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 Thursday, December 17 2015

Mkrtchyan Emmanuil

Belarus ambassador to Armenia: We have a lot to offer each other under Eurasian Economic Union

Belarus ambassador to Armenia:  We have a lot to offer each other under Eurasian Economic Union

 

Mr. Ambassador, before your appointment to Armenia, you occupied the post of the director at the Foreign Economic Department of the Belarus Foreign Ministry. I think your appointment among others pursues enhancement of the trade and economic relations of our allied countries. Would you assess the current stage of these relations?

The Armenia-Belarus relations are at quite a serious level. They are steadily developing both politically and economically. The two states laid a serious historical foundation of relations. Numerous decades connect our nations with ties of cooperation, mutual support and friendship, and these ties are constantly strengthening due to mutual confidence and support. In addition, Belarus and Armenia are currently members of a number of integration structures such as CIS, CSTO and the Eurasian Economic Union since 1 January 2015. The heads of our states, governments, ministries and organizations hold regular meetings. On international platforms, our stands are either similar or they fully coincide.  Therefore, one can unambiguously state that our relations are at the highest level in political terms.

The trade and economic relations are also dynamically developing.  Over the past ten years, the commodity turnover between the countries has grown 3.6-fold to nearly $39 mln in 2014. Belarus is the third foreign trade partner of Armenia among the CIS countries (after Russia and Ukraine).  Armenia imports a wide range of goods, including heavy-duty equipment, BELAZes, agricultural equipment, field engines, tyres, light industry products, medicine, timber, furniture, as well as food.  At the same time, Armenian brandy, juices, fruits and jams are very popular in Belarus. Over the past few years the supply of Armenian jewelry to Belarus has considerably grown. There is a Belarusian-Armenian joint venture on brandy bottling in Belarus and there is also an Armenian- Belarusian Trade House in Armenia, which is a good platform for sale of over 12,000 items of Belarusian goods.

The contacts between the chamber of commerce and industry, as well as mutual business missions, exhibitions and fairs have been intensified. The Belarusian-Armenian Intergovernmental Commission on Trade and Economic Cooperation holds meetings on an annual basis. So, the Commission has held 11 meetings.  There are also joint commissions on scientific- technical and military-technical cooperation.

I can gladly say that there are no serious obstacles for development of the trade and economic relations, except for several complicated and cost-intensive logistic routes between the countries. It should be noted that certain slowdown has recently been observed in mutual trade, but the reason is clear - the world still suffers an economic crisis. The economies of Armenia and Belarus are open.  Naturally, the crisis has a negative effect on the enterprises' activities and the consumer purchasing power. I hope we will be able to overcome the negative trends in the mutual trade and to considerably increase the trade in the near future.

We are ready to take all possible steps to further increase the bilateral trade. Our country seeks expansion of the Belarus equipment supply to the Armenia market. Our equipment can be used in Armenia’s economy for implementation of important infrastructure projects and projects in the field of mining, energy, and agriculture. Belarus is ready to provide finance and credit support and technical service of the supplied equipment. 

What do you think, if Armenia’s joining EEU this January is able to give a new impetus to these integration processes?

Sure, we see boundless opportunities and prospects for our countries and the Union, in general. As I have already mentioned, there are serious grounds for this: common technological platform, common mentality, common scientific and technical school, common approaches to organization of the education process laid yet in the Soviet time.  Brand awareness, habits and stereotypes are important here, as they help develop the trade relations. For instance, when it comes to certain products, I personally prefer those made in Armenia. In Armenia they are aware of the quality of the Belarusian products too.

Yet the commodity turnover for $39 million does not reflect the full capacity of our trade and economic relations. Therefore, Belarus and Armenia need to develop long-term programs of economic cooperation to boost the trade and economic cooperation. Undoubtedly, in new conditions when a 170-million-strong market has opened to our countries, we must use our capacities at full.

The two countries must enhance the cooperation on the industrial field and combine efforts to create joint competitive production in demand in the domestic markets and the markets of the EEU and third countries. 

Next year, the Board of the Eurasian Economic Commission – the operating body of the EEU – will be reformatted and a representative of Armenia will be heading it. I am sure such rotation will be useful for the Eurasian integration, as it will bring some novelties to the strategy and tactics of our combine work. 

You have mentioned the basic advantages that will enable our countries intensify contacts in the trade and economic field. This is sure the strong side of cooperation. Let’s speak a little about the weak sides.

 

As I have said the economies of Armenia and Belarus are open and external factors affect them greatly. The financial system of our countries is at the stage of establishment so far. That is why our positive steps are sometimes shadowed by the external influence. At the same time, to launch a big economic project, we need big funds. The problem number one of our governments is to find “long” and “inexpensive” money. We have enough capacities and minds to launch join big projects.

Correct me if I am mistaken, but we have a common Eurasian Development Bank for all members of the EEU.  I do not remember the Bank funding any common -for Belarus and Armenia - project. Yes, they provide funds for infrastructures, some other goals, but I don’t remember the bank doing it for development of integration processes in the industrial or scientific-and-technical fields. Either we have nothing to offer jointly, or it has not set such a goal.  The time does not work for us. We have already lost much during the last 25 years in the fields Armenia and Belarus were not on the last places. Integration gives us a chance. Once industrially developed Armenia must use it undoubtedly. Belarus has managed to maintain and even develop many sectors to international standards.  

We must understand that the Eurasian Development Bank is not a charitable fund; it is a commercial company. It sets quite pragmatic goals and pursues profits for itself and the EEU countries.  We need effective business projects able to undergo trials, coordination at the government and be brought to a supra-national level. I am not ready to go into details now, but I’d like to say that the role of the Eurasian Development Bank in the development of integration processes is essential. The bank funds such prior directions as development of infrastructures, development of HVA products, improvement of the energy efficiency of economy etc. This helps the countries overcome the consequences of the global financial and economic crisis.

I think with introduction of a single industrial and agro-industrial policy in the EEU, the number of the Bank-funded joint projects in the field of industry, agriculture and others will increase.

A joint project on assembly of Belarusian agricultural equipment in Armenia has been discussed for several years already.  It seems rather an interesting project, given that it may find more sales markets in Georgia and Iran. To organize a successful sale of such necessary agricultural equipment, Armenia needs to use leasing, for instance.  Of course, Armenia could import agricultural equipment, but its final cost turns too expensive for our farmers.

I'd like to say that certain work is being implemented now, to that end. In 2014, at the Trade House Ar-Be in Yerevan, an area for assembly of small-size tractors 'Belarus' was opened and the first 10 tractors have been assembled.  In addition, Armenian specialists have undergone the necessary training course. By the way, organization of the assembling enabled reducing the price of the tractors by some 20 percent.  The organization of agricultural equipment assembly shops was discussed at the meeting of the Belarus- Armenia Inter-parliamentary Committee this summer.  The Armenian and Belarus ministries and organizations concerned are currently holding consultations to select partners to implement the project of agricultural equipment assembly.

As for interaction in the foreign economy, Belarus is for simple form of trade, such as purchase-and-sale and cooperation. Before launching an assembly shop, it is necessary to ensure economic measures and staging. At present, Belarus is producing such tractors and combine harvesters that can be served by specialists with high technical education only. Here is where we see the success of our cooperation with Armenia. We can see the agricultural successes of Armenia, but to boost exports, it is necessary to increase the efficiency of the sector, which is not easy without the necessary technological tools.

Yes, the weather was very favorable this year, but no one is insured against natural “force majeure” situations.

We experienced the same difficulties 15-20 years ago. We had no combine harvesters, no other equipment, very little fertilizers etc. Now, we have the full line of industrial equipment necessary in the field of agriculture. We use high-tech equipment where necessary and not large ones on smaller areas. Armenia needs such technological re-equipment of the agrarian sector.  We stand ready to help Armenia at least by launching cooperative production shops where we could supply the basic component and the remaining part of the necessary components could be produced here. This will help partially localize production for a joint product “made in EEU.” The financial issues must be settled too, as farmers not always have free funds. I’d like to say that Belarusian legislation provides various forms of cooperation in the given field, including leasing and banking schemes and concessional loans. We can use the mechanism of government guarantees, though in limited cases. Maybe, it is not a market method, but as people say: survive before thrive. 

The issue of the transport logistics is turning acute as never. The Belarusian products imported in Armenia rise in price. Before the crisis, the imported goods were successfully sold, but now with the falling consumer demand, the prices of these products are no longer flexible and affordable to the local consumers. 

Import of Belarusian goods in Armenia is not high so far. However, one of the global instruments of the modern trade is free trade agreement. EEU has already signed one with Vietnam. It is the first fruits. There are a number of countries that seek such agreements with our Union.  As far as I know, Iran shows certain interest in it too. Considering that Armenia and Iran are close neighbors, Belarusian goods can be transited to Armenia and then to Iran via it. Furthermore, we can set up joint venture to satisfy the large Iranian market and not only Iranian. This is especially relevant now when Armenia has GSP+ system with the European Union. Therefore, the construction of transport corridors – motorway and then railway – via Armenia will help create joint productions and boost sales. Then the commodity turnover will increase drastically and the transport costs will less affect the prices.

Although, a huge work is yet to be done within the EEU to develop the transport infrastructure, liberalize the market of transport services, as well as help reduce expenses on logistics and speed up freight activity.

Belarus goods, especially the food products, are of high quality. The Belarus state standards are often tougher than the European ones. Meantime, Armenia has just entered that path. Don’t you think that “sly” idea of “technical regulations” will seriously limit export of Armenian products to the EEU countries, including Belarus.  

Armenia does not need to create its state standard, it can and should cooperate with the partner-countries to adopt the cutting-edge technologies. The fact that these standards will be applied to both importers and producers creates “a two-edged sword.” The question is whether our producers are ready to meet such tough standards? It is a long chain: raw materials, technical production, packaging, storage, transportation, sale etc.  All these stages must be analyzed thoroughly. In addition, high technical requirements make producing more perfect goods. 

I’d like to thank you for your high assessment of our goods. Belarus really strives for high standards and it is not an end in itself. It is a responsibility for the health of our citizens and our producers understand and accept this. In addition, we had to learn to make pure, safe and good quality products also because a significant part of our products is exported. That is why some of our standards are even tougher than the European ones. Meantime, Europe not all our products lets to its markets. I think it is an element of unfair competition.

The Armenian market features a lot of Ukrainian goods, especially food products. The number of Russian products is also high. As regards the Belarusian goods, they have emerged in the Armenian stores only recently. Why did they enter the Armenian market so late? There is a small chain of Belarusian stores inside the Ar-Be Trade House in Armenia, like in many other big cities of the CIS. It is like a certain brand, but the number of such goods in the trade chains is not big.       

As you know, it is not always easy to enter the trade chains with commodities, especially in foreign countries. The entry into the large trade chains will be successful in case of an efficient, sometimes even aggressive marketing strategy. It is necessary to use the entire arsenal including the broad promotion of the brand, the transport logistics and flexible conditions of payment. I would not say that I am absolutely right but some of our enterprises realize that the Armenian market is not large as the Russian one, for instance, and they do not operate at a full scale. A certain role belongs to the transport component, especially when the matter concerns the perishable commodities. Ukraine and Russia are a bit closer. Many of our enterprises work directly through the structure of the Ar-Be Trade House. Nevertheless, some brands are quite widely represented in Armenia, for instance, Santa Bremor fish products, Savushkin Product dairy products, cosmetics, household goods, etc. It is needless to say about Milavisa, Conte, which are very popular in Armenia.

As regards the quality of the Belarusian products, I’d like to recall the well-known proverb – a picture is worth a thousand words. Therefore, I would like to invite everybody to assess the quality of the Belarusian products at the stores of the Ar-Be Armenian-Belarusian trade chain located in Shiraki Street and G.Kochar Street. 

At what stage is the project of a fish producing JV?

As you know, Belarus procures fish products from third countries in large scales, though our fish production is very developed and the fish products made in Belarus are exported to many countries, even to the sea powers. We are going to increase our food safety within the Eurasian Economic Union, reduce dependence on foreign food suppliers.  Implementation of these joint projects meets this our policy. Therefore, we must promote them by all means possible. In Belarus the prices of some fish types similar to the ones bred in Armenia are much higher than in Armenia. Import of fresh fish to Belarus will be difficult logistically, but why shouldn't we try to use Armenia's experience and technologies in fishery i.e. implement a joint project in the given sector? I'd like to say that certain work is being implemented now, to that end.

The Armenian and Belarus ministries and organizations concerned are currently holding consultations to select partners to implement the project of agricultural equipment assembly. As for the cooperation in the field of fish breeding, in August 2015, the meeting of the bilateral committee for scientific and technical cooperation in Yerevan resulted in a decision to set up a joint research and practical center on Lake Sevan to survey ecosystems. Under the project, surveys will be held in such fields as reproduction of the environmentally and commercially important shellfish of Lake Sevan and Lake Naroch.

Armenia is trying to revive its once developed light industry, including shoe production. Belarus has already achieved certain success in the field. What do you think, if the two countries will find common interests here without overshadowing each other on the single market? For instance, Belarus linen has become your country’s trademark. Armenia that was once famous for its silk has unfortunately lost its erstwhile fame in the field.  I think it is the very field where Armenia and Belarus cam combine efforts, experience and opportunities without ousting each other.  

Well, we have certain achievements in the light industry. We have accumulated a solid experience in the textile, knitting, sewing, leather, and shoe production and we are ready to share this experience with our Armenian partners and export finished products. I’d like to say that in Belarus these segments of industry were developed to employ the female population, while male were working at factories, plants and mines. After satisfying the domestic need, the country has to launch export and improve the quality of the products. The country started creating favorable conditions and foreign investors took an interest in the field. Yet, the government made the largest investments. The production was gradually supplied to the highly competitive markets. Our country has many advantages: highly qualified labor force, stability of the taxation legislation and far-reaching transport network with many logistic centers. By the way, WB’s Doing Business Rating has been ranking Belarus among top five most reformed economies in the world for about 5 years already. Yet many of our partners try not to notice this fact for obvious political reasons.

Everything is simple: hard work on a daily basis and favorable conditions for investors. We are establishing the barrier-free trade and investment environment within the EEU to implement joint projects easily and effectively. Unfortunately, the EEU market has been recently flooded with cheap and low-quality products of light industry imported from third countries, as the borders are open and some producers avoid fair competition.

Hopefully, with the development of the system of technical regulation and standardization at the EEU, the light industry market will be regulated. To that end, we need to combine efforts and support native producers and implement joint projects. I think this issue should be discussed at the upcoming meeting of the Belarus-Armenia Intergovernmental Committee.

Like in Armenia, in Belarus the IT-sector is actively developing. Do our countries cooperate in the field?  

As you know there are two big IT centers in Belarus: High Technologies Park and China-Belarus Industrial Park.  These projects are sometimes confused with each other, but these are two different projects. The first project looks to boost development of the IT-sector, while the second presents various directions: IT, high technologies in instrument engineering, means of communications, pharmacology, bio- and nano- technologies. Investments will total about 5 billion dollars. It is a very large-scale project where the specialists of our countries will yet work together, I think.

As for the IT-sector, I know that Armenia has achieved much in the field. I assure you that our specialists have close ties. Although there are no joint ventures yet, but in such specific sector, it does not matter.

By the way, a few years ago, Belarus Park of High Techologies and Gyumri Technopark signed an Agreement of Cooperation several years ago.

Our specialists in jewelry sector have established cooperation. In what particular directions do they cooperate? 

Armenia has a very rich experience in jewelry industry and the cooperation with Belarus in this field remains relevant.  In 2011 at some Armenian companies, Belarusian jewelers underwent courses on the "Swiss" technology of setting diamonds into jewelry items. The training was a success. We are ready to continue training Belarusian jewelers on the basis of the Armenian companies as well as sharing our experience with the Armenian specialists. Our countries' companies cooperate in the production and supply of jewelry and precious stones to expand their assortments, keep contacts with representatives of the organizations concerned, and participate in exhibitions, business contacts and other events to exchange experience.  

Armenia and Belarus are negotiating for cooperation in peaceful uses of nuclear energy.

Energy field is the second after finance component of economic success. It is important to enhance own generating production in order to reach energy balance. There is a certain deficit of it in Belarus, so we have to import part of electricity.

The issue of alternative sources of energy is very essential. But favorable natural conditions such as bright and “long” sun, firm winds, stormy rivers, geothermal sources etc. are needed for implementing corresponding decisions. Regretfully, we do not have such conditions. There remain two solutions: to develop technologies of coal, heating oil, gas burning or focus on use of peaceful nuclear energy. We do not have enough hydrocarbons in the county, and the world prices will only rise, as they are exhaustible resources. The only way to get significant energy facility is use of fissionable materials.

The decision of building a nuclear plant was a very difficult one for our country, which suffered from Chernobyl disaster. And in spite of this, over time we have overcome our phobias and created our own program on development of peaceful nuclear energy, as an alternative to of traditional organic resources. There were a lot of discussions and debates. As a result we have chosen the most secure platform as a basement for construction in three variants. The question was who to rely upon.  Russia proved to have the safest and cheapest technology. The launch of the first power unit of the Belarus NPP is scheduled for 2018. In this light, your experience in exploitation of NPP is very interesting to us. Armenia plans construction of a new power unit in future and Belarus' experience will be useful to you country, I think.

Related to the building of NPP we have prepared Belarus-Armenia Agreement of Cooperation in Peaceful Uses of Atomic Energy.  The draft agreement provides for cooperation in development, design, construction and exploitation of NPPs, research reactor facilities and other nuclear facilities. The document regulates cooperation in nuclear safety, diagnostics and control of the equipment of nuclear power plants, accident management etc. As far as I know, Rosatom offers the best technology. In addition, the sides will have an opportunity to share experience in storing and managing nuclear waste, radioactive waste and others.  Cooperation in the protection of the nuclear facilities and radioactive waste storage facilities, as well as protection against radiation and assessment of the radiation impact on the environment will become possible in future. The sides will get a chance to train specialists in use of nuclear energy and exploitation of NPP at higher educational centers in Belarus and Armenia, as well as engage in scientific research in peaceful uses of nuclear energy.

On September 10, the Government of Armenia approved an intergovernmental agreement with Belarus, under which the citizens no longer need to get registered at migration centers. When will that agreement come into effect and what it will give the citizens of our countries?

Well, under the Road Map on Armenia’s accession to Customs Union/ European Economic Space, a Protocol of Amendments to the Intergovernmental Agreement of Mutual Visa-Free Travels of Citizens of Belarus and Armenia dating back to 2002 was drafted. The document looks to increase the registration-free stay of the Armenian citizens in Belarus from 5 to 30 days. A similar rule will be effective for the citizens of Belarus in Armenia. The bilateral document will come into effect after the sides implement all the necessary procedures inside their countries. It will reflect the friendship and partnership of our countries, boost business ties and private contacts, as well as create favorable conditions for fruitful economic cooperation.

Thank you for extensive interview. 

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