Belarus enjoys boost from selling Russians forbidden fruit

AP News
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Posted: Dec 09, 2015 8:44 AM
Belarus enjoys boost from selling Russians forbidden fruit

MINSK, Belarus (AP) — As he fights an economic downturn in Belarus, the man often called "Europe's last dictator," longtime President Alexander Lukashenko, is getting a surprising boost.

Following a rash of Russian bans on foreign products and services, Belarus is specializing in selling Russians a way round their own government's restrictions.

Since the start of 2014, Russia has embraced sanctions as a foreign policy tool, banning food imports from the European Union and United States over the Ukraine crisis, and now also cutting off flights to some countries.

For Belarus, that has meant a rush in demand for food that a senior official called "a Klondike" of money-making opportunities. And thanks to new bans on Russian air travel to Ukraine, it is now also enjoying a boom in sales for its national airline as Russians transit through the Belarusian capital, Minsk.

Belarus is in an ambiguous position both politically and economically under Lukashenko, who has ruled the country since 1994. Once a pariah in the West, he has positioned himself as a mediator in the Ukraine crisis, allowing him to warm relations with the European Union while still receiving cheap Russian gas.

In October, the EU suspended most of its sanctions against Belarus after Lukashenko freed political prisoners and was re-elected with 83 percent of the vote in polls that were boycotted by the opposition.

"Lukashenko is a genius when it comes to maneuvering and blackmailing partners, all partners, to get some dividends, economic dividends first of all," says Moscow-based analyst Fyodor Lukyanov.

Following Russia's ban on EU food imports, Belarus has become Russia's largest supplier of kiwi fruit, while apple exports to Russia are up 96 percent in a year and citrus exports up 60 percent. "For us it's a Klondike. We're ready to replace Western countries on many agricultural products," Deputy Agriculture Minister Leonid Marinich said last year.

Besides legitimate sales, there is a thriving but hard-to-quantify market in re-selling EU goods rebadged as Belarusian, made easier because the country's customs union with Russia means reduced border checks. Soon after Russia introduced its food sanctions last year, Moscow shoppers began to spot Belarusian fish and seafood on sale, even though the country is landlocked.

"Belarus is the main beneficiary after Russia introduced its foodstuffs embargo," says Yaroslav Romanchuk, an analyst at the Mises Center in Minsk. "In Belarus, there's a popular joke - give me a meter of border and I'll become rich."

Both Belarus and Russia have said they will crack down on re-badged food, but Russia has not responded with tough measures against its neighbor.

"Of course Russian officials are not happy that Belarus is serving as a way out for those who want to bypass sanctions. At the same time, there were never any illusions among the Russian leadership about the nature of Belarus under Lukashenko," Lukyanov said. "This is a leader who tries to use any opportunities."

Were relations to deteriorate, Russia could find ways to hurt Belarus' food sector, perhaps by blocking imports on spurious safety grounds, Lukyanov suggests.

With a largely state-controlled, Soviet-style economy and a population of about 10 million — around one-fifteenth of Russia's — Belarus finds it hard to compete with its bigger, richer neighbor. The economy shrank 3.7 percent in the first nine months of 2015 and the government last week asked the IMF for a $3 billion loan.

Bucking the trend, however, is state airline Belavia, which has tripled flights to Ukraine in the last two months to cope with a surge in demand from Russians who can no longer fly there directly. In October, the governments of Russia and Ukraine suspended all flights between the countries as diplomatic relations remained tense. Anyone wishing to travel from Moscow to the Ukrainian capital Kiev now faces either a 12-hour train ride or a trip through a third country. Many pick Minsk.

Belavia, which in September operated two flights a day to Kiev, on Friday introduced a fourth. It has new routes to three other Ukrainian cities to cope with a rush of Russians and Ukrainians traveling between the two countries for work or to visit relatives. It has also introduced Ukrainian-language onboard announcements to suit its new passengers.

However, Belarus has yet to see any benefit from Russia's recent flight bans on Turkey and Egypt, both popular tourist destinations.

Last month, Russian President Vladimir Putin suspended flights to Egypt after an airliner carrying Russian vacationers crashed there. Russian officials say it was brought down by a bomb. Putin then banned charter flights to Turkey and ended sales of package tours to the country after Turkish forces shot down a Russian warplane in disputed circumstances on the Turkish border with Syria.

While some in Belarus had hoped that holidaymakers would flood through Minsk airport, Russians are still too worried about security to risk a trip, says analyst Liliya Kobzik.

"Expectations haven't been justified," she says. "Russian tourists have preferred to refuse holidays in Turkey and Egypt completely because they have been scared by their government."

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Ellingworth reported from Moscow.