Have Gas, Will Blackmail

 

You’re the president of a Third World country that is barely making it through this worldwide recession. You’ve got $500 million at hand. Do you

A) invest it in your country’s economy and spur some growth? –OR-

B) Give it away to the government of another Third World country a thousand miles away?

 

On Monday, Belarussian president Alexander Lukashenko took option B, giving half a billion dollars cash to breakaway Georgian province Abkhazia.

 

For added good measure, he flew to Moscow the next day to meet with Abkhaz leader Sergey Bagapsh and assure Bagapsh that the Abkhaz have a friend in Lukashenko.

 

“Much work emerges after gaining independence,” he said. “We would be happy if Belarus’ involvement could help to solve problems in this region.”

 

Why this burst of magnanimity from Lukashenko? The answer consists of one word: Russia.

 

Russia has been pressuring Belarus to recognize the independence of breakaway Georgia republics South Ossetia and Abkhazia for months. And to do so over EU counter-pressure, no less, which included a veiled threat last month from Czech foreign minister Karel Schwrzenburg that “if they recognize South Ossetia and Abkhazia it would create a very, very difficult situation for Belarus because Belarus would be out of the European consensus.”

 

Russia pressing on one side, NATO pressing on the other. Not an easy position for little Belarus to be in. Russia’s Medvedev has been doing his part to make Lukashenko’s decision easier. His government gave Lukashenko’s $1.5 billion in aid earlier this year and has promised an additional $500 million later this year. Needless to say, Medvedev’s “charity” isn’t for free. Belarus is going to have to earn its keep.

 

The Russian president has every reason for presumptiousness in this. Belarus is currently in no position to be defiant. Not when, according to the CIA World Factbook, Russia is the market for 59% of its exports.

 

Nor when Russia is the staple of Belarus’ energy supplies. As this table from the CIA World Factbook will show, item by item, Belarus’ native energy supplies are barely a drop in the bucket of its energy needs. Russia’s oil and gas lines fill a very large gap:

 

Oil – production:


33,700 bbl/day (2007 est.)

Oil – consumption:


179,700 bbl/day (2006 est.)

Oil – exports:


256,400 bbl/day (2005 est.)

Oil – imports:


394,100 bbl/day (2005 est.)

Oil – proved reserves:


198 million bbl (1 January 2008 est.)

Natural gas – production:


164 million cu m (2007 est.)

Natural gas – consumption:


21.76 billion cu m (2007 est.)

 

 

And as far as energy goes, Belarus has proven relatively pliable in the past. Russia raised the price Belarus must pay for Russian natural gas from $47 per thousand cubic meters in 2006 to $100 in 2007 and again to $128 in 2008. Belarus squabbled a bit over both hikes, which led each time to Russia threatening to shut off the gas. The latter threat sufficed both times to make Belarus relent and do Russia’s bidding.  

 

There is talk of Russia raising the price again to $200 per thousand cubic meters this year, and ultimately charging Belarus the same rate it charges the rest of the world in 2011. These are the same terms that sparked last January’s ugly showdown with Ukraine, with all the gas-deprived Europeans that that entailed. Any showdown with Belarus will probably end much more quickly, though. We got a hint of that around the time of the January Ukraine fiasco, with a less-publicized meeting between Belarussian and Russian authorities. Prior to the meeting, the Belarussian government told the Belarussian public that it is raising their price that they will have to pay for gas by 9.8%: $174.18, up from $158.67. In short, to appease Gazprom, Belarus may sacrifice even its own Belarussians.

  

Now we see Lukashenko forking over a huge sum of money to finance Abkhazia’s growth at a time when his own country might not be able to afford electricity in the next year. This all speaks to a great desperation on his part to please Russia. And a ruthless drive on Russia’s part to squeeze its weaker CIS neighbors for every last ruble it can get.

 

It is no wonder that Medvedev and company make a scene whenever more of its neighbors consider joining NATO, or at least doing more business with the West. The West is an alternative to Russian exploitation. Medvedev and company find it preferable that their neighbors have no alternative and keep being exploited.

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4 Responses to “Have Gas, Will Blackmail”

  1. Balqis Says:

    Why NATO and EU have the right to put pressure on ex-USSR countries to isolate Russia, and Russia shouldn’t have the right to defend itself ?
    And about prices, it needs to be said that countries like Ukraine have been charged for long time with lower prices, without forgetting that since the collapse of Soviet Union Gazprom subsidized Ukraine for a total amount of 49 bill $
    After such long time and probably due to the financial crisis, now is time to be paid .
    If Russia wants to be repaid of debts, they’re using energy as threat .
    If America funds opposition groups or puppett governments based on determined conditions, that’s support to freedom of expression .
    Can we stop to play the game of double standards and call things with their own names ?

  2. rickdocksai Says:

    Russia certainly has the right to defend itself. But this isn’t a matter of self-defense. This is a matter of money.
    As you point out, Russia has offered lower-priced gas to customers in Ukraine and Belarus for some years now. There is nothing unusual in this. Tax breaks and subsidized services are a common practice in many industrialized economies, and are often beneficial as they make affordable a lot of goods and services that might otherwise not be (think U.S. subsidies of renewable energy industries, as a case in point).
    If Russia thinks that the discounts on gas no longer serve any purpose, then it certainly has the right to revoke them. But to do so during a major recession, when far too many Belarussians and Ukrainians are in no position to shoulder major increases in their gas bills, comes off as callous at best, and money-grubbing at worst. Hence my critical stance on this.

  3. Balqis Says:

    And when you want to do it if not now ?
    Russia too is feeling the crisis and the government is not hiding it
    Gazprom apparently had to give up the deal with Turkmenistan and the Ukraine soap opera costed them 2 bill, so they’re not navigating in gold
    Money and politics go together, am not that naive
    But the debt kept increasing year by year due to the inability [or corruption] of those governments to handle economy
    Russia action is not against the average citizen, but to cover its own interests
    That’s all

  4. fluetapaila Says:

    Solid web site. will come back soon.

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