Diesel Volkswagen Is Heading Steadily Downhill

Easy money raised on oil are about to be wasted.

Belarus and Russia has negotiated deliveries of oil products for the end of 2018 and for 2019.

No official statements on signed agreements are made. Later it became known that Russia would not deliver dark oil products to Belarus. A day later it was informed that Russia also refused to deliver light oil products to Belarus as well.

In addition, Russian Deputy PM stated that new agreements avoid "grey" schemes in supplies of oil products within the 'Union State', which damaged the Russian budget.

What will it mean to the Belarusian economy in 2019?

These questions of Charter97.org were addressed to head of the Strategy analytical center, economist Leanid Zaika:

- Russia has had a simple economic maneuver. Dark oil products, it all has started with, are heavy fractions of oil refining: fuel oil and bunker fuel, for example. Belarusian bunker oil was of high quality, and it was popular among the Baltic States. Other oil products such as bitumen were supplied to Lithuania.

It's not surprising that Russia has decided to close this market for Lukashenka. After all, it's barely hard enough to identify Belarusian oil products and those re-exported from Russia. This is the market sharing behind borders of the EEU.

Another issue, whether Russia preserves deliveries of 22 mln tons of oil and at what price, is more important for the Belarusian economy.

As of today, the Kremlin has put on heels Lukashenka's fair oil companies engaged in double dealing. It will be rocky times fot them.

- That is, will these "grey schemes" the Russian representatives mentioned stop working?

- On the part of Russia it was a business decision. After the introduction of ban on supplies of light oil products, Belarus loses a wide range of production. The Belarusian authorities sold petrol and diesel fuel under guise of "thinning agents" and "VM and P naphtha" and brought profit of around $1.5 billion a year.

The Kremlin realized it and put things in order, and shut out oil companies tied to our government.

- You've mentioned a great importance of crude Russian oil. What will happen in future given "the tax maneuver" and growing prices for Belarus?

- In fact, almost 25 years ago Belarus got hooked on Russian oil. Being a specialist, I think that the sooner we give up these 22 mln tons of oil the better.

We urgently need it to make the authorities finally get into gear instead of this oil nirvana. Belarus needs only 7 million tons of oil a year to produce equipment and other production. Now the oil component makes up 40% of currency export. It sounds ridiculous.

The country is simply pinned down by the Russian oil pipe. The sooner we abandon it, the sooner we start working as normal. Easy oil money only corrupts Lukashenka and his circle.

The government sees a biased picture of profits and opportunities of the Belarusian economy. This imbalance causes a sharp increase of imported foreign goods which can bear repercussions. But Prime Minister and higher officials are not capable of analyzing the situation: their "radars" are misadjusted.

Belarus must give up this oil addiction. Then we can turn to robot development work, computers, e-transport and so on. Oil is the curse of Russia. Now it is our curse too. That's it.

- Are our authorities capable of it?

- No, they are scared. After all, parasitism does not require any efforts. They can only flourish arms and cry out they work hard.

Once I performed in a city and wondered whether officials knew that by 2020 many European countries would ban internal combustion engines. Where will you supply your petrol? They opened their eyes wide being not capable of saying anything.

Oil era is about to end, in several years no one will use it. But our authorities keep refining it in Novopolotsk and Mozyr... From 2025 even Israel abandons deliveries of petrol-run vehicles.

Two refineries are too much for Belarus. What will they be used for in several years? Should we organize shows there? But the authorities do not realize it; they live for today. Their used diesel Volkswagen is heading steadily downhill.

- What will happen to fuel prices in Belarus?

- It will grow. It's the easiest way. However, it may bear an opposite effect for the authorities. Summing up expenses Belarusians can start using e-transport.

It does not matter what Lukashenka wants, his new Prime Minister Rumas and other ministers can't resist the scientific-and-technological advance. They believe that Belarusians will buy an old diesel-run Volkswagen for fun and service it with more expensive fuel and be glad of it. Soon the repair of such vehicles will cost more than the purchase of an e-transport.

What will Lukashenka's economy do then? It is based on re-export of oil, refineries and production of outdated tractors and vehicles. Oil will soon fall into oblivion. And the authorities of Belarus will start dancing to Chopin music at empty plants. Little time is left.

Everything will come to a halt, and only 900 thousand pensioners over 70 years old will look at useless dancing. Everyone under this age has already excelled the authorities in development. We should think long-term. But now we observe the system which is running dry.