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Ever narrower access to the sea undermines Belarusian sovereignty

On Thursday, Lithuania announced that its Klaipeda port had recorded the highest ever annual volume of shipments. This occurred thanks to Belarusian firms’ growing use of Klaipeda despite Moscow’s pressure which demands of Belarus to boycott the Baltic states’...

On Thursday, Lithuania announced that its Klaipeda port had recorded the highest ever annual volume of shipments. This occurred thanks to Belarusian firms’ growing use of Klaipeda despite Moscow’s pressure which demands of Belarus to boycott the Baltic states’ ports.

Officially, the Belarusian government and businesses report that they start exporting oil products via Russian ports. Yet, while Minsk tells what Moscow it likes to hear, it continues with business as usual.

Minsk giving in to Moscow?

On 20 December, Belarus’s Deputy Prime Minister Uladzimir Syamashka “forecast” that in 2018 Belarus would export up to one million tons of oil products via Russian ports. These exports would be rerouted away from Baltic states’ ports.

Indeed, on 8 December, Ihar Lyashenka the head of Belnaftakhim (BNK), a Belarusian state company that sells oil products, announced that his firm was beginning to export oil products via Russian ports. The first deal on 72,000 tons should have been finalised in December-January. The formal character of his statement was underlined by the fact that his comments were made at the meeting of the Council of Ministers of the Union state of Belarus and Russia.

The actual volume of the deal is negligible, and even the plans to export one million tons a year via Russia fail to impress. For comparison, last year even after its respective exports had shrunk by about 15 percent – Belarus exported almost a million tons of oil products each month. There is another interesting detail: Russia lacks the technical capacity to reroute even half of these export volumes. The director of commercial issues for the Russian railways, Aleksei Shilo, told TASS news agency on 19 October that his firm can transport about five million tons of Belarusian oil products per year.

The Kremlin’s campaign to impose a blockade on Baltic ports is stalling. Last August, Russian president Putin personally demanded that the transit of Belarusian oil products be rerouted away from the Baltic states to Russian ports. He suggested that this could be done by imposing such logistical demands on Minsk through supply contracts for Russian oil deliveries to Belarus. Previously, beginning in 2016, Moscow had attempted to achieve the same goal by offering Belarus ever bigger discounts on transportation of their export cargo via railways. These efforts failed.

Belarus’s Deputy Prime Minister Uladzimir Syamashka told the media that Minsk had signed all oil contracts with Russia for the period until 2025, and that they cannot be amended.

Image: Vestnik Naftana

At the end of September, however, the acting director of the Belarusian oil company BNK, Siarhei Hryb, announced that Belarus was ready to ship its oil products to foreign customers via Russian ports if it were not for lack of economic feasibility. As TUT.by reported, transhipment operations for one ton of oil products via Baltic states’ ports costs six to eight US dollars, while using Russian ports as suggested by the Kremlin pushes the cost to $12-18.

No business just politics

Minsk may have its own reasons to send some cargo via Russia to make a point in relations with its Baltic neighbours. Belorusy i rynok, the economic daily newspaper, observed that Minsk’s decision to export some products via Russian ports could have not only economic but also political reasons. After all, Lithuania objects to Belarus’s nuclear power plant construction project and works to put pressure on Minsk everywhere.

Belarusian presence at Lithuania’s Klaipeda port provides Minsk with some leverage over Vilnius. Indeed, although for some years Russia has been reducing the volume of cargo it transports via the Baltic states, Klaipeda thrives. Thanks mostly to Belarusian exports of potash and oil products in 2016 its port achieved a record level of cargo transhipment 40.14 million tons, and in 2017 it broke that record again by transporting more than 43 million tons.

The official share of Belarusian cargo in the Klaipeda port, according to Belarus’s ambassador to Vilnius, Alyaksandr Karol, constantly exceeded 30 percent during the past five years. According to other estimates, in particular those published by the Russian news agency Regnum, the share of the cargo linked to Belarusian firms and shipped via Klaipeda might reach 70 percent.

Yet such intensive use of Klaipeda makes Minsk more vulnerable too. In an interview to the Vilnius-based Litovski Kuryer daily on 13 December, Ambassador Karol complained: “We sadly notice the statements of Lithuanian politicians and heads of government agencies on the undesirability of cooperation with Belarus, as well as their recommendations [to Lithuanian firms] regarding ‘more careful choice of business partners and suppliers.’”

Belarusians come as Russians leave

On 5 November, analysing Moscow’s attempts to lure and drive Belarusian firms away from the Baltic states’ ports, the popular Belarusian independent internet portal, TUT.by, interpreted these moves as part of a broader Kremlin reaction to Belarus’s growing presence in Lithuanian and Latvian ports.

General director of Belaruskali Ivan Halavaty shows the firm’s products to the chairman of higher chamber of Belarusian parliament Mikhail Myasnikovich. Image: BelTA

It started with Belaruskali, the national potash company, buying a 30-percent share in a terminal of Klaipeda port in 2013. The firm has kept this ownership share and invested further. Last September, Belaruskali‘s director Ivan Halavaty announced that Belaruskali could now export all products it needed to ship by sea via its own Klaipeda terminal.

Another attempt to improve access to the sea for Belarusian businesses can be seen in Belarusian oil company BNK’s decision to work with the Latvian port in Riga. Yet in 2016, Naftan, the Belarusian oil refinery, signed a contract with BNK to export annually in 2018−2022 of at least one million tons of petroleum distillates via the facilities of the Latvian WT OIL Terminal. Both the Belarusian and Latvian firms involved in the deal kept silent about it, though the information was revealed in one of Naftan‘s annual reports.

Minsk reviews its plans on Ukrainian and Polish ports

Minsk’s efforts to find alternative options for access to the sea via Ukraine and Poland stalled although the reasons remain unclear. On 4 January, the Belarusian government decided to close its consulate in the Ukrainian port city of Odesa. The consulate, opened in March 2011, coincided with Minsk’s efforts to find alternative sources of oil import and decrease dependence on Russia which relied on the use of the port in Odesa. Ironically, it was on his way to a meeting with his Ukrainian counterpart, Pavlo Klimkin, in Odesa in August 2015 that Belarusian foreign minister Uladzimir Makey announced Minsk’s interest in increasing shipments of Belarusian cargo via Ukranian ports.

In a related development, on 18 January, foreign minister Makey revealed Minsk’s plans to close its consulate in the Polish port city of Gdansk. In recent years the Belarusian government has studied the opportunities for using Gdansk port and also by developing an international route via rivers between Black and Baltic seas.

Hence, land-locked Belarus is struggling not only with the Kremlin’s plans to starve Russia’s regional opponents into bankruptcy. There are problems in Belarus’s relations with regional countries which have nothing to do with Russia. As a result, Minsk shelves, for now, its plans concerning Ukrainian and Polish ports, while its cooperation with Latvia and Lithuania on gaining access to sea suffers from instability. Without stable regional cooperation, Belarusian sovereignty remains under threat. It needs diversified trade and communications which can change the political economy of the Belarusian state and balance Minsk’s dependencies on Russia. This will only be possible if Belarus can secure access to the sea via various countries other than Russia.

Siarhei Bohdan
Siarhei Bohdan
Siarhei Bohdan is an associate analyst at the Ostrogorski Centre.
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