BMI's Executive Summary

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Belarus faced something of a defence and security crossroads in 2007. An isolated and near pariahlike state in the international community, it had relied on a close strategic alliance with Russia to help shore up its economy and its defence and security position. But the dominant story of the year was the opening of a long and damaging conflict with Moscow over gas prices and transit fees. Shocked with the doubling of gas prices charged by Gazprom in January 2007, the government of Alexander Lukashenko reacted erratically, oscillating between defiance and attempts to renegotiate the terms of a previously privileged relationship with Russia's President Vladimir Putin. In a series of statements throughout the year Lukashenko castigated the Russians for their greed, suggested his country would develop its own nuclear reactors to gain greater energy independence, and yet at the same time at various points acknowledged that Russia remained his main foreign policy priority and that the 'union pact' – a plan to merge the two states pulled apart by the collapse of the Soviet Union – remained his long-term goal. The counterpart of this policy zigzag was oscillation in relations with the European Union. Here, Minsk wavered between rejecting Brussels' demands for democracy and human rights on the one hand, and seeking some kind of accommodation on the other. In October 2007 the Minsk authorities even allowed a small demonstration by opposition parties calling for closer links with the European Union.

Despite Belarus' poor diplomatic and military relationship with the US and the EU, its external and internal security remained reasonably stable during 2007. The opposition to the government remained relatively weak, cowed by the weight of the security services, and with only tenuous unity among the different political groupings. Strong economic growth has to some extent softened anti-government protests over the lack of democracy. Looking towards the future, however, cooling relations with Moscow may have a negative impact on the economy, and contribute to a more difficult political scenario for the regime.

In 2007 Belarus' arms trade continued to come under greater scrutiny from the international community. Reports of arms sales to rogue or strongly anti-US states (among them Venezuela and Iran) were being watched closely in Western capitals. Suspicions had emerged after Belarus purchased the technology without the necessary support systems or the need. The international community still regards Belarus as a prominent conduit for illegal arms trading. The Belarusian defence industry continues to be dominated by state-run defence enterprises such as Beltechexport and Belvneshpromservis. The latter is a significant player in Belarusian arms exports and modernisation.

Contents

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Chapter 1 - Executive Summary

Security

Defence Industry

Military Expenditure

Arms Trade

Chapter 2 - SWOT Analysis

Belarus Security SWOT

Belarus Defence Industry SWOT

Belarus Political Overview SWOT

Chapter 3 - Political Overview

Internal Political Outlook

External Political Outlook

Chapter 4 - Security Risk Analysis

BMI’s Security Ratings

Table: Regional Security Ratings

Table: State Terrorism Vulnerability Index

Europe Regional Security Risk Rating Q306

Belarus Terrorism Risk

Belarus Physical Safety Risk

Belarus Conflict Risk

Chapter 5 - Security Overview

Internal Security Situation

External Security Situation

Territorial Disputes

Relations With The West

Relations With Central Asia And Russia

Chapter 6 - Defence Industry

Armed Forces

Table: Regional Armed Forces (including conscripted) 2005

Current Strength

Historical Strength

Weapons Of Mass Destruction

Chapter 7 - Market Overview

Industry Trends & Developments

Table: Key Players: Belarus Defence Sector

Arms Trade Overview

Procurement Trends & Developments

Chapter 8 - Industry Forecast Scenario

Table: Belarus Troop Numbers, Historical Data & Forecasts

Table: Belarus Defence Sector Historical Data & Forecasts

Chapter 9 - Macroeconomic Forecast Scenario

BMI View

VAT Woes

Table: Belarus – Macroeconomic Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 10 - Company Profiles

Beltechexport

558 Aviation Repair Plant

Minsk Wheeled Tractor Plant (MZKT)

Minotor Service Company

Chapter 11 - BMI Forecast Modelling

How we generate our industry forecasts

Defence Industry

Sources

Competitive Landscape for European Defence & Security: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

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BMI's European Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: