“It’s a gateway to CIS markets” - Czech companies closely following situation in Belarus

Photo: ČTK/AP/Dmitri Lovetsky

As protests in Belarus against President Lukashenko’s regime continue, the situation is being closely followed by more than a hundred Czech companies that do business in the Eastern European state. Some see it as a risk, but also an opportunity.

Russia is by far the most important economic partner of Belarus, but the country also maintains trade relations with several EU member states, including the Czech Republic.

There are currently 162 Czech businesses registered in the post-Soviet republic, according to the local Czech Embassy. Belarus ranks forty-fourth on the list of Czech export markets. However, the Czech Republic is the fifteenth largest source of imports for Belarus.

Keeping abreast of the quickly developing political situation is an important factor right now, says František Masopust, the executive director of the Chamber of Trade and Industry for the Commonwealth of Independent States.

František Masopust,  photo: Youtube

“Stability is important for any kind of business. That is the alfa and omega of successful business and economic cooperation.”

While it ranks far behind countries such as Russia and Kazakhstan in terms of market size, Mr. Masopust describes Belarus as a “gateway to the Eurasian area”, a result of two factors he says.

“First of all, Belarus is the closest country to us geographically from the Commonwealth of Independent States.

“Second, Czech companies have positive experiences with their Belarusian partners, because, and I know this may sound rough, the Belarusian worker is more disciplined and capable of maintaining technological procedures than others, which is very important in regard to any sort of production.”

Charles Univeristy’s Karel Svoboda is an expert on the Eastern European region. He says the “gateway to Russia” argument is the way in which Belarus markets itself, but it does not always work, because Russia maintains power over access through complex market legislation.

“Officially Belarusian producers have free access to Russia that is their comparative advantage. However, unofficially, once the Russians decide to block foreign investors in Belarus from the Russian market, they can do it.”

One of the Czech companies active in Belarus is Metrostav, whose total worth of contracts in the Eastern European state exceeds CZK 1 billion crowns. Currently, Metrostav is constructing a wastewater treatment plant in Brest.

Company spokesman Vojtěch Kostiha told Czech Radio that the current situation can be viewed from both angles.

Photo: ČTK/AP/Sergei Grits

“Of course we see the current situation in Belarus as a risk. Any sort of instability, whether internal or external is unfavourable.

“However, we also see it as an opportunity. If the country changes its regime from autocratic to democratic it can be assumed that the conditions for conducting business there will improve.”

Czech companies who were questioned by Czech Radio say that the political tensions have not impacted their business activities yet. However, some, such as AŽD Praha, a supplier of control and signalling systems for transportation which sees Belarus as a key foreign market, warn against any sanctions that could impact business activity.

Such sanctions have not been put in place by the EU, which has focused on punishing only selected members of the ruling elite. Marek Svoboda says sanctions that would impact the economy are unlikely in the future, not just because they could hurt European businesses, but also the opposition in Belarus.

“The point is, and I have also heard this from Czech diplomats, that there is a sort of dilemma. Once you impose sanctions the regime hardens, which means there will be no discussions or possibility to help the Belarusian opposition. They will be left just to Lukashenko and Russia which would mean the end of support for the opposition.”