertilizer) to China over five years, with a value of $1.3 billion. Another was the formation of a Chinese-Belarusian Industrial Park, aimed at promoting innovation and improving the two nations’ bilateral cooperation. In a joint statement, China pledged to encourage its high-tech firms to establish themselves there, while Belarus agreed to provide favorable conditions for the park and its residents’ operations. China also extended $1 billion in low-interest loans to two Belarusian banks.
The moves come as Beijing presses forward with its ambitious Silk Road strategic investment program linking China to Europe. Belarus is a significant attraction for China, and the timing of these deals is fortuitous. Despite Belarus’ mediation of the Russia-Ukraine conflict, Europe has never embraced its strongman President Alexander Lukashenko due to his regime’s poor human rights record. And Belarus’ economy depends heavily on neighboring Russia, which is contracting economically under the sanctions imposed by the West over Moscow’s actions in Ukraine. So Lukashenko’s best option to grow his country’s economy is closer ties with China, which has been eagerly shoring up political support all along the route of the Silk Road Economic Belt. (Chinese President Xi Jinping is cozying up to Moscow as well, most recently by attending Russia’s massive WWII commemoration parade this weekend).
Belarus is a founding member of the Eurasian Economic Union (E.E.U.), a Russia-centric regional trading bloc, and it is by no means jettisoning its long-standing ties to its much-larger neighbor. But Belarus is suffering from ripple-effects of Russia’s downturn, so it is diversifying its options, and has already demonstrated a willingness to choose Beijing over Moscow. Russia and Belarus collectively produce 40% of the world’s potash, but a price feud between them led both to dump potash on the market, causing the price to drop by nearly half from two years ago. In March, Belarusian Potash Co. signed a contract with China at a price that undercut its main Russian competitor Uralkali and the rest of the global market. The exact price of the deal signed on Sunday will be determined in further negotiations.
Meanwhile, Russia’s strategic turn to China is far too important to President Vladimir Putin for any jealousy over Belarus’ deals with China to impact it. On Friday, Russia signed 32 bilateral cooperation agreements with China, and although many were preliminary, the total value of deals and loans is enormous. “Today, China is our key strategic partner,” Putin said, seated next to Xi as the deals were signed. One agreement will allow Russian companies, struggling to repay foreign debts as the ruble has fallen, to raise up to $25 billion over the next two to three years from Chinese banks at lower costs than on the domestic market. Russia also secured over $6 billion in Chinese funding for an intercity railway, in addition to other agreements across sectors like agriculture and defense. The two countries also worked out a framework to avoid a clash between the E.E.U. and the Silk Road.
So China is successfully courting both Russia and Belarus. A good time to buy allies is when they have no alternatives to turn to.
