RUSSIA AND BELARUS: A ROW OVER “FRIENDSHIP”


10.01.07
MOSCOW. (Igor Tomberg for RIA Novosti)

Russia’s energy scandals with its neighbours are becoming a New Year tradition. This time, the dispute erupted with Belarus. On January 1, when Russia raised the price Belarus paid for gas to $100 per 1,000 cubic meters and added an export duty to oil of $180.70 per metric ton, Minsk slapped a $45 per ton transit tariff on oil. Russia dismissed this transit oil duty as an absurdity, and on January 6 Belarus started siphoning off oil meant for Western consumers, prompting Russia to cut off shipments. The standoff continued until January 10, when the Russian and Belarusian presidents reached an agreement whereby Russia would resume oil supplies and Belarus would abolish the transit fee and deliver the oil it had illegally siphoned.

In Transneft’s estimate, Belarus took almost 80,000 metric tons of oil, thereby depriving Germany, Poland, Slovakia, the Czech Republic, and later on, Hungary of expected fuel. The temporary suspension of Russian oil transit through the Druzhba (“Friendship”) pipeline in Belarus caused quite a stir in Europe. It gave the European Union (EU) one more excuse to criticize Russia for unreliable fuel supplies and complain about being held hostage to Moscow’s energy diplomacy.

The European Commission demanded that Russia and Belarus explain what had caused interruptions in oil supplies to Poland and Germany. EU Commissioner for Energy Andris Piebalgs urged Moscow and Minsk to report immediately on the details of the problem. If the situation had not been resolved, Piebalgs might have called a meeting of EU experts this week to discuss the potential consequences of oil supply bottlenecks for the EU countries.

German Chancellor Angela Merkel made quite a strong statement on the oil crisis, saying it was high time Europe thought about alternative energy sources. At the same time, she emphasized, “Moscow is a partner not only of Germany, but also of the EU. We maintain relations of strategic partnership with Russia.”

Europe, being fully aware of the causes of the crisis, did not present it as a tragedy. Claudia Kempfer, head of the economic and transportation department of the German Institute of Economic Studies, bluntly accused Minsk of politicizing the issue. She said until now Minsk had made good money on Russian oil by receiving it on favourable terms, refining it, selling it, and taking all the profits. When these benefits were taken away, Minsk decided to get the money by shutting down the transit oil pipeline and causing an oil shortage in Europe.

The Russian leaders are confident that it is time to put an end to the energy parasitism of the Belarusian authorities. President Vladimir Putin said that Russia was supporting Belarus with lower gas prices. “This is the price Russia has to pay for a switchover to market relations; this is direct support for our Belarusian colleagues, which is costing Russia and our taxpayers billions and billions of dollars.” Gas agreements with Belarus will cost the Russian state budget $1.3 billion, and Gazprom will lose two billion dollars, Putin said.

The duty that Russia imposed on oil exports to Belarus was completely legal. In 2001, Belarus unilaterally withdrew from a 1995 agreement under which Russia was supposed to get an 85% duty on Belarusian exports of petrochemicals made from Russian crude. This Belarusian “offshore refining” cost the Russian budget more than one billion dollars a year.

In reality, Moscow’s patience before the crisis was nothing but a “political credit” to Minsk. When it became obvious that Belarusian President Alexander Lukashenko was not going to honour any terms (which was confirmed by the failure of the Russian-Belarusian Union State project), Russia decided to stop supporting the “Belarusian economic miracle” with its fuel.


Moscow’s ultimate goal was to show Minsk that without Russia, Lukashenko will not be able to rule his country without a hassle – sooner or later he will have to pay for Russian resources either with money or sovereignty. He will find it hard to retain sovereignty even in the former case – it will not be easy to maintain social stability without Russian benefits.
It is true that, as in the case of Ukraine last year, the Kremlin risked damaging its reputation as a reliable energy supplier, which is the backbone of its energy strategy. Europe viewed this latest scandal as one more argument against excessive dependence on Russian hydrocarbons. Clever German journalists have even coined an expression: “the Russian energy prison.” Their opinion could be ignored if only the European leaders did not share it.

The cessation of oil supplies through the Druzhba pipeline prompted Angela Merkel, whose country holds this year’s EU presidency, to talk about the need to avoid unilateral dependence on “individual energy suppliers.”

On January 21, Angela Merkel will arrive in Moscow for talks with President Putin on the signing of a new EU-Russia partnership and cooperation agreement. This visit may again lead to a dialogue of the deaf, as happened recently in Lahti, Finland. But it may also lead to a breakthrough to a new level of mutual understanding and consideration for each other’s interests. To achieve this, it is necessary to expand the framework of dialogue and consultations, a goal on which Chancellor Merkel strongly insists. It is also important to consider the circumstances and even the problems of one’s partner, such as Russia’s difficulties in switching over to market relations with its former Soviet neighbours, who are so reluctant to part with the politically-motivated subsidies to which they have grown accustomed.

Igor Tomberg, Ph.D. (Economics), is chief researcher at the Energy Studies Centre at the Institute of World Economy and International Relations, Russian Academy of Sciences. -0-