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Will Belarus and Russia have single currency? Interview with Mikhail Myasnikovich

The "dairy" controversy of the presidents, including at the Forum of Regions in Sochi, is a colorful example of how the heads of state are personally fighting for the interests of their countries! There are still many barriers and restrictions in Belarusian-Russian trade.   For example Russian Prime Minister Medvedev, visiting Grodno recently, asked at a solemn feast to be treated Belarusian parmesan, Belarusian Jamón and Belarusian oysters? Such ironic phobia! We began the interview with Chairman of the Council of the Republic (in the recent past, the Prime Minister of Belarus) Mikhail Myasnikovich from the most pressing topics of the week. We met with Mr Myasnikovich directly at the Sochi exhibition.

Yuri Koziyatko:
Mr Myasnikovich, let's start with the well-known joke about Belarusian oysters. It is especially popular among Moscow residents at a time when the West imposed sanctions against Russia.
Does Belarus have any historic opportunity to occupy the niches on the Russian market after the sanctions? What new products can we offer?

Mikhail Myasnikovich, Chairman of the Council of the Republic of the National Assembly of the Republic of Belarus: 
We export products to the Russian Federation, 20% of which is innovative.  Regarding those oysters, now the whole world is trying to specialize in something. Someone catches fish, someone processes it and someone sells. So I don't know what re-export they are hinting at... Our customs and law enforcement bodies have detained almost two times more sanctioned goods than Russian colleagues.

So, of course, we have never put such a task to benefit in any way from the fact that someone is under sanctions. We don't want to be a dishonest partner.

We are talking about new and competitive products. Products that will be competitive for both the Russian and world markets.

Yuri Koziyatko:
At this exhibition in Sochi we see a lot of well-known products. Here we see the tractors, BelAZ, MAZ buses and so forth. I, frankly, feared that Belarus would be unnoticeable among dozens of Russian regions, many of which are larger than Belarus. But we see that we are noticed!

Mikhail Myasnikovich:
We want to attract Russian regions thanks to well-known goods and start closer and mutually beneficial cooperation. Because, of course, everyone wants to earn their share of the value added. To buy the finished product is the most primitive form of trade. So we tell our Russian partners that have the appropriate industry capacities in their regions "Let's do Gomel combines together."  And let's adapt the same tractors or other equipment, which is demanded. While we in a Union State we would like to produce something that will be Russian-Belarusian instead of "foreign Belarusian".

And here is a niche: to share value added in order to really increase sales.

Yuri Koziyatko, host of "Picture of the World":
Here is a Belarusian BelAZ, a huge vehicle, in which 60% are Russian components and 40% is from Belarus. Should we now increase this share now?

Mikhail Myasnikovich:
Today, our BelAZ signed several contracts. And these are import contracts on complete sets from the Russian Federation.  For several recent years we have been working closely with St. Petersburg plants that produce engines for transmission. According to BelAZ experts - I spoke with the plant's management and designers - this all has a very good prospect. So we came here not to merely sell something to somebody. This is the so-called two-way street.

Yuri Koziyatko:
Let us remember, in general, the recent past, when our President actively visited the Russian regions. Even under Yeltsin. If you remember, there was some kind of political jealousy: the President was not even let to visit one of the regions. But now governors are in line to come to Belarus, to sign a contract. Was it the right way - to directly trade with Russian regions?

Mikhail Myasnikovich:
Certainly.  In the 90s, the subjects of the federation began to gain a decent enough force. This is objective. Even in the Soviet times, the Moscow region, Moscow, St. Petersburg, the Leningrad made a more significant contribution to the Soviet Union's GDP than Belarus.

Yuri Koziyatko, host of "Picture of the World":
Almost like separate countries.

Mikhail Myasnikovich:
Yes, they are worthy partners. And then Mr Lukashenko proposed a model to intensify work with the regions and not just decide everything through the Kremlin. And it gave the result.  Almost 50% of our agreements are between the Government of the Republic of Belarus and one or another Russian region.  This is a kind of two-story cooperation.  We are not confused by that, we are not alarmed.

Yuri Koziyatko:
Aren't we brought down to the level of a Russian region?

Mikhail Myasnikovich:
No.  We always proceed from pragmatism: if it is good and profitable for businesses, the government supports it.

Yuri Koziyatko:
And people also benefit!

Mikhail Myasnikovich:
And people, too.

Yuri Koziyatko:
Belarusian products are in demand here in Sochi, meet and dairy, aren't they?

Mikhail Myasnikovich:
We came here with a fair where active trade is underway. It is not easy to surprise Sochi residents. Sochi is a really powerful resort. And Russia should have such resorts.   This is a multiplier effect: they buy something Belarusian at the fair in Sochi ...

Yuri Koziyatko:
And bring it to Kamchatka!

Mikhail Myasnikovich:
They will bring some good impressions together with specific goods. And thus they encourage the conclusion of direct contacts. Sometimes we hear that, perhaps it is more profitable to trade with our neighbors, with the Bryansk, Smolensk, Pskov regions as well as with Moscow and St. Petersburg. Some say that logistically it is not profitable to trade with regions behind the Urals. Yes, of course, we, Belarusians, cannot trade well. And plus, of course, logistics is expensive. But we need to work in these conditions. For example, concrete poles are sold very well in Baikal and bring benefit. Can you imagine? Hence, it is beneficial for both countries. If Belarusian stew and Belarusian canned milk is in demand in Central Siberia, so we need to go there.

Yuri Koziyatko:
Despite the fact that distance from Belarus to Kamchatka is the same that the distance from Belarus to South Africa?

Mikhail Myasnikovich:
I understand what you are trying to say. Sometimes they say 'diversification of exports.'

But diversification does not mean that this will be done at the expense of the Russian market.

Through diversification we need to gain more markets. South Africa, Brazil, the united Europe... But without losing the Russian market. The import substitution program, which was adopted in the Russian Federation, opens up certain niches for industrial cooperation projects or some individual products. Unfortunately, we have to say (I yesterday talked with Valentina Matvienko) that we don't see Belarusians' role in the program of import substitution. One of the purposes of our Forum of Regions is to show that we can work within import substitution programs. We can work together in the programs of structural reforms in connection with the difficult circumstances caused by oil prices, devaluation of the currency.

Yuri Koziyatko:
So it is this circumstance that caused our trade with Russia to fall?

Mikhail Myasnikovich:
If we take the sanctions, I can't see such a direct connection. The deep devaluation of the Russian ruble is what influenced it all. Preparing for the Forum, I looked through the materials and drew attention to the statements in Grodno. Their gist is that we should not allow a parade of devaluations.

Yuri Koziyatko:
Competitive devaluation.

Mikhail Myasnikovich:
Competitive. So if a country devalues its currency, this should not be done by its neightbors. 

In H2 2014 and H1 2015, the Russian ruble depreciated by about 20 percentage points more than the Belarusian ruble. Therefore, the Russian producer is in a more advantageous position than the Belarusian producer.

Exporters always benefit from weak currency.

In my estimation, the most appropriate exchange rate of the Belarusian ruble to the Russian is somewhere 280 to 1, even 290 to 1.

Of course, we see that it can cause complications for importers, because Belarus' import from Russia is also quite large.

Yuri Koziyatko:
Here, we took BelAZ, where 60% of the components...

Mikhail Myasnikovich:
-Yes, yes! So we have to work together with the National Bank on this issue trying to find some happy medium.

But I do not accept this reproach that we quickly devalue our currency trying to stay competitive. Everyone needs to protect their interests.

But of course one should also take into account the interests of the partner.

Yuri Koziyatko:
What is behind the idea of ​​the monetary union? Will we again hear that conversation: the Russian ruble as a means of payment?

Mikhail Myasnikovich:
I support the idea of the monetary union but I believe that this is the last stage of integration, the highest stage of integration.

And when today we have different economic conditions for our businesses, when we still have a lot of different barriers in mutual trade (we have 422 barriers in trade in goods alone)... The Treaty on the Eurasian Economic Union directly eliminates only 71 barrier. The rest will have to be addressed through standardization and harmonization of the legislation of the parties, Russia and Belarus, which is extremely tight.

And it seems to me that our integration bodies are seriously underperforming in this respect or are lacking initiative. It is they who need to raise these issues and put forward relevant options for their solution.

Such quiet and slow style of work, is unacceptable for integration structures, I think. Someone has probably already adapted because they don't get criticized for this style of work. Why aren't they criticized? Because there are no errors.

A person is criticized for errors. And if there is no activity, there are no errors.

With regard to timing. We must first remove all trade stages (goods, services and labor market) and then switch to a financial union.

If we do it right now, I will say at any level that this is a threat to sovereignty.

Mikhail Myasnikovich, Chairman of the Council of the Republic of the National Assembly of the Republic of Belarus