Italy has always been one of Belarus' key partners in the European Union. In 2018, the bilateral trade was estimated at $912.7 million, up 15.2% over a year before. Top government officials of Belarus and Italy met in Rome last week. The two countries are well positioned to advance cooperation to a new level. In an interview with BelTA, Belarus' Ambassador to Italy Alexander Gurianov discussed market prospects for Belarusian steel mill BMZ, Belarus' proposals for the Italian car making industry, the interest of Italian haute couture in Belarusian linen, economy and the human dimension of the bilateral relations.
Italy has a new government. What impact has it had on relations with Belarus?
In recent two or three years our contacts with Italy have been advancing incredibly fast: the year 2016 marked an important milestone as Belarus' president made a visit to Italy, which gave a fresh impetus to our relations. Despite some insignificant drawbacks due to political developments in Italy last year, our political dialogue and economic cooperation have been gaining momentum. The progress is attributed to regular inter-ministry contacts, in particular, at the level of the foreign ministries and embassies. This helps maintain a high level of trust and mutual understanding between the parties.
The visit of Prime Minister Sergei Rumas to Italy on 6-8 February was an important milestone in the bilateral agenda. We had expected the Italian side to demonstrate a bigger interest in bilateral cooperation and they did it when they upheld the idea to arrange such a visit that resulted in constructive talks.
In principle, we are on good terms with virtually all the political forces in Italy. The new Italian government and the new political forces that came to power (the Five Star Movement and its coalition partner League) feel favorably toward Belarus. It had been a long time coming, but the senior government officials of the two countries had to meet to review progress and outline new areas of cooperation that would bring tangible benefits for the two sides.
How did Belarus-Italy economic relations evolve throughout 2018?
In 2018 Belarus-Italy trade maintained momentum and grew by another 15% over 2017 (to add to the 20% growth over 2016). It is noteworthy that the growth was posted by our exporters (up 26%) and importers. Italy is a huge market; however this market is incredibly mature. In order to operate there, one should know what and how to sell, and most importantly, to find and seize available market niches.
Generally speaking, although Belarus and Italy have a similar industrial structure, we are competitive. Italy is among the leading furniture producers. At the same time, in 2018 we sold nearly $10 million worth of furniture and component parts there starting near from scratch. Our supplies of timber, plywood, fiberglass, potassium, linen fabric, synthetic fiber, cables and naturally metal products are on the rise. As far as the Belarusian steel mill BMZ is concerned, Italy is not just one of European sales markets for them, but a key export destination with vast cooperation opportunities in manufacturing, technology, logistics. Proposals put forward by Italian companies and the government are a testimony to that. By the way, BMZ used Italian equipment to build up its capacity, while Italy became one of the biggest consumers of the new products by the Belarusian steel mill.
As part of the so-called investment import from Italy, we purchase many things needed for the upgrade of domestic manufacturing and agricultural companies. It is obvious that Italian companies often offer a better price/quality ratio than their competitors. It is also important to have financial support on the part of banks and specialized lending institutions.
In 2014 our trade with Italy reached $2 billion, however half of it came on the back of our petroleum exports. The market has changed; we no longer export vast amounts of petroleum products for economic reasons. Nevertheless, I would like to note that although the trade figures are not as impressive as in the heyday, we export 188 highly relevant commodity items instead of a few names of products. This is the result of our diversification effort.
Mutual trade in services is on the up and up, too. In 2018 the trade in services expanded by over 50% and Belarus had a significant surplus, unlike in the trade in goods. I would like to give credit to the Belavia national air carrier that started flying between Minsk and Rome every day in 2018. It also offers Minsk-Milan flights and a variety of charter options. It is not only Belarusians who use these flights to go to vacation spots. There is a reverse passenger flow, with business travelers and tourists coming to Belarus. By the way, the Italians are the third largest group of foreign nationals who have taken advantage of the visa free entry into Belarus via Minsk National Airport.
With the launch of the visa waiver we closed the consulate in Milan. We maintain and even expand our presence in Italy using other mechanisms. We will open two honorary consulates in the north and south of Italy: Brescia (with the consular district covering the regions of Lombardy, Veneto, Friuli-Venezia Giulia and Trentino-Alto Adige) and in the city of Reggio Calabria (with the consular district covering the regions of Calabria and Sicily).
Steadily inсreasing is the volume of direct investments from Italy in Belarus. In 2017-2018 the number of new enterprises with the Italian capital reached 60 (a total of 263 now). Interest in our market is growing due to the integration projects Belarus is part of. Belarus is a small market but it gives access to the common market of the Eurasian Economic Union.
Italy is also interesting to us as a partner to work on the markets of third countries. We receive many proposals in Latin America, Asia and Africa to help develop milk processing businesses or launch food production facilities. We have the experience but we do not produce the entire scope of equipment. Here the Italians can be partners.
These issues were discussed during the talks between the Belarusian head of government and Deputy Chairman of the Council of Ministers Luigi Di Maio of Italy.
In addition, Italy suggests that we develop our own production base in the European Union through cooperation. Corresponding ideas were put forward by?) the Belarusian Embassy in Italy and the Ministry of Foreign Affairs as part of the practical economic diplomacy, as well as by our Italian partners. We must match these initiatives with the real economy and the interests of the companies, gaining the support of the two governments, if necessary.
This applies to possible production and investment cooperation between the Belarusian steel mill BMZ and a tire reinforcement materials factory in Figline Valdarno?
Yes, such a proposal has been voiced by the Italian partners. We need to carefully assess the risks and calculate the economics. The factory, once Pirelli's unit, was the first in Europe to start buying Belarusian steel cord for tire production. By the way, BMZ sales of a wide range of products have been growing on the Italian market for several years already. BMZ contributes about one third to the total Belarusian export.
The idea is that BMZ could be not only a supplier/seller but also a partner, with a private or joint asset in Italy (which equals the European Union). Available is the industrial and warehouse space, staff, good logistics and neighboring markets in the Balkans, the Middle East and Africa where our products are in demand. De facto, we are talking about a new form of foreign economic activity of the Belarusian manufacturer, which could contribute to the sales growth and geography of sales.
Textiles are another area of trade and economic cooperation with Italy. The idea of the embassy gained support of the Bellegprom light industry concern. We started supplying flax linen in 2018, almost from scratch. Now these supplies have come close to $1 million. First, we were not optimistic about the prospects as Italian textiles are considered to be the benchmark. But we found our segment – flax linen. We took part in a series of specialized exhibitions, and the process picked up. Communication and consultations with Sistema Moda Italia, the Italian Textile and Fashion Federation, were of great help. Even famous Italian premium segment brands are already considering purchasing Belarusian linen fabrics produced by Orsha Linen Mill.
During the visit of the Belarusian prime minister to Italy the parties discussed the possibility of arrival of major players to Belarus. Italy is about small and medium-sized businesses. So are our bilateral projects. But the arrival of such manufacturer as Fiat Chrysler to the Belarusian market could lead to more manufacturers and cooperation, new jobs both in Belarus and in Italy. Sites for such initiatives are many, from the Italian industrial district in the FEZ Brest to the China-Belarus Industrial Park Great Stone. We agreed to discuss this during the second meeting of the bilateral intergovernmental commission on economic cooperation. This will also be the theme for interaction with the ICE-Italian Trade Promotion Agency.
Are there any interesting projects in the automotive industry? Is there any financial support for bilateral initiatives?
We have studied a number of areas, including the possibility of making auto parts for the EAEU market with the participation of Italy. Certain progress has already been made on this front.
Italy is not part of car assembly projects in the EAEU and the CIS. We also see that Italian automakers have numerous partners who produce component parts for Italian automakers and others. This could be interesting for us. The same is true about cargo vehicles, passenger transport and farm machinery. We hope our proposals and projects of the kind will get further traction.
I would like to mention that Italy remains a very serious financial supporter of Belarus, despite regular aftershocks of the global crisis. Italian financial institutions have always supported us in part of boosting mutual trade and investment. The two countries enjoy good interbank partnerships. The Italian Export Credit Agency SACE provides all kinds of assistance. Belarus is one of the most disciplined borrowers and payers. During the visit of the Belarusian government delegation to Italy, direct contacts were established between two finance ministers.
I would like to note that all areas of the Belarusian-Italian cooperation are underpinned by most positive history of close human contacts.
Has humanitarian cooperation played its role?
Italy is our number one humanitarian partner. We are grateful for the opportunity to send Belarusian children to Italy for recuperation after the Chernobyl NPP accident.
Belarus and Italy have been developing cultural, tourist and sport exchanges. Last year, Italy began advertising us on TV and the internet when they learned that Italy, a recognized leader in agro tourism, placed second after Belarus in the agro tourism development pace.
I will not say that there are no problems. Fortunately, these are not systemic issues but some technicalities that are handled by means of the constant dialogue and engagement of official and public diplomacy. For example, at the ministerial consultations last week we discussed several cases of non-fulfillment of contractual obligations on both the sides. These are, however, only two or three cases per 100 transactions. In any case, we outline problems and understand that the intergovernmental commission (designed to solve problems and promote practical cooperation) should continue working. This year we plan to hold its second meeting in Rome alongside the bilateral business forum.
In summary, Belarus and Italy have cultivated good contacts, which we value. We are fully aware of it and try hard to keep it up.
Italy does too. They demonstrate by attitude and action that Italy is a friend of Belarus in the European Union. Belarus is a reliable and predictable partner for Italy in Eastern Europe and the EAEU.
It is easy for us to find a common language with Italy without the need for any diplomatic curtseys and long explanations. This all is supported by a regular high-level dialogue, mutual trust and respect.
The two countries enjoy close cooperation in international and regional associations. In 2018, the two countries actively interacted during Italy's presidency in the OSCE. Minsk hosted the OSCE conference on preventing and countering terrorism in the digital age. Belarus' Minister of Foreign Affairs Vladimir Makei took part in the final meeting of the OSCE Ministerial Council in Milan. We have good contacts in the Central European Initiative (CEI) where Italy also plays a big role. We view this organization as an additional opportunity for active bilateral and multilateral contacts with the support of Italy, and are ready to continue a meaningful dialogue, keeping in mind Italy's presidency in the CEI this year.
In 2019, Italy and Belarus will take part in a number of international events. The Flame of Peace torch relay for the 2nd European Games will start in Rome on 3 May. A part of the torch relay will pass through Italy, and the Belarusian diplomats, together with the representatives of the Minsk European Games Organizing Committee are working on the project.