Cheap gas for Belarus — what’s the real price?


Just as Belarus seems close to ending its gas dispute with Russia, its foreign minister visits Ukraine in a period of significant tension. Belarus' balancing act continues.


Yury Drakakhrust
1 September 2016

Belarus' foreign minister Vladimir Makei meets Ukraine's president Petro Poroshenko in Kyiv. Credit: Ukraine's presidential press service.According to Kommersant, Russia and Belarus are close to concluding an agreement that will end the gas dispute that has dragged on since the beginning of 2016. Predictably, this doesn’t mean that Minsk’s unilateral interpretation of the gas contract will be accepted: the $300m bill it has accumulated over the months still needs to be paid.

Moscow has, however, agreed to some concessions. The price of gas will no longer be tied to the dollar and will be calculated in roubles, which will cover Belarus against any losses connected with currency devaluations.

Russia’s current gas price for Belarus stands at $132 per 1,000cm. Minsk has been asking for a drop to $73, but Moscow has agreed on $100, which is already a considerable discount. Supplies, cut in June over Belarus’ refusal to move on its price demands, will also rise again to the previous level. And although the price to customers there will remain higher than in Russia itself, there is a promise that this gap will disappear by 2025.

This latest draft agreement has no mention of any Russian desire or requirement for the two countries to set up a joint venture company based on five strategic Belarusian companies. The Kommersant article also makes the point that Russia has made more concessions than were envisaged in the draft agreement worked out in July after talks between Vasily Matyushevsky, Belarus’ first deputy prime minister, and Arkady Dvorkovich, Russia’s vice-premier.

How did Belarus manage it?

During the dispute, Minsk invoked a promise made by Moscow to introduce netback pricing by 2015, when the Eurasian Economic Union (EEC) formally came into being.

But this still hasn’t happened. And this is why Minsk evidently decided to introduce it unilaterally, as a fait accompli. It’s hard to say whether its argument was irrefutable, but its weight hasn’t faltered since the beginning of 2016. If Moscow wouldn’t recognise it then, it might not have recognised it now.

The decisive factor was probably Belarus’ obstinacy on prices combined with the possibility of a “diplomatic scandal” and the peculiar character of the countries’ mutual relations. Holding out on payment at the rate specified in the contract was a bargaining chip that was given up in exchange for real concessions.

These tactics would not of course have worked for, say, Ukraine. But Belarus is part of Putin’s grand plan for the EEC as a geopolitical centre of power and influence and symbol of Russia’s rising from its knees, etc. Crimea and Syria are also symbols of course, and possibly weightier ones, but demonstrating Russia’s greatness by power alone is a bit boring. As Fyodor Tyutchev wrote in 1870: “Unity can perhaps be bonded together by just iron and blood/ But we shall try to bond it with love/ - and then we’ll see which is stronger.”

In other words, Russia wants to be loved, by someone at least. In practical terms, this doesn’t necessarily imply that love has to be paid for — merely that the subject and object of that love should be handled gently and with understanding.

International politics is often conducted like a family quarrel. What’s another billion or two for Russia, in the end?

International politics is often conducted like a family quarrel. What’s another billion or two for Russia, in the end? It’s a lot of money, of course, but it’s not the end of the world. Chechnya, Crimea, Donbas and Syria also cost plenty. But the Americans too have devious allies that they have to pay. So it works both ways. It’s the Russian man’s burden, to paraphrase Kipling.

Some people have another interpretation of Russia’s generosity — that Belarus conceded something dear to the heart of every Belarusian in return. Thoughts like this arise every time Russia shows any major kind of blandishment, but in this case it seems particularly plausible, given the military and political tension in the region.

Belarusian political scientists Yury Tsarik and Arseny Sivitsky recently published a report, entitled “Belarus in the Context of the Russia-NATO Standoff: threats and challenges to sovereignty, independence and national security. Strategic conclusions and recommendations”. They argue that Moscow is putting unprecedented pressure on Minsk: “to carry out its strategic plan, Moscow needs Belarus to stop being just a provider of security and revert to being a source of multiple challenges and threats to the security and stability of the NATO countries and Ukraine”.

If Tsarik and Savitsky’s hypothesis is correct, the payback for generosity over gas prices might be an end to Belarus’ brinkmanship and a clear return to the Russian military and political fold. This fine idea, however, doesn’t really correspond to the facts of the case.

“There are no unresolved issues between Belarus and Ukraine”

The publication of Kommersant’s article about the gas deal coincided with a visit by Belarus’s minister of foreign affairs Vladimir Makei to Ukraine.

The timing was fortuitous (Makei was attending celebrations of the 25th anniversary of Ukrainian independence), but it turned out to be symbolic. It took place against the backdrop of a sharp worsening of Ukrainian-Russian relations, Russian accusations of Kyiv’s subversion in Crimea, Putin’s criticism of the “Normandy format” talks on the situation in southeastern Ukraine, threats of a breakdown in diplomatic relations — and so on and so forth.

So, Makei arrives in Kyiv. He meets president Petro Poroshenko, presents him with a traditional silk and gold thread Slutsk sash and thanks him for facilitating dialogue between Belarus and the EU. He also announces that “independence has to be fought for”, that Belarus “will be governed exclusively by its own national interests” in its relations with Ukraine, but mentions that “there are no unresolved issues between Belarus and Ukraine”.

Lovers of conspiracy theory may, of course, see in Makei’s visit some subtle Byzantine deviousness

In other words, while Putin accuses the Ukrainian government of terrorist activity and refuses to meet or communicate in general with Ukraine’s leaders, Belarus doesn’t even have any unresolved issues with them. So Ukraine teetering on the brink of a full-scale war with its closest ally is not a problem for Belarus. How does that fit? Well, somehow it does.

It’s not even a question of analysing the statements Makei made while in Kyiv: they will probably dismay those who support the idea of the indissoluble brotherhood of Belarus and Russia, and cheer those who hold other political views. The point is that, after them, it will be difficult, both politically and psychologically, to execute the U-turn that Sivitsky and Tsarik mentioned above. It would be hard enough to execute anyway without considerable loss of face, but doubly so after Makei’s visit to Kyiv and the statements he made there.

If Belarus officials were planning a volte face, if it was part of a concerted gas deal, they would not have sent their foreign minister to the celebrations in Kyiv. They would have sent a third grade clerk or possibly just a restrained message of congratulations to the president.

Lovers of conspiracy theory may, of course see in Makei’s visit some subtle Byzantine deviousness — a silk sash today, a knife in the back tomorrow. That sometimes happens as well, and a well-constructed theory will survive any amount of facts.

Nevertheless, if we are to reject such beautiful theories, then Minsk’s gesture towards Kyiv rather refutes the idea that the gas deal was dependent on major military-political concessions. Perhaps Moscow will demand these one day, but not now and not in return for cheap gas.

This article originally appeared in Russian on tut.by. 

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