Leanid Zaika: ‘Emirate’ Has Long Been Gone. Only Greed Remained

Lukashenka will face new problems.

The oil market opened on Monday with a collapse of quotations, not typical for almost three decades. The value of Brent oil on the first working day after the collapse of the OPEC+ deal collapsed by almost a third, to $31.43 per barrel, according to the trading data.

On Monday, the dollar and the euro simultaneously hit the historical record-high in trading on the Belarusian Currency and Stock Exchange.

Head of the analytical center Strategy, Leanid Zaika, told Charter97.org what these events could mean to the Belarusian economy.

- How would you comment on the collapse of oil prices, triggered by Russia's withdrawal from the OPEC+ agreement?

- It is a rather remarkable moment because contradictions in the world crisis economy have sharply escalated. On the one hand, production is falling and oil consumption is declining. The reaction is quite expectable, there have been attempts to reduce the traditional oil production. Russians can tolerate up to $25. They still have a profitable oil production, transportation and sale.

As for the world economy, a decline in energy prices always has a positive impact, although there will be both direct and reverse trends. This is a force majeure, which is to be resolved within two or three weeks.

- Saudi Arabia will sell oil in northwestern Europe, a key market for Russian oil. How will this affect Russia?

- American Senator John McCain said that Russia was just a huge gas station. It's high time for it to get rid of the Soviet Union's legacy. I can give you two examples of how this can happen. The first is an embargo on food and goods. Due to it, Russia has begun to develop its production of foodstuffs and a wide range of goods. It is an interesting process when tougher conditions encourage unusual actions. Even scientists and politicians want to abandon the myth of the "gas station", to correct the mistakes of the past. Let us see how quickly they will handle it and restructure to encourage new industries and economies. Then it will be clear what is going on.

First, there will be a deterioration of the situation and a decline in revenues. Perhaps, it will cause a bigger rejection of the dollar. This trend was already triggered two or three years ago. Belarus could also try to declare it, but it fails.

The decline in oil and oil products-based income is expected in Russia and Belarus, which puts the current elites in a difficult situation. It is hard to predict whether they act wisely or not.

But the main thing is that globalization of the world has already ordered to live long. This applies not only to Russia; the whole model of a large economy is interconnected and feels great.

Airplanes have already stopped flying and communication between countries has practically stopped. It's such force majeure. It is not just an event-related element, but a clear indication of such milestones as the completion of civilizational development based on oil and gas and the transition to a new economy - the economy of intellect. It will develop differently in different countries. It is worth paying attention to the fact that Putin's daughter suddenly started to head the Institute of Artificial Intelligence at Moscow University and not some oil company.

On the other hand, I observe a clear attempt of the world's major automobile companies to promote a reduction in gasoline prices, because the prospect is great, and competition on the market for electric cars and internal combustion engines is growing. Today, reducing oil and fuel prices is a successful strategy that will extend the era of cars of the 19th century.

This all emphasizes that the oil and gas civilization is coming to an end and that there is a prospect of increased competition in new sectors - electric transport, robots, IT, etc. It is very interesting, though people will feel bad.

- Will Belarusian oil refining be profitable with such oil prices?

- I was quite critical of the strategy of sitting "on a pipe" as early as in the 90s. After all, Russians skillfully made Lukashenka and his company dependent on a narcotic needle, where gas and oil became the decisive factor of the government's successes and failures. The Belarusian elite will have problems. Today, Lukashenka will say that the stars tell us the places for cheap oil or, to make the lie even funnier, will say that the Arabs helped.

Secondly, gasoline prices will go down. Percentages of price movements are barely predictable. At least they will talk a big game. This oil and gas addiction is a dead end for us. Instead of competing for oil, looking for it in Norway, Russia, or Zimbabwe, we had to deal with new industries. Our rural elites can't do that.

- Oil has pulled down the Russian ruble, while the Belarusian ruble lags behind. Rumas stated that the ruble would continue to float. How long can it "float" like that and where can it bring us to?

- This is a strange statement because nowhere in the world the Prime Minister engaged in monetary policy. This is how no one should act. What does the Prime Minister have to do with it? The Central Bank or the National Bank determine the situation. A certain ironic twist of fate it is that economic problems are handled not by economists, but by axemen.

Whatever Rumas says, it is clear that great leaps will be dangerous. This is called the high volatility of the Belarusian ruble. The real rate is barely predictable. Speculative processes will start, everyone will speak up. There's nothing more hilarious than analysis of coffee at the bottom of a cup.

Belarus has already made some statements about alternative oil; any greater idiocy is hard to imagine. The whole country is discussing it and now they will say how much the Belarusian ruble will cost. Current events are a great opportunity for fx prostitutes and corrupt officials in the government. It's funny to observe how our officials will manage the fluctuation of the ruble and currencies. They can't control it. They will only create an imbalance between an official and unofficial rate. But that's already happened. It's hard to expect realistic solutions.

- What are the hidden risks behind the collapse of the Russian economy for Belarus?

- The Russian economy is not very dynamic now. It moves slower than the world one. Fools will save something and hold onto a sinking ship.

What could be positive? As an economist, I can say that crisis processes will change a certain balance of powers in the economy and the role of sectors. This means that given the situation deterioration in the Russian economy, certain sectors will get an impetus to their development. Such changes and restructuring always take place in crisis processes.

- How can this affect an ordinary citizen?

- Let an ordinary Belarusian citizen pour in a glass of vodka declared by Lukashenka, fry the grease and sit still. He can't influence it in any way. He'll only have a great opportunity to hear the lies from all sides. Those who are smarter may have kept money in dollars or euros. They could become 30% rich.

The second point, one will have to cut consumption. When I go shopping, I pay attention to food products. We have Iranian cucumbers, US dried cranberries and Russian sugar cranberries. Imagine, Belarus doesn't have their own; swamps dried out. That's fantastic. So we're going to cut import purchases and buy more lard, potatoes and so on. We'll have to survive this time. The main thing is not to listen to stupid things that someone from above will say.

- Is it possible to officially declare the "Belarusian oil emirate" closed at such oil prices?

- It has long been gone. All that remains is rural greed. There are two refineries. The guys, who are closer to the authorities, raised tens and hundreds of millions of dollars there. Now they have the plug pulled.

These guys have to do completely different things, but they don't have enough brains for that. They will try to do their best, but no matter how hard they try, the world is moving towards a new economy. There will be less oil and gas, more intelligent people, and robots and new technologies in all industries will work.

Belarus lags behind. It has a collective farm consciousness. Of course, it will be hard for many people, politicians too. They will say that someone denies them oil. Well, take it, it's cheap. No one needs it. All of Europe has enough oil and gasoline. Who does needs Belarusian?

- How can we painlessly get off the oil needle?

- It is not painful to lie in a wooden box and be wrapped up with bandages. It will be painful. People will be fired, retrained and told the truth. There is a Belarusian game - freeride. We have to stop playing this game.

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