How Low Can Minsk Go for Cheaper Energy?

To lower the price of Russian energy Belarus has tried pleas, threats, promises, and blackmail. Minsk set lowering the cost of imported energy as a condition to joining the Customs Union with Russia and Kazakhstan and last week went as far as to offer to give Russian firms control over its energy assets.

Having accused Russia of trying to subdue Belarus by acquiring its key industrial assets, Minsk is nevertheless ready to cede control of the gas pipeline operator Beltransgaz (of which Russian Gazprom already owns 50%) and the Mozyr oil refinery in return for oil and gas supplies at Russian domestic prices.

Luckily, Igor Sechin, Putin’s deputy in charge of energy, was not thrilled with Alyaksandr Lukashenka’s proposal. Sechin said Belarus would have to clear its outstanding debt of $200 million before any deal can be considered.

All these last-ditch efforts not to pay the true cost of energy would do is allow Belarus’ Soviet-style economy to continue in its tracks without a serious reform until the next energy crisis hits. While without the duty-free oil and gas, joining the Customs Union hardly makes economic sense for Minsk, there is even less economic sense in ceding control of Belarus’ energy infrastructure.

Everything has a price: if not paid right away, then paid later — with interest. Unless they are willing to trade their independence for a temporary discount, states have to buy energy at the global market costs.

Looking back at Minsk’s numerous attempts to get on brotherly terms with Moscow hoping for some nepotistic economic relationship, one sees that the struggling Customs Union project may well be the beginning of the end of several unsuccessful integration projects in the post-Soviet space, including the Union State between Russia and Belarus and their single economic space.

Since the uncivilized nepotistic ways are failing, it is high time for Belarus to resort to more civilized forms of international economic relations by initiating a full-scale economic reform, strengthening political and economic ties with the European Union, and catching up on the alternative energy solutions.

If the energy issues are as important as Belarus’ efforts on that front suggest, then it is definitely not in Minsk’s interest to cede control of this important strategic asset to Russia, even if “for decent money,” as the Belarusian President hopes.

The loss of control over its energy transit and refinery system will result in the loss of the only bargaining chip Minsk has while securing Russia’s gas supply routes to the European market.

 

Orphus system Found a typo? Select spelling error with your mouse and press Ctrl + Enter