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R 211143Z MAR 07
FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 5814
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHGV/USMISSION GENEVA 0349
RUEHVEN/USMISSION USOSCE 1469
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UNCLAS SECTION 01 OF 03 MINSK 000247 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PREL USTR BO
SUBJECT: BELARUSIAN TRADE STATISTICS FOR 2006: SOLID GROWTH BUT 
FUTURE LESS CERTAIN 
 
Summary 
------- 
 
¶1. (SBU) Clearly, higher energy prices this year will likely have an 
adverse and significant impact, but Belarus enjoyed solid growth in 
foreign trade in 2006.  The key driving factors were high world 
prices on oil and oil products and cheap energy supplies from 
Russia.  Commodity exports and imports amounted to USD 41.8 billion, 
a rise of 29.1%.  The trade deficit in 2006 reached USD 1.66 billion 
(4.5% of the GDP), while foreign commodity trade deficit was USD 2.4 
billion (largely because of a nearly USD 6 billion deficit in trade 
with Russia, which remained by far Belarus' largest trading 
partner).   Despite its rhetoric, Belarus is becoming increasingly 
economically dependent on the Western democracies, and is seeking 
less economic dependence on traditional trading partners Russia and 
Ukraine.  End summary. 
 
¶2.  (SBU) It should be noted that Belarus' presumed extensive sales 
of military goods in 2006 are not a matter of public record, and 
those figures are therefore excluded from this report. 
 
Growing Trade, Expanding Deficit 
-------------------------------- 
 
¶3. (U) According to the official statistics, Belarus' foreign 
commodity trade in 2006 totaled USD 41.8 billion, an increase of 
29.1% from 2005.  Belarus exported goods worth USD 19.8 billion (on 
the year increase of 24.4%), and imported USD $21.5 billion (up 
34.5%), for a trade deficit of USD 2.2 billion (compared to a 
deficit of USD 0.6 billion in 2005). 
 
¶4. (U) According to a Prime-TASS analysis, in 2006, Belarus' exports 
actually fell 1.5% and imports grew 4.4% in terms of volume. 
However, in dollar terms both were up, exports by 24.4% and imports 
by 34.5%.  Most of the export rise could be attributed to higher oil 
and potash prices.  For example, Belarus exported 9% less potash, 
but earned 8.5% more from its sale.  The value of exports of oil 
products grew by 36% on 2005, while the volume increased only by 
7.4%.  Belarus had USD 3.3 billion and USD 3.4 billion surpluses in 
trade with countries outside the CIS in 2005 and 2006 respectively. 
 
Russia 
------ 
 
¶5. (U) Belarus' USD 2.2 billion commodity trade deficit in 2006 
resulted primarily from a USD 6 billion deficit in trade with 
Russia, its main trading partner.  Belarus' high trade deficit in 
2006 is primarily attributed to larger imports of Russia's crude 
oil, which increased in both volume and cost per unit, and shrinking 
exports to Russia. 
 
¶6. (U) Although trade with Russia increased in absolute and relative 
terms, its role as Belarus' main trade partner continued to 
decrease.  In 2006, Russia accounted for 47.4% of Belarus' foreign 
trade, totaling USD 19.6 billion.  Exports to Russia, worth USD 6.8 
billion grew by 19.9%.  Imports from Russia, worth USD 12.7 billion 
grew by 29.5%.  In 2005 and 2004, Russia accounted for 48% and 58% 
of Belarus' foreign trade, respectively. 
 
¶7. (U) In 2006, Belarus' main exports to Russia included: trucks (up 
0.7% in volume and up 18.8% in monetary value), tractors (up 33% and 
49.7%), TV sets (down 31.1% and 37.5%), dairy products, 
refrigerators, meat, furniture, components for vehicles, iron and 
non-alloy steel rods, tires and castings.  Belarus' main imports 
from Russia included crude oil (up 34% in monetary value, but just 
8.5% in volume); oil products, oil gas and gas hydrocarbons, ferrous 
metal scrap, internal combustion engines (diesel and semi diesel), 
copper wire, rolled non-alloy steel, and hot- and cold-rolled flat 
iron. 
 
European Union 
-------------- 
 
¶8. (U) The European Union was Belarus' second largest trading 
partner, and the largest consumer of Belarusian exports.  [Note: 
This reflects the fact that Belarus refines and exports Russian 
crude oil.  However, much of this production does not remain in the 
EU.  End note.]  The countries of the EU account for 33.9% of 
Belarus' foreign trade (up slightly from 2005), totaling USD 14 
billion: USD 9 billion worth of exports and USD 5 billion worth of 
imports.  Belarus maintained a USD 4 billion trade surplus with the 
EU.  Trade with the EU increased mostly as a result of rising oil 
 
MINSK 00000247  002 OF 003 
 
 
prices. 
 
¶9. (U) According to GOB statistics, Belarus' main trading partner in 
the EU -- and its second largest trading partner in general -- was 
the Netherlands.  However, this reflects questionable accounting on 
the part of the GOB.  Bilateral trade is actually quite small, but 
the GOB counts oil products exported through Rotterdam as trade with 
the Netherlands. 
In fact, Belarus' primary EU trading partner is Germany (see below), 
followed by the UK with USD 1.66 billion (export USD 1.47 billion, 
imports USD 185 million), Poland (see below), Italy with USD 670 
million (exports USD 172 million, imports 498 million), Lithuania 
with USD 603 million (exports USD 433 million, imports USD 170 
million), Latvia with USD 574 million (exports USD 462 million, 
imports USD 112 million), Sweden with USD 482 million (exports USD 
367, imports USD 115) and France with USD 474 million (exports USD 
203 million, imports USD 271 million). 
 
Ukraine 
------- 
 
¶10. (SBU) By the numbers, Ukraine was Belarus' foreign trade success 
story, with trade growing 36.2% over 2005 to USD 2.45 billion (of 
which USD 1.23 billion was Belarusian exports and USD 1.22 billion 
was imports, providing Belarus a surplus of USD 12.6 million). 
Consequently, Ukraine became Belarus' third largest trading partner. 
 The key exports to Ukraine were oil products, tractors, trucks, 
refrigerators, ethylene polymers, potassium fertilizers, rubber 
tires, etc.  The key imports were rolled iron, steel, ferrous 
metals, electric power, railway cars, sunflower oil, corn, etc. 
 
Germany 
------- 
 
¶11. (U) Germany is Belarus' largest trading partner in the EU, with 
USD 2.45 billion in trade (exports USD 779 million, imports USD 1.67 
billion).  Belarus' major exports to Germany are textiles, wood and 
wood products, medical equipment, chemical products, tractors and 
optical products.  Its main imports from Germany are capital goods, 
machinery, equipment, chemical products and motor vehicles. 
 
Poland 
------ 
 
¶12. (U) Poland is Belarus' fifth largest trading partner, accounting 
for USD 1.8 billion in trade in 2006 (Belarusian exports USD 1.033 
billion, imports USD 766 million, for a USD 267.8 million surplus). 
Belarus' main exports to Poland include oil, natural gas and potash. 
 The main Polish exports to Belarus were pork, fiberboard, apples 
and pears, attachment fitting, and architectural hardware. 
 
Commonwealth of Independent States 
---------------------------------- 
 
¶13. (U) Excluding Russia and Ukraine, Belarus' trade with the other 
nine countries of the CIS was 1.4% of total foreign commodity trade. 
 Most of this was with three countries, Kazakhstan (USD 333 
million), Moldova (USD 177 million) and Uzbekistan (USD 70 million). 
 Trade with the rest of the CIS, including with fellow Eurasian 
Economic Community partners Kyrgyzstan and Tajikistan, was even more 
negligible.  Belarus had a surplus in trade with all CIS 
member-states excluding Russia. 
 
China 
----- 
 
¶14. (U) China is Belarus' seventh largest trading partner, with USD 
949 million in total trade in 2006.  Of that amount, Belarus 
exported USD 395.3 million and imported USD 554 million, for a trade 
deficit with China of USD 158.4 million.  Belarus mainly exported 
potassium fertilizers, dump trucks, machinery and spare parts, metal 
goods, chemicals, tools and leather.  Belarus imported Chinese 
computers, telephones, machine tools and digital cameras. 
 
United States 
------------- 
 
¶15. (U) According to GOB statistics, the United States is Belarus' 
eighth largest trading partner, with USD 728 million in trade in 
2006 (a 208% increase on the year).  According to the GOB, Belarus 
exports were USD 445 million and imports totaled USD 283 million, 
giving it a trade surplus of USD 162.  U.S. exports to Belarus 
 
MINSK 00000247  003 OF 003 
 
 
included pharmaceuticals; marine engines and parts; medical 
equipment; pulp and paper machinery, organic chemicals; measuring, 
testing and control instruments; agricultural machinery and 
equipment; and computer accessories.  Belarus' exports to the U.S. 
included mineral fuel oil, potassium fertilizer, rubber goods, 
apparel articles and accessories, iron and steel. 
 
Asia, Africa, and the Western Hemisphere 
---------------------------------------- 
 
¶16. (U) In 2006, Belarusian trade with the rest of the world, with a 
few exceptions, was minimal.  The country's main partners in Asia 
were China, India and Turkey.  Main partners in Africa were Egypt 
and Libya.  Belarus' main partner in South America was Brazil, which 
accounted for USD 438 million in trade, with Belarus exporting USD 
228 million and importing USD 210 million.  Potassium fertilizer 
accounted for most of Belarusian exports to Brazil.  In return, 
Belarus imports raw sugar, coffee, tea and tobacco from Brazil. 
 
Comment 
------- 
 
¶17. (SBU) A large portion of Belarus' exports consisted of potassium 
fertilizers, ferrous metals and manufactured goods, such as 
textiles, machinery or chemicals.  All of them are becoming less 
competitive because of higher prices due to the higher cost of 
energy inputs.  Furthermore, Russia is contemplating closing its 
markets to some Belarusian exports in the years to come.  Even based 
on these official figures, conditions do not appear favorable for 
Belarus to meet the government's stated goal of moving from a trade 
deficit to a trade surplus of USD 500 million. 
 
MOORE