Belarusian economic growth over the past 10 years has been fueled primarily by high economic growth in neighboring Russia and the rise in world prices of oil products. In particular, the basis of Belarus’s robust economic growth was subsidized energy prices from Russia and increases in domestic petrochemical industry production on the back of sustained high oil prices. Like this, the Belarusian economy depends significantly on external factors, especially the relations with Russia and its macroeconomic conditions. However, the fact that Belarus is Europe’s last autocratic nation and with little freedom of speech puts some distance between Belarus and the EU. Recently, the government of Belarus has undergone subtle changes in its external relations and foreign investment policy since the crisis in relations between Belarus and Russia started. Belarusian government will maximize its own interests by attracting investment from the EU.
This paper deals with a rough sketch of the macroeconomic situation of Belarus and its economic structure, and addresses economic relations between Belarus and the EU in depth. Moreover, this study predicts future external policy directions of Belarusian government and provides its policy implications from the viewpoint of foreign investors. Based on this study, although the government shows a favorable attitude in the foreign investment and relations with EU, Belarus’s accession to the EU or accession to a free trade zone with the EU does not seem likely to be realized in the near future. First of all, the EU is not interested in expanding their borders due to the fact that it brings EU countries more trouble than advantages. Belarus also does not have any plans to join the EU or seek formation of a free trade zone with the EU. Firstly, after joining the EU, Baltic countries have lost control of their industry and agriculture, and became simply a market for European companies. Second, due to its special relationship with Russia, Belarus has enjoyed the lowest prices on energy sources among all EU countries and most CIS countries. Third, Belarus has a political and economic system, which cannot be integrated into the European system, as they are distinguished from EU in the view of not only economic management, but also with respect to the role of state and government in society.
Considering these factors, it is much more possible for the Belarusian government to simply maintain a balance between pro-Russian and pro-European policies. The foreign policy of Belarus will be aimed primarily at expanding the level of FDI. To attract foreign capital, the government will seek to maximize several advantages of Belarus including geographical position, presence of free trade areas with Russia and Kazakhstan, cheap energy, well-developed infrastructure and skilled and cheap labor. Also, Belarus will try to expand its external relations to other countries, such as Latin America. Thus, from the viewpoint of foreign investors, it would be wise policy to keep an eye on Belarus’s subsequent external policies towards both EU and Russia.

Executive Summary 

I.  Introduction 

II. General Survey on the Belarusian Economy 
2.1 Current Economic Situation 
2.2 Foreign Investment Climate in Belarus 

III. The External Economic Relations between Belarus and the EU 
3.1 Economic relations with the EU 
3.2 Political relations with the EU 

IV. Conclusion 

References