BELARUS DIGEST

Damon Wilson and David Kramer recently gave they account of how the United States pressure resulted in Belarus regime’s release of political prisoners. David Kramer was the key figure in George W Bush administration responsible for dealing with Belarus.

It is interesting to see different approaches of the United States with their principled stand and the Realpolitik of Germany. According to Wilson and Kramer, the German embassy in Minsk was trying to strike a deal with Belarus authorities to let Alexander Kazulin, a former Belarus presidential candidate, quietly go into voluntary exile. Kazulin rejected that offer and was subsequently released without any conditions following the US pressure.

Within two months of the asset freeze on Belneftekhim, an authoritative representative of the Lukashenka government quietly approached the U.S. Embassy in Minsk to ask what the American response would be if the regime released its political prisoners. Note that the regime approached the American embassy, not any European embassy, because it was the United States that kept ratcheting up the pressure against the government, backed up its threats when the regime continued to stall and whose political figures, from the President on down, used the bully pulpit to shine a light on authoritarianism and corruption in Belarus. Lukashenka and his cronies wanted to get out from under that bright light and free themselves from the pressure from sanctions, and the only way to do so was to release the political prisoners.

(more…)

This week, after a bitter gas transit conflict with Belarusian government, Russian Gasprom declared that preliminary gas prices for Belarus next year should be about USD 250. Now it pays 185 dollars. Even some naïve oppositional analysts welcomed what they considered ‘European’ prices, joking of Lukashenka’s ‘stupid’ wish to live ‘of Russian cost’.

The prices for gas and oil, they forgot, are specific prices. Since gas and oil depend on infrastructure to ship them to consumers, therefore the Russian gas price for Belarus shall be different one than tariff for more distant Germany or Belgium. Furthermore, the prices for such strategic commodities are anyway politically influenced. So, Belarus which has allied itself with Russia since 1995, has all reasons to demand be given cheaper gas and oil than other countries.

And at least it should not be suddenly hit by arbitrary Russian decisions to increase price by almost 100 dollars. After all, the Belarusian side has carried out its part of agreement with Kremlin – it gave Moscow a small bit of imperial grandeur by agreeing to be a ‘small brother’ and ally, it secured a segment of Russian borders and followed most Russian foreign policies. So why Russia agreed to sell China its gas considerably cheaper than Belarus?

It seems that this time it is Russia that wants to live as an empire ‘of Belarusian cost’, by giving Lukashenka nothing for it, and even openly threatening and abusing him. Russian elites’ greed is stronger than imperialistic appetites? (more…)

Belarus’ voice is seldom heard on the international scene, and its concerns are rarely taken into account. Minsk has not succeeded in achieving its major foreign policy goals and appears to lack an overall strategy. The much-disputed customs union with Russia and Kazakhstan, the feebleness of its military alliance, and its prospects for EU accession are three key examples of Belarus’ foreign policy failures.

Belarus seems to be seeking a “third way” between Moscow and the West, but it is doing so with essentially no international influence. Belarus has few levers to pull and little to bring to the negotiating table. The traditional currency of power in international relations is a strong military backed by a strong economy. Unfortunately for Belarus, it has neither. In order to successfully pursue an independent course in the international sphere, Belarus needs to get its economy on track, rethink its military posture and alliance affiliations, and modernize both its military structure and equipment.

Belarus’ 2009 defense budget was $611 million, which somehow financed an active force of 72,940 and a paramilitary force of 110,000. With a budget of $611 million, it is hard to imagine that Belarus could project a modicum of force beyond its borders or equip its soldiers with new weapons. Clearly, Belarus is unable to stand up to serious pressure from an external foe. To successfully embark on “a third way” in the international sphere, Minsk needs to develop the military power requisite with such a strategy.

(more…)

It seems that pragmatism and realpolitik are winning at the moment over values-driven approaches in EU policy toward Belarus, while Lukashenka’s power game continues eroding the EU’s self-esteem. He is very well aware of the complicated procedural nature and internal problems of the EU and was not particularly shaken by the post-Lisbon proclamations that the EU would become a “more capable, more coherent and more strategic global actor.” In spite of the shifts in policy in his favor and high-level handshakes from various European figures, Lukashenka openly criticizes the EU, including its Eastern Partnership program, for not doing even more; meanwhile, he ignores diplomatic messages related to his behavior and the new wave of repression toward the media and civil society groups. In GMF’s On Wider Europe Series*, Pavol Demes argues that it is time to realize how President Lukashenka has outmaneuvered the EU, and time to shift to a policy that places more emphasis on civil society as a motor of future change.

On Wider Europe, June 18, 2010

Lukashenka needs to feel EU’s power
by Pavol Demes

Due to ongoing and serious violations of human rights committed by the Lukashenka regime, in April 2010 the Parliamentary Assembly of the Council of Europe decided to suspend high-level contacts with the authorities in Belarus. This decision reinforced the conclusion that the European Union’s previous policy of engagement with President Aliaksandr Lukashenka had failed to lead to liberalization of his autocratic regime or real cooperation with the community of democracies. That policy of engagement was launched almost two years ago, in 2008, when European Union leaders, responding to the release of internationally recognized political prisoners, suspended sanctions imposed against key figures in Minsk. Member states, together with the new post-Lisbon EU representatives, will review their policy toward Belarus in the fall of 2010, but most observers doubt they will re-introduce strict conditionality toward the Belarusian regime.

As a result, Lukashenka will continue bluffing and benefiting in the absence of a coherent, effective EU policy. Meanwhile, the 10 million people of this post-Soviet nation will continue to suffer under Europe’s last dictator and will lose faith in receiving solidarity and support from the family of Western democracies.

(more…)

Every time facing confrontation with Moscow, Belarusian president speaks about immaterial and spiritual – common Slav roots, history and kinship of Belarusians and Russians. Emotions and sentiments can matter a lot in international politics and are an effective tool in national foreign policy of some countries. Reiterating his declarations on Belarusians’ and Russians’ unity, Lukashenka is undoubtedly targeting Russian sentimental bonds to his country, not his Belarusian compatriots.

Russians are mostly longing for their imperial and Soviet history to be appreciated and positively articulated abroad. Lukashenka perfectly realized it a very long time ago. He understood that huge potential of Russian frustration and anger at loosing former imperial greatness had harbored immense opportunities for political projects in Russia. One did not need to be even a Russian politician to conquer neighboring country’s hearts and minds by playing old imperial motives!

After coming to power in mid-1990s, Lukashenka shrewdly posed himself as a warrior for restoring Soviet Union and his version of pan-Slavism. It fared quite well for a while and he got very popular in Russia whose residents ever more were seeing him as a fine alternative to hard-drinking Boris Yeltsin in 1990s. Belarusian president was firmly on his way into Kremlin. But then Colonel Putin unexpectedly put an end to it at millenium turn. Lukashenka could not compete with dynamic new Russian leader.

Belarusian regime’s Russian policy contracted to more humble limits. It began to implement a new, however, pretty familiar paradigm – while playing on emotional, spiritual and mythological bonds to Belarus in Russian mentality, Belarus should have become the very best Russia’s ally to be cared of and defended at any cost by Moscow support and money. Actually, one can guess that Lukashenka wanted to be for Russia what Israel is for United States, i.e. a strategic ally which significance is not limited to solely economic or military issues.

(more…)

Russia’s state-controlled monopoly Gazprom started reducing gas supplies to Belarus over the debt of about $200m that Minsk can’t or won’t pay off. Because Belarus and Russia are in a Union State and have a long history of camaraderie, Gazprom plans to introduce the reductions in a truly brotherly fashion: “day-by-day, proportionally to the debt’s volume.” It has started with a modest 15% cut that reach more than 80% as the spat continues. No 100% cut seems to be a possibility, however.

Whatever the outcome of this argument, Belarus may wind up the winner in the short run. (Incidentally, this to date two-decade “run” on generous energy subsidies could have been even longer had it not been for the financial crisis.) Even when Minsk finally starts paying market energy prices, it will have milked Moscow for decades despite being far from a reliable ally and doing little in return.

To an extent, the energy rows have been recurring year after year because collecting Belarus’ meager payment in full has been a matter or principle rather than financial need to Gazprom, which possesses an enormous foreign reserves fund and is backed by the Russian government. There may also be a catch for Minsk in long run, however.

How has Minsk managed to pull this off? In a truly Soviet spirit, the Belarusian leadership had the guts to buy gas at the price no higher than it deemed to be fair. The fair price to Belarus in 2010 seemed to be the last year’s gas price of $150 per thousand cubic meters. That Russia must subsidize its customs union buddies with cheap oil and gas seems quite logical to the Belarusian government; one could even argue that the customs union had zero value without this provision. The frequent disagreement on what would seem to be a clear Russian language of its contracts and agreements with Moscow is a clear sign that the regime in Minsk has finally started to speak some native Belarusian, opting for an independent political decision-making and refusing to be the Kremlin’s lackey.

(more…)

How to deal with Belarus, along with the question of whether to engage or seek to isolate the regime of Aliaksandr Lukashenka has been a bone of contention in policy debates across the Atlantic. In 2008 the European Union concluded that the previous policy of isolation had failed, and it shifted to a policy of engagement. That policy, however, has thus far borne little fruit. In GMF’s On Wider Europe Series*, Sabine Fischer nevertheless argues that Belarus has no option in the long term but to deal with the EU, and that Brussels should show strategic patience and continue a long-term policy of multilateral engagement.

On Wider Europe, June 18, 2010

The EU and Belarus – Why Engage with a Troublemaker?
by Sabine Fischer

Two years ago, in 2008, the European Union switched its policy course on Belarus. Frustrated with the lack of progress of its previous policy of isolation, it moved to engage with Belarus and the regime of Aliaksandr Lukashenka. That policy has not led to the kind of success or improvements that were hoped for. However, it would be a mistake to conclude that the only viable policy option in the face of the frustrating developments that ensued is a return to coercive diplomacy and isolation. This paper contends that further isolation of this eastern neighbor is dangerous and not in the interest of the EU. As will be argued below, Lukashenka’s search for a third way between Moscow and the West has no chance of succeeding. At the end of the day, the EU is Belarus’ only alternative when it comes to finding a more balanced position in Europe and to modernizing the Belarusian economy. Therefore, the EU should exercise strategic patience and continue to develop a multifaceted policy of engagement toward Belarus.

(more…)

The news on a legal move by the Belarusian parliament to allow privatization of most profit-making public property objects – the Belaruskali Company and strategically important oil pipelines – generated little publicity. However, it is these assets that make up a major part of the Belarusian economy: the enterprise Belaruskali makes Belarus isthe world’s third largest producer of potash mineral fertilizers, and the pipelines give Belarusian government a certain leverage in its relations with Russia and Europe. In addition, both Belaruskali and the pipelines a major source of foreign currency for Belarus, which badly needs foreign capital.

As always, the rationale for the Parliament’s decision was not announced widely and openly, as should happen when the companies of such strategic importance are involved. The Interfax news agency informed that the pipelines and Belaruskali will be excluded form the list of obligatory state property objects and that the latter will be transformed into a joint stock company. The decision has been taken by the Parliament that lacks independence due to the nature of the Belarusian political system and usually just rubber-stamps the bills upon the executive’s request.

Will the Belaruskali and the pipelines be sold to the insiders and the cronies of the Belarusian regime or to other interested clients? There are good reasons to suspect that Alyaksandr Lukashenka’s government is going to handle these trading matters secretly, as had happened in the so-called ‘Oman deal’ when a huge plot in historical area of Minsk has recently been sold – at unexpectedly low cost and under favorable conditions – to someone from the Middle East.

(more…)

Belarusian highly enriched uranium (HEU) has not received a significant amount of attention apart from within small policy circles. Belarus was not invited to the high-profile Nuclear Security Summit this spring in Washington, nor has it had much of a relationship with the United States over the last couple years. One is hard pressed to think of what Belarus and the U.S. even have in common. It is hard to negotiate when the interests of two countries don’t seemingly overlap. However, nuclear material is one area where some common ground can be found between the United States and Belarus.

Taking into account the uranium enrichment activities of Iran and the renewed belligerence of North Korea, Belarusian HEU has all but disappeared from the political radar. Nonetheless, the material could be a potential ace-up-the-sleeve for President Alyaeksander Lukashenka if played wisely. The HEU could be used to both garner high-level attention from the United States, and to improve any future Belarusian negotiating position, at least in the short to mid-term.

(more…)

The post-Soviet integration and cooperation initiatives have an extremely unsuccessful track record. It seems that the problems persist. Recently, the very idea of Customs Union between Belarus, Russian Federation and Kazakhstan had been questioned, after the government of Belarus made clear its intent to insist on more tariffs exemptions, especially concerning Russian raw oil exported to Belarus.

These exemptions are vital for the Belarusian economy which in 1990s and 2000s immensely profited on refining imported oil selling the end products to Western Europe. By importing cheap Russian oil Belarus kept its refineries in Navapolack and Mazyr busy and very profitable. It also worked well for Russia which lacks refineries and other processing facilities.

But recently Moscow decided to stop this enrichment of Belarus and while insisting on ‘customs union’, excluded oil and oil products from its coverage. Belarus is expected to pay full tariffs. Yet cheap oil was that only benefit which made the idea of customs union with Russia and Kazakhstan, known as the world’s major oil- and gas exporters, interesting for industrially developed Belarus.

(more…)

This year Europe will purchase its first oil products from Venezuelan crude refined in Belarusian Mozyr. While Belarusian citizens have a hard time obtaining visas and traveling, Belarusian oil products traverse borders freely and are welcome in the EU regardless of the state of Belarus’ civil society or its human rights situation. The Belarus-Venezuela project, whatever its economic feasibility, may help Minsk get on better terms with its immediate neighbors (perhaps with the exception of Russia) and decrease its reliance on Moscow.

In fact, precisely because the route for delivering Venezuelan oil is so long and tortuous, Belarus is forced to cooperate with Ukraine, Lithuania, Latvia, and other countries on delivering it. The first 80,000-ton “trial” crude was shipped via Ukraine’s Odessa port and then by the rail to the Mozyr refinery. Other transporting possibilities include utilizing Ukraine’s Odessa-Brody pipeline or Lithuanian (Klaipeda), Latvian (Ventspils) or Polish (Gdansk) ports.

While the logistical and financial aspects of the project are being criticized – especially in the Russian press, – and its profitability and efficiency indeed warrant caution, the project may bring Belarus closer to its neighbors that already offer assistance. For example, Lithuanian Prime Minister said that the project of transiting Venezuelan oil through Lithuania was “doable” and that Vilnius could even offer Minsk a discounted tariff rate. Similarly, Ukrainian Prime Minister said that the Venezualan oil project could lead to the “mutually beneficial agreements” between Minsk and Kiev and that Ukraine could provide Minsk with transportation discounts.

The first oil was produced by the JV Petrolera, and another JV will be set up to supervise the sales, with Minsk having a 25 percent stake in the venture. Alyaksandr Lukashenka and Hugo Chavez plan to invest at least $8 billion into developing the oil fields by 2025 and are also considering cooperating in the gas industry.
(more…)

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.

(more…)