The Byzantine Games and Water Porridge

Lukashenka's "trumps" are beaten.

Negotiations between the Russian and Belarusian leadership in Sochi had a predictable end: some issues were agreed, some not. But no quarrel followed. However, the meeting was decisive in another way. Russia is changing the very paradigm of relations with Belarus: from fraternal and united to accounting.

Minsk could not believe it, experiencing anger, denial and, finally, acceptance. After all, it is no secret that the Belarusian "park of the Soviet period" have been operating largely due to Russian subsidies - cheap loans, an open market, the cheapest gas outside Russia, and above all, due to processing and direct resale (the so-called re-customs) of Russian duty-free oil.

The Byzantine Games

As it seemed to him, Lukashenka went to Sochi with "unbeatable" trumps: a promise of American support (Mike Pompeo's words), agreements on the purchase of oil from alternative suppliers, the "repair" of the Druzhba oil pipeline and threats to nationalize the gas pipe - the Belarusian section of the transit pipeline Yamal - Europe. The one (Beltransgaz) sold by Lukashenka himself to Gazprom in 2011, when the Belarusian economy was on the verge of default.

"If you can't deliver duty-free oil to us in the Eurasian Union, the tax manoeuvre was introduced; then sell us at world prices," exclaimed Lukashenka speaking on cameras on the eve of the trip. He had no chance to win the "Byzantine Games" against Moscow. In Sochi, the Russians played the whole game by their own rules.

Another meeting of the rulers of Belarus and Russia was held on February 7 - it was held in Krasnaya Polyana in the reception house for official delegations. One-on-one talks were held the first as a large part of the Russian delegation got to Sochi late due to the bad weather.

The rulers were smiling, but it was clear that they had been trolling each other from the very beginning.

- Have you eaten porridge in the morning? Vladimir Putin asked Lukashenka in the presence of the press.

- Not a water one," said the Belarusian ruler.

- Why not? It's delicious. Try it, you'll like it.

- I'll try it now," replied Lukashenka.

As a result, breakfast took more than an hour (already behind closed doors). After that, Lukashenka told the reporters waiting for him: "We've many issues discussed, reached the depths of Father Times, discussed many historical dates and moments (they are known). In addition to issues of mutual interest, Vladimir Vladimirovich told about, issues regarding many of our neighbours, the former Soviet Union countries, the policy line pursued by us and them were also discussed. We discussed many things up to the present day and decided to continue our conversation with those who are also involved in this process," he said.

The expectation of late arrival of the Russian delegation was brightened up with the hockey game. The presidents were playing on the same team. Putin in the uniform of the Russian national team, No. 11, Lukashenka was wearing a hockey hoody No. 01. His youngest son, Mikalai Lukashenka, played in the same team, No. 31. The Russians hid a "grand piano in the bushes" - Dmitry Medvedev unexpectedly appeared on the stands. He became a symbol of Moscow "hard line" against Minsk a year ago. The hint was clear.

Then the talks in the extended format followed. Then Aliaksandr Lukashenka did not even appear before the press. This always happens when negotiations fail. Moreover, nobody has seen Lukashenka in public so far (on Monday morning). Such depressions happen to the ruler whenever he suffers a crushing defeat.

I'm leaving the same way I came...

The Russian side represented by Deputy Head of the Presidential Administration Dmitry Kozak shared the details of the negotiations. He started on a merry note stating: "The talks were held positively. Russia and Belarus will continue consultations on integration". That is, not even the integration process itself, but only consultations. It immediately became clear that only an experienced proctologist can now find the Belarusian-Russian friendship.

However, one cannot say that Russia has already "pragmatized" its relations with Belarus. According to Kozak, the parties agreed to retain gas supplies on the terms of 2019. That is, this is $127 per thousand cubic meters. On the one hand, it is still the lowest price outside Russia. On the background of the collapse of gas prices in Europe, this is a quite profitable contract for Gazprom. On the third, Lukashenka insisted on $70, as it is set for the Smolensk region. He was said that the Smolensk region was the part of Russia, but Belarus was not.

Well, the sad note was oil supplies for Belarus. If low gas prices help our neighbour's domestic" economy be relatively stable, then oil, previously received at a 30% discount (due to no duties), filled the Belarusian budget with net currency.

But since New Year, this option is not available. Russia has a tax manoeuvre in the oil industry. It makes oil more expensive for Belarus, while Lukashenka refuses (more precisely, has refused so far) to buy it on new terms. This is not surprising. According to experts, the new crude oil price bears losses of the Belarusian refineries of about $2.5 billion per year. This is on the eve of the next presidential election.

Earlier, the Kremlin offered Lukashenka to buy oil directly from Russian oil extracting companies. However, he wanted some intergovernmental agreements with a guarantee of price reduction.

Now the Russian official has only confirmed the Kremlin's position in a rather sophisticated way: "As for the terms of oil supply that we also discussed, the Russian government will render assistance in reaching an agreement with Belarusian consumers and oil producers in our country. Today we cannot drastically change the terms of regulation of our oil industry. You know, crude oil prices are formed by the market and not regulated administratively. To grant Belarus discounts would mean the introduction of state regulation of the oil market, which the Russian government cannot do".

Summary: no discounts on oil, no "re-customs". Market prices are imposed. The Russian government will "contribute to the conclusion of contracts". It may give the phone number of Rosneft sales department. We will "continue consultations" on integration. Leaving them at the governmental level again. It is easy to guess that then the governments will be sent back to the presidential level.

As for integration, it will become even more low-level now. So far, 24 out of 31 road maps have been agreed on. Six maps are not coordinated: energy, customs, taxation, creation of supranational bodies, a single currency and the single emission centre.

Denis Lavnikovich, Business Capital