#27 - JRL 2007-14 - JRL Home
Date: Thu, 18 Jan 2007
From: Andrei Tsygankov andrei@sfsu.edu
Subject: The Test of Belarus

Andrei P. Tsygankov
Program Chair, International Studies Association 2006-07
Associate Professor, International Relations / Political Science
San Francisco State University
http://bss.sfsu.edu/tsygankov/
The Test of Belarus

Russia’s recent energy disputes with Belarus prompted a new discussion of the Kremlin’s foreign policy objectives in the media and policy circles. Raising energy prices for a loyal ally and a member of a Customs Union, Belarus has been indicates a change in Russia’s international strategy. It serves as an important testing ground of Moscow’s new foreign policy intentions and Western reactions to their implementation.

Net economic results of the energy disputes have been positive for Russia. On natural gas, Russia’s Gazprom managed to cancel a preferential price doubling it to $100 per 1,000 cubic meters and to acquire a 50% stake in the Belarusian state gas pipeline company, Beltransgaz. On oil, Russia imposed a new export duty of $53 per metric ton increasing domestic revenue and reducing Belarus’ chances of re-exporting Russian oil. The net gain from both deals for Russia, according to some calculations, amounts to around $4 bln, or over 2% of the overall budget. As before, the official explanation has been, to quote President Vladimir Putin, that Moscow is gradually switching energy relations with all countries “to a transparent market basis free from any political conjuncture.”

Many have insisted, however, that the new agreements had more politics than economics. The U.S. State Department denounced Russia for “using energy as political leverage to influence its neighbors policies.” Belarusian President Alexander Lukashenka ¬ in line with the American critique ¬ has accused Moscow of trying to incorporate his country into Russia. And German Chancellor Angela Merkel found the oil deal “not acceptable” objecting to not being informed of the gas cutoff and charging that the crisis was destroying confidence in Moscow. Typical characterizations of Lukashenka as the last dictator in Europe by Western politicians did not stop them from uniting with the “dictator” against Russia on the energy disputes.

Belarus plays a crucial role in Russia’s foreign policy calculations. Energy exports is a precondition of the nation’s successful modernization, and up to 80% of Russia’s oil gets delivered to its most important customer, Europe through the Druzhba (Friendship) pipeline across Belarus. Overall, the pipeline accounts for a third of Russia's total oil exports. In addition, Russia transports a considerable part of its natural gas through the Beltransgaz and the Yamal-Europe pipelines, both running through Belarus territory. Given alliance-like relationships with Minsk, Moscow also counts on Belarus as an important alternative in case of potential problems with other supply routes to Europe. Unlike Ukraine or Moldova, Belarus has not wavered from its pro-Moscow orientation remaining a strong link in Russia’s energy-driven modernization-Europeanization.

Because of all these considerations, Russia has more than generously subsidized its neighbor’s economy providing, by different estimates, an addition of around 20% of Belarus GDP, or 50 to 70% of the country’s annual budget. It has done so expecting further development of alliance-like ties, an additional access to Belarus’ internal markets and greater guarantees of safety of its energy deliveries to Europe. No other country in the region came close to this kind of support, and Putin made it abundantly clear to Lukashenka: if the deal was to continue, Belarus had to go much beyond rhetorical pledges of loyalty to the Kremlin. Lukashenka signed appropriate agreements about deepening Russia-Belarus union, but did nothing to implement them. He continued to view Russia’s subsidies as a fair price for his rhetorical loyalty and insisted on Belarus’ “economic sovereignty.” He refused taking any steps toward harmonizing the two nations’ economies, providing greater safety for Russian energy supplies to Europe or improving conditions for Russian companies in Belarus. Furthermore, Lukashenka recently began playing a nationalist card, and ¬ through his actions and public statements ¬ implied that he was perfectly satisfied with the status quo viewing it as leverage against Russia’s “imperial ambitions.”

Then, and not earlier than then, the Kremlin had began to act. It is hard to blame Putin for wanting to have more than just rhetoric to ensure that Belarus remains a strong link in Russia’s energy policy. Even now, after adopting a tougher tactic and securing new deals, Russia continues to provide more subsidies for its neighbor than for any country in the region. According to Russia’s estimates, subsidies for natural gas supplies would amount to about $3.3 billion, and for oil and oil products to $2.5 billion, approaching 40% of Belarus annual budget. Subsidies will start to decline this year and will end only in 2011. It seems that Putin is closer to the truth here referring to the arrangement as “a calm, moderate way for allies to move to free market relations” than those who see in Russia’s actions a way to politically intimidate its neighbor. With some reservations, the latter characterization might have been applicable to Georgia, but to use it with regard to Belarus is quite a stretch.

Russia has a way to go to learn how to better explain its actions. This, however, does not take away from the fact that it has set legitimate foreign policy objectives and defensible means of achieving them. Charging Russia with intimidation and blackmail, as it has been common in the Western media and policy circles, amounts to forgetting or conveniently disregarding some important realities. For Russia, they include dependence on safety of pipeline infrastructure. By pressuring Belarus to accept Russia’s partial ownership of the Beltransgas, Russia was working to ensure there would be no disruption of energy supplies to Europe, not showing itself a potentially “unreliable supplier.” Another important and universally valid reality is that economics is rarely, if ever, fully divorced from foreign policy and the assertion of national interests. When Belarus truncated the planned union, disassociated itself from Moscow’s energy concerns, and forgot its promises to give Russian companies greater access to its markets, Russia had the right to draw its conclusions and to act on them. If these conclusions were of political nature, then it is equally true that correcting the mismatch between politics and economics was of a normalizing, rather than an imperialist or blackmailing, nature.

The Belarus story indicates that Russia remains pragmatic and focused on selfish considerations of national recovery, not empire. Every nation seeks to create and maximize its comparative advantages and Russia only does what other would do under the circumstances ¬ seeks to capitalize on its energy advantages. At the same time, unlike some others seeking to control world resources by toppling regimes and waging wars, Russia has been remarkably peaceful. Charges concerning its political use of energy sound especially strange when made by those supportive of such wars as conducted by their own countries. Curiously, such charges also frequently put forward by the same people who tend to view Belarus as an unreformed economy that is too dependent on Russia’s subsidies for its survival. Russia will do well to ignore these charges and continue with its energy-driven modernization. At the moment, this is critical for maintaining economic growth and generating revenue necessary for rebuilding the army and investing in social programs.