LUKASHENKO: RUSSIA’S ALLY OR SPONGE?


11.01.07
MOSCOW. (Andrei Suzdaltsev for RIA Novosti)

Taken aback by the Kremlin’s harsh reaction, Belarusian President Alexander Lukashenko has cancelled a transit levy of $45 per metric ton for Russian crude introduced in late 2006. His press service has announced that the January 12 talks in Moscow will end in success for Minsk.
The Belarusian prime minister has brought to Moscow a long list of issues for immediate discussion. The most important of them is the customs duty on the export of Russian crude to Belarus, which amounts to $3.6-$3.8 billion a year. The Russian budget will lose it if the Kremlin makes concessions to Minsk.
Belarus annually imports 21 million metric tons of Russian crude, although it needs only 7-7.5 million. It refines the rest and sells the products to the European Union. Belarusian companies can refine no more than 18 million metric tons a year. Nearly 3 million metric tons of crude are resold to Lithuania and Poland unrefined at dumping prices. Average annual revenues from that transaction amount to at least $550 million. (Belarusian GDP amounts to $35 billion.) Minsk also sells 11 million metric tons of petrochemicals refined from the duty-free Russian crude. Moreover, the resale of Russian crude has a destabilizing effect on Russian crude export to Europe.
Russian natural gas, the cheapest in Europe, allows Belarus to save huge sums by reducing the prime cost of its output and to “buy” the sympathies of the electorate. Annual pensions in the country total $2.1 billion. Gazprom’s gas price concession for Belarus in 2007 amounts the same sum, $2.1 billion, and, taken together with the customs duty, exceeds $3 billion.
Russian gas mostly allowed Lukashenko to save money, whereas the tax-free Russian crude earned Minsk billions of dollars deposited with Belarusian and Western banks.
Petrodollars were used to create an image of a prosperous republic in the West, and to finance the media and political structures. It is Russian crude that is the earnest of Lukashenko’s political longevity.
When the Russian leaders decided to convert relations with Belarus to market principles in May 2006, they disregarded the fact that economic relations with Russia are the foundation of Lukashenko’s power. Moscow was not prepared for a fierce battle with Lukashenko, who has since shown that he would not stop at anything to ensure his political survival.
But the Belarusian president has made a mistake. For the first time in 12 years of his relations with the Kremlin, he has received a coordinated response from the Russian executive authorities. The Kremlin rallied the state mechanism against Belarusian blackmail within hours, and the legislative branch quickly abandoned its illusions regarding the Belarusian “ally.” The Russian media refused to respond to a large-scale information war initiated in Minsk.
As a result, Lukashenko has lost nearly all his footholds in Russia. Thinking that he would deal with a Russian political class busy settling accounts and establishing coalitions against each other, the Belarusian leader struck out, only to find himself face to face against a consolidated Russian elite.
Russia has lost one more, possibly its last, ally on January 10. But this is a minor loss, since Lukashenko has never been a real ally. Under him, Belarus has moved further away from Russia than it ever was since the dissolution of the Soviet Union. Getting huge economic privileges from its partner in the Union State, Lukashenko failed to use them wisely. He has not reformed the Belarusian economy, modernized its enterprises, or found effective points of growth.
Belarus has long become a sanitary cordon dividing Russia from the West, because the Belarusian market is closed to part of Russian goods, Russian business is not allowed in Belarus, the joint air defense system is a phantom, and Russian transit goods can be confiscated by Minsk any moment. Belarus has not supported Russia in the issue of transit to the Kaliningrad Region, a Russian exclave on the Baltic Sea. Russia has become bogged down in Belarus, slowing down the pace of its potential economic expansion in the Baltic countries and Poland.
The Belarusian leaders have turned out to be impossible to talk or strike deals with, and Minsk cleverly avoided implementing agreements and treaties.
But enough is enough. Lukashenko has exhausted the trust of the Russian leaders and proved useless to the main part of the Russian opposition (with the exception of the Communist Party). The Belarusian president has found himself in a tighter isolation than ever before. Nobody wants to talk with him.
Lukashenko most likely did not intend to use the oil transit levy for filling his country’s budget. He wanted “an absolute argument” for bargaining with Russia according to his scenario and from positions of strength. Minsk believed that Moscow would accept the unfair exchange and cancel the crude export customs duty.
Since January 3, the Belarusian media has published many interviews with members of the government and leaders of energy departments, who said Minsk would cancel the transit levy if Russia pledged to continue supplying it with cheap and tax-free crude.
Instead, Moscow demanded that Belarus immediately cancel the transit levy if it wants to talk, and Minsk had to sheath its only, and seemingly invincible, weapon.
It has no tools left for blackmailing Moscow now. Unfortunately, Minsk has turned its economic problems with Moscow into an international scandal. As a result, the issue of oil transit safety has acquired political significance, requiring top-level interference.
Lukashenko deliberately provoked the oil conflict in bilateral energy relations, thus unwittingly initiating processes that will destroy the Russia-Belarus integration project. I doubt that he has scrutinized a head-on collision with Russia for all possible consequences to his political stability.
Andrei Suzdaltsev is an expert at the Higher School of Economics.
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