Energy War with Russia Pushes Belarus to Crisis
After Belarus was forced to agree for doubling the gas price and a partial sale of its pipelines to Russian Gazprom, the issue of oil, the most important blood vessel that feeds Russian economy, has come to the fore. In the winter half of 2006 Minsk got about 3.7 billion dollars due to refining and re-selling of cheap Russian crude. Now this source of income is under question, as Moscow wants to stop subsidizing Belarusian economy and raise duties.
“Russia is flooded with petrodollars and other exchange earnings,” Alyaksandr Lukashenka said. He reminds that by signing a gas contract, Russia has undertaken not to demand any export duties for crude from Belarus.
However the duties have been introduced since January 1. According to a political analyst Valery Karbalevich, oil stock in Belarus would be sufficient for two weeks.
“Lukashenka has brought himself into a deadlock,” Karbalervich said. Since his coming to power in 1994 the president declared reunification of the former soviet republics. First this intention was greeted by the Kremlin. Until the recent time Lukashenka was receiving cheap oil and gas from Russia. Analysts believe that Russia spends about 4 billion dollars annually for subsidizing Lukashenka.
However, by his steep demands Lukashenka blocked the process of union creation. Thus, he wanted to receive equal voting rights with his big neighbour in supernational bodies. And recently, in November, he stirred wrath of the Kremlin by trying to win on his side a break-away Ukraine.
Simultaneously Lukashenka put Belarusian economy in dependency from Russian export. He used revenues from selling oil to increase an average salary to $200 a month and make pensions higher than in other countries of the former Soviet Union. Mass-media controlled by him were speaking about an “economic miracle”. But the reality looks different. “Actually 40% of enterprises are insolvent,” an economist Leanid Slotnikau said.
Even a gas compromise reached right before the new year, when gas price increased from $46 to $100 per cu.m., is almost impossible for Belarus”, Belarusian Prime Minister Syarhei Sidorski said. Experts believe that the real purchasing power in the country would decrease, while losses for the state would be cushioned by giving away 50% of shares of Beltransgaz, an enterprise providing gas transit.
Only two options are left for Lukashenka
Belarus cannot resign oil revenues without getting into a catastrophic state. The illegal ruling of Lukashenka to impose duties for Russian oil transported to Western Europe demonstrated that the situation is grave. This step could cost Russian oil concerns 3.5 billion dollars a year.
Finally there are only two options left for Lukashenka. He might change tack and lead the country to market economy, for instance, through privatization of state enterprises. If is won’t be successful, he would have to make concessions to Russia and agree for merger on Russia’s terms. “Lukashenka’s economic and political positions are very weak. He has no support in Europe, and he depends on Russia completely,” a strategist of Russian Alfa-bank Christopher Wifer said.
Nobody believes that Lukashenka could open the country to the West and start democratisation process. “In this way he may lose power, and it is unthinkable for Lukashenka,” Karbalevcih said.
Lukashenka is called “the last dictator of Europe” in the West.