Economists talk about the consequences of the unrest in Belarus for Lithuania: they see risks, offer more immigrants

The intensification of economic relations would pose risks in some areas

According to Marius Dubnikov, vice president of the Lithuanian Business Confederation and financial analyst, Belarus is not a very important partner of Lithuania in terms of total trade, but our neighbor is important in several areas: tourism, transport sectors and port stowage companies.

“We receive direct money from Belarus by importing pharmaceutical engineering products and machinery. Another thing, if relations were to deepen and borders were closed, the tourism sector would suffer, because, considering the number of tourists in Lithuania, how much income contribute, Belarusians make up a significant part – a quarter.

Belarus is also important for the Lithuanian railways, because we import various raw materials from Belarus, the cargo in transit is transported through the Lithuanian railways, which then provides income to the stevedoring companies in the port. If relations were to intensify at the level of economic cooperation, these areas would undoubtedly feel more affected, ”shared M. Dubnikov.

According to the interlocutor, the recent unrest in Belarus probably will not have a significant impact on the activities of Lithuanian companies in Belarus, as they are more related to politics. However, according to Dubnikov, investors from the neighboring country anxiously await the end of events.

“Anyone who has invested in Belarus has opened factories and is looking anxiously in that direction. When there were events in Crimea and the Lithuanians had invested there, of course, the cancellations were large. So, for those who have invested in Belarus. “There are really turbulent days. The question is: what level of escalation will be achieved, what sanctions will be announced between the countries, will it affect the economy or only political actors”, considers the economist.

Dubnikov: investment flows in Belarus will decrease

Belarus, according to the interlocutor, is an interesting and large enough market for Lithuanian investors. M. Dubnikov points out that the attractiveness of Belarus for Lithuania is very specific: it is a low-income country, but it attracts most investors who are also interested in the Russian market.

“Lithuanian investors are interested in the Belarusian market because of the relationship with Russia, there are no mutual borders here. Interest (investment – Delphi) will remain, just to answer to what extent it is necessary to know what the relationship between Russia and Belarus will be.

Until now, it is difficult to know who is sitting at the gaming table and what forces they represent. It is difficult to decide what Belarus will be like in a month or six, what relations the country will have with the European Union and Russia. All this would allow answering the question of whether Belarus, as a country, will be attractive for investments, ”says the financial analyst, adding that Lithuanian investments in Belarus do not occupy the most important part of the investment field.

Summing up the events of recent days in Belarus, Dubnikov points out that this chaos is short-lived, but in the long term, as predicted, investment flows in this country may decline.

“It is likely that certain interruptions (data flows, etc.) – will be restored. In the long term, it is difficult to expect an increase in investment flows here. I doubt that after these events anyone would want to invest so boldly in a country that it potentially runs the risk of long-term disturbances. It is possible to predict that investment flows will continue to decline, “he says.

Commenting on the possible long-term impact on Lithuania, the economist assures that there is a risk for the transport and stevedoring companies, but at least for now, according to him, it is extremely difficult to expect dramatic changes.

“Belarus also benefits from relations with Lithuania Delphi), they need foreign exchange, they inevitably have to trade abroad to maintain the economic stability of the country, and Lithuania is the most attractive channel by sea through which goods can be exported. Most likely, at least the current situation will remain in the struggles at the political level, and subsequent changes will depend on the situation, be it more acute or milder. However, today it is difficult to expect us to suffer much, “says M. Dubnikov.

Mačiulis: Short-term business relationships should not be emphasized

Commenting on the possible impact of the events in Belarus on the Lithuanian economy, Swedbank Chief Economist Nerijus Mačiulis states that short-term trade relations between Lithuania and Belarus should not be emphasized, and mentions core values ​​such as democracy, electoral freedom and human rights.

“It would be a mistake to think how not to damage the economic relations between Lithuania and Belarus, trying to put pressure on Belarus and help build democracy in our neighboring country. In the short term, we have a moral obligation to help the citizens of Belarus, but to In the long run, Lithuania would benefit much more if the neighborhood was not a poor totalitarian but a prosperous democracy with a standard of living closer to Lithuania and other EU countries, ”says Mačiulis.

According to him, the current strikes and protests of workers in Belarusian companies will have a minimal impact in Lithuania in the short term: with other economic processes and from a long-term perspective. “

Mauritius: having a weak and economically unstable neighbor is not good for any state

According to Sigismund Maurice, chief economist at Luminor Bank, the economic situation in Belarus, not only in recent days, but also for several years, does not bode well, as the flow of aid from Russia is steadily declining, as is the oil and gas transit.

“Belarus’s economy has looked very poor in recent years. 2014 Belarus was closer to the economies of Lithuania and the Baltics, but now it is moving closer to Ukraine in terms of its economy. This is a long-term trend. ”, Says the economist, adding that it is not good for any country to have an economically unstable and weak neighbor, and after these events in Belarus, he believes that these trends will intensify.

Like Ž. Mauritius, until 2014-2015 There has been a significant amount of investment from the Belarusian industrial sector and the Lithuanian retail trade, but later, due to the bad economic situation in Belarus and Russia, these investments have stagnated a bit and is currently contributing an additional geopolitical risk factor.

Therefore, the economist is convinced that Belarus will be an increasingly less attractive country for Lithuanian and foreign investors in the future. However, he points out that Lithuania should not worry about this, because in this way our country will be able to attract more investment. According to the interlocutor, investors no longer dare to invest in countries further east than Lithuania.

“There is a certain challenge – it is not in Lithuania’s interest to have such a long-term neighbor, geopolitical threats may strike at the other extreme – to increase Lithuania’s geopolitical risk. The Astrava nuclear power plant is one of the smallest details. In general, nobody wants to have a neighbor like that, because it is to adjust the pump. (…) The whole system of authoritarian regime is stagnant. Normally, these systems remain stable until the change takes place.

Even if they don’t happen now, the chances of seeing changes in the next election are even higher. However, these changes are often neither very peaceful nor economically very positive, at least in the short term, because there is no established elite that can replace the current government. This is the biggest challenge for the democracies below. If the change happens sooner or later, there can be even more confusion. It is a threat ”, emphasizes Ž. Mauricas.

Economists: sanctions must be coordinated with other countries

Another potential threat, identifies the economist, are the EU sanctions if they are directed not only at those who are directly involved in the repression and possible falsification of votes, but are imposed more widely. According to him, this can directly affect trade and investment flows with Lithuania.

“Lithuania is obviously one of the main partners of the EU, so we will have to bear part of the economic burden. The most ideal option for Lithuania is that if Belarus moves flexibly along the democratic path, real democratic elections will be held. But neither the current government wants to release him, nor the new one could take command of the state ”, Ž. Mauricas.

The economist is skeptical of possible economic sanctions against Belarus, since general economic sanctions, he said, often do not achieve their objectives. As an example, he cites the Russian sanctions against Lithuania: at first you may feel lost, but then the business redirects and finds other markets. However, some companies may not survive. According to the economist, Lithuania was lucky because it discovered other markets. If such economic sanctions are imposed on Belarus, he says, the general public would suffer.

“Belarus would attack even more in the arms of its eastern neighbors: Russia, China, countries of Central Asia. (…) There would be a reorientation of the entire economy, which would make it even more difficult to attract society to the West. Sanctions should be directed at the ruling elite, minimizing the negative impact on the general public.

(…) Sanctions must be coordinated with neighbors, who in some cases are also competitors. If Lithuania jumps above the navel, others can take advantage of the situation and take over some of the business or more of the economic clout, ”says Ž. Mauricas.

According to Dubnikov, a Lithuania will not impose sanctions on Belarus and, according to him, will probably try to trust the EU’s position towards Belarus.

“It is too early to talk about economic sanctions. It will probably start with a list of names that will prevent people from entering the EU, doing business, etc. Following this path, Lithuania’s economic losses are most likely not significant.
Russia’s sanctions were more important, when companies had to reorient to the other side, because it is a more significant partner, and Belarus is a bigger problem for some sectors, but not for the business of Lithuania as a whole ”, says the financial analyst.

N. Mačiulis agrees that Lithuania should have a common position with the EU on the sanctions against Belarus and should not question whether it will hurt the country’s economy in the short term: “It may hurt, but it is a small price to make the neighboring country be democratic and could prosper in the long run. “

Mauricas offered Lithuania the opportunity to invite more Belarusians

Ž. Mauricas listed four aspects of the importance of Lithuania’s association with Belarus. First of all, it is the transport sector. Lithuania is Belarus’s main gateway to the world, exporting companies use rail and port infrastructure.

Another important connection with Belarus is tourism. Vilnius, Druskininkai, and other regions benefit greatly from Belarusian tourists. The third thing is the Lithuanian industrial investment in Belarus.

Migration flows from Belarus are also very important for Lithuania, as more and more Belarusians are employed in the country. If in the past the majority of Ukrainians came to Lithuania, now the main and growing flow of workers comes from Belarus.

The economist also presents an opportunity for Lithuania as a country to help Belarusians. Ž. According to Maurico, Lithuania should increase immigration flows from this country.

“Lithuania can invite as many Belarusians as possible, especially victims, to go here to develop, work, at the same time carry out political and democratic activities, etc.” Lithuania will continue to need immigration. <...> The shorter the cultural and geographical distance, the easier the integration will be. Employees from Malaysia, the Philippines and other countries come to Lithuania, it is more difficult for them to integrate here, for Belarusians – much easier. Most of the persecuted people in Belarus are more pro-Western, they have a value similar to ours.

I think this thing needs to be exploited. Universities are complaining about the lack of students, please, that would be a good gesture. We have a shortage of specialists, especially in the field of information technology, and a glut of them in Belarus. There is less investment in the country and the level of education is not very different from that of Lithuania ”, considers the interlocutor.

According to him, in this way Lithuania would feel the benefits and at the same time help the Belarusians: “If a person fears being persecuted or is being persecuted, then he will still look for ways to get out of there.”

Ž. Maurici estimates that Lithuania could accept up to 100,000. Belarusian. “Lithuania could say that it gives priority to the Belarusians and accepts a few or several thousand a year if they wish,” he says.

As published on the website of the Ministry of Foreign Affairs, evaluating 2018 In the volume of Lithuania’s trade with foreign countries, Belarus ranked 11. The volume of commercial business with this country amounted to 1.8 billion. EUR.

Lithuania’s foreign direct investment in Belarus amounted to LTL 121.5 million. Eur and ranked eighth in this size. The main investments were in wholesale and retail trade, purchase and sale of private real estate, manufacturing, transportation and storage.