Will Russia defend its captains of business?
Businessman Vladislav Baumgertner was used as bait to negotiate at least some compensation for Belarus in the collapse of a joint Russian-Belarusian company the Belarusian Potash Co, or BPC. Will the conflict become political or will Moscow choose not to defend its "captains of business"?
Head of Uralkali Vladislav Baumgertner was detained in Minsk on August 26 upon his arrival to the country by invitation of Prime Minister Mikhail Myasnikovich to discuss the BPC case. Baumgertner took his company out of BPC two months ago. He was charged under the Criminal Code of Belarus for abuse of power and official authority and is facing a prison term from three to ten years. The case is investigated by the KGB of Belarus that claims that the crime involves concentration of all links of potash sales management in the hands of a small group of senior managers involved with BPC shareholders. Another claim is isolation of the Belarusian side of any important information, said press secretary of the Belarusian Investigative Committee Pavel Traulko.
Four other senior officials of BPC are on the wanted list, including by the Interpol. BPC was established in 2005 and is the exclusive exporter of potash produced by the shareholders of Belaruskali (45 percent) and Uralkali (50 percent). In 2012, BPC exported about 43 percent of all potash in the world market. In short, the parties accused each other of secretly looking for the opportunities to market the products through their own traders. Uralkali was the most successful of all. Head of the Institute of CIS Countries Belarus Alexander Fadeev confirmed for Pravda.Ru that Uralkali took the entire distribution system with it. The CEO of Belaruskali Valery Kiriyenko said that Russia's withdrawal from BPC may indicate that there was an attempt of a hostile takeover of the Belarusian company. Uralkali has offered to buy back Belarusian shares, but was refused. Moreover, experts have estimated that Uralkali will survive the inevitable decline in product prices, while the Belarusian company will not be able to survive.
However, the management of the Russian ex - shareholder of BPC believes that the Belarusians were the first ones to violate the principle of trade through a single distribution network after signing of the Decree on the abolition of the exclusive right of BPC to export Belarusian Potash by Belarus President Alexander Lukashenko on December 22 of 2012.
After the arrest of Baumgertner Belarus police stated that they began an investigation of the involvement of one of the shareholders of BPC in illegal activity. The person under investigation is a Russian businessman Suleiman Kerimov who also could have been arrested along with Baumgertner, but failed to come to Minsk due to personal reasons.
Director of the Scientific Research Mises Center Yaroslav Romanchuk believes that the actions of the Belarusian authorities can be called a coercion to engage in a dialogue. "In Belarus potash cannot be just business. This is definitely a political commodity. This is an asymmetric response of Alexander Lukashenko to the actions of BCP and forcing of Suleiman Kerimov who is actively buying shares of Uralkali to engage in a dialogue. Lukashenko has realized that at this stage the Kremlin will not defend Uralkali and therefore chose this measure," quoted Radio Liberty.
Indeed, for Belarus BPC is an analogue of the Russian Gazprom, therefore the actions of the authorities are understandable. They also count on the fact that Russia will not interfere in the conflict because of its criminal nature. Will the Kremlin speak up? "Of course, Russia will not leave Vladislav Baumgertner in this difficult position," Alexander Fadeev told Pravda.Ru. He noted that Prime Minister Dmitry Medvedev and his first deputy Igor Shuvalov ordered their subordinates to address with this issue. Russia's Foreign Ministry protested, and Ambassador in Minsk Alexander Surikov demanded the release of the Russian citizen. "Thus, the Russian side has taken steps to secure the release of the director of Uralkali Russia and will also challenge the charges against its other managers declared wanted. The Russian party relies on the wisdom of Minsk, the fact that it would immediately release Baumgertner and reclassify the case into an economic one instead of criminal," Fadeev believes.
"Potash is the main source of foreign earnings for Belarus (200 million dollars a month - Ed.). This is why Belarus, being offended, is trying to receive compensation and solve this problem with its own methods specific to the authoritarian regime. The Russian president did not say the last words, and we can expect a stronger reaction because Russia will not allow such actions in respect of its business captain," Fadeev told Pravda.Ru.
Other analysts do not see this case as politically motivated. "It's just a fight for the potash market and influence in the petrochemical industry of Belarus. In the post-Soviet area it is assumed that the most important tool in a conflict is an arrest of a top manager of a rival firm and taking him hostage," said political analyst Stanislav Belkovsky. He is supported by a Belarusian economist Leonid Zaiko. According to Zaiko, the Moscow-Dagestani scheme was implemented within BPC, in the interests of Vladislav Baumgertner and his colleague in the potash business Suleiman Kerimov, to the detriment of the Belarusian state, Zaiko told REGNUM news agency.
"What Baumgertner and Karimov were involved in is not a business; Baumgertner went in the wrong direction and did wrong things," he added. Who made the "corrupt practices" of Baumgertner public? According to Zaiko, it was the former CEO of BPC Valery Ivanov recently promoted to the administration of President Lukashenko.