PISM Bulletin

The energy and petroleum industries are the basis of the Belarusian economy. At the same time, the country’s almost total dependence on Russia is becoming a barrier to its own development, and the rising prices of Russian gas and crude oil may lead to a serious crisis in the state’s finances. Until 2024, when the gas contract with Russia and preferential oil purchase rules expire, the Belarusian authorities will have a few limited opportunities to develop energy cooperation with EU countries. However, if by that time the Belarusians do not conclude new favourable agreements with Russia, which does not want to subsidise Belarus to the extent it does now, Belarus increasingly will be interested in acquiring gas and oil from other countries.

After Recep Tayyip Erdoğan’ swearing-in on 9 July, the presidential system in Turkey was officially introduced. The brinkmanship and tendency to strike a balance between allied commitments and relations with other countries will be maintained in Turkey’s foreign policy. It will also have a more centralised character, subordinated to the president. As a result, Turkey will remain a difficult partner for the EU and NATO allies.

The trilateral gas talks between the European Commission (EC), Ukraine, and Russia that resumed in July face serious challenges. The reasons for that include the Russians’ attempt to link the negotiations to other issues and Ukraine’s stalled gas market reforms. Furthermore, the EC does not have formal tools to influence either country. This may change if EU Member States support amendments to the gas directive and the mandate for the EU-Russia negotiations on the status of the Nord Stream 2 (NS2) pipeline project. However, this will require countries that support the pipeline construction to overcome their reluctance to back the changes.

The future of the EU’s second-largest budget programme, European Cohesion Policy (ECP), is the subject of a dispute during negotiations on the Multiannual Financial Framework (MFF) for 2021-27. The main dividing line runs between advocates of maintaining high transfers for this purpose, and those who wish to transfer some of the funds to other areas of the EU budget. Despite the opposition of some net contributing states, it is likely that the amount proposed by the European Commission will be maintained at the price of moderate ECP reform.

Belarusian authorities attach significant importance to relations with China as an opportunity for economic development and strengthening their state’s international position. In China’s Belt and Road Initiative (BRI), they see possibilities for the development of the Great Stone industrial park near Minsk, as well as upgraded transport infrastructure and shipping and logistics centres. Although relations with China may have adverse economic consequences, they give an opportunity to strengthen Belarus’s cross-border cooperation with Poland and the European Union.

The value of Polish exports of devices for generating energy from renewable sources is similar to the value of exports of machinery in the coal energy sector. At the same time, global trends indicate a declining potential of trade in goods related to coal-fired energy. It is worth considering these trends when shaping Polish economic and energy policy to support this branch of the economy on more prospective global markets.

After nearly nine months of efforts by Prime Minister Andrei Babiš, the Cabinet of the Action of Dissatisfied Citizens (ANO) and Czech Social Democratic Party (ČSSD) on 12 July won a vote of confidence. The creation of the minority government was made possible by the unprecedented support of the Communist Party of Bohemia and Moravia (KSČM). The contract with ANO allows it to influence the government’s domestic policy. In turn, in foreign policy, the so far ineffective pressure of the communists may gain momentum in their cooperation with President Miloš Zeman.

It is difficult to consider the agreement between the Christian Democratic Union (CDU) and the Bavarian Christian-Social Union (CSU), which settled a dispute between them over rules on admitting refugees, as a radical change in German asylum policy. It rather proves that both parties began to see the risks and costs associated with continuation of the conflict. This is good news for Germany’s neighbours who—at least for now—do not have to worry about the political stability of a country of key importance for the EU.

The confidential nature of U.S. President Donald Trump’s talks with Russian President Vladimir Putin and the uncertainty surrounding any arrangements agreed during them may have a negative impact on NATO’s further adaptation to threats from Russia. For some Alliance members, the talks may be a signal that instead of investing in deterrence and defence, NATO should look for ways to resume cooperation with Russia. In that case, the Alliance would also find it more difficult to maintain consensus on support for Ukraine and Georgia.

The deteriorating security situation in the Indian state of Jammu and Kashmir is becoming a growing challenge for India. Reports on violations of human rights are increasingly publicised. The mass protests of the Kashmiris against the Indian authorities are not weakening, and the risk of escalating conflict between India and Pakistan is increasing due to more frequent exchange of fire on the border. It is unlikely that peace in the region could be brought about in the near future. Kashmir will therefore remain a source of internal instability in India, a flashpoint in the conflict with Pakistan, and an increasing problem for EU relations with India.