BELARUS NEWS AND ANALYSIS

DATE:

17/01/2007

Why Russia's imperialism is good for the West. Minsk Meat

by Lionel Beehner

Only at TNR Online

It is becoming a winter ritual for Russia to get into the ring with one of its neighbors and provoke an energy fight. Last January, a pricing feud between Russia and Ukraine briefly disrupted gas shipments to Europe and raised fresh doubts about Russia's reliability as a stable energy supplier. Now, one year later, Moscow has taken the gloves off again, this time against a longtime ally, Belarus. At first, it seemed like an eleventh-hour deal between Russia's state-run energy behemoth Gazprom and Minsk--that doubled the price of Belarus's gas (to $100 per thousand cubic meters) and imposed a hefty export duty on its crude--might avert a crisis. Instead, Minsk slapped a transit fee on Russian oil shipped through its territory and allegedly siphoned off gas supplies meant for European markets. Charging force majeure, Russia shut off its pump.

The reaction from the West was predictable. "EU furious at Putin's defiance on Belarus oil," fumed a Financial Times headline. "Not acceptable," thundered German Chancellor Angela Merkel, who objected to not being informed of the gas cutoff. There were calls from European leaders to step up efforts to find alternative energy supplies, such as nuclear power or Norwegian gas. There were also familiar complaints of Russia wielding its vast energy reserves and Gazprom as tools to bully its neighbors.

But these arguments fail to mention an important point: Higher energy costs could help unseat Belarusian President Alexander Lukashenko. His Stalinist-style regime has been labeled Europe's last "outpost of tyranny" by the U.S. State Department. Western governments have tried to undermine the mercurial ruler for years, but he has survived thanks to the economic, political, and military support of Moscow. Yet the gas crisis--which lasted for 60 hours before Lukashenko lifted the transit tax--may portend worse relations ahead. A proposed political union--a decade-old plan between Minsk and Moscow to establish open borders, a common currency, and eventual political integration--has been delayed if not permanently derailed. And, without Russian handouts, Belarus's economy will suffer and Lukashenko's power may unravel. Meanwhile, his domestic opposition, emboldened by a strong showing at the polls last year, will gain more strength amid such an economic slowdown. In fact, the irony of the whole situation is that Gazprom, normally the Goliath-like bogeyman in energy disputes, may in fact be doing the West a favor. By squeezing Belarus, it is unwittingly installing the conditions needed for greater political change. As The Wall Street Journal put it, "It's a shame this Russian epiphany didn't happen before Mr. Lukashenko rigged and bought, with Russian energy, his latest 'reelection' last March."

Russia props up Belarus's Potemkin economy by subsidizing its energy needs and supplying nearly half its exports. Handouts from Moscow amount to about $4 billion annually. Belarus remains a closed but stable society, prosperous by post-Soviet standards with near double-digit growth. Much of its heavily industrialized economy remains in the hands of the state, shielding most Belarusians from the market turbulence of its post-Soviet neighbors. "What they've had is essentially a Soviet existence," says Robert Legvold, a regional expert at Columbia University. "Pensions have been paid. Jobs have been secure." Indeed, Belarusians largely credit Lukashenko, a former collective farm manager, for keeping unemployment low, wages high, and streets clean.

But higher energy costs will crack this veneer of economic stability. "The so-called stability of Belarus's economy was the stability of an addict getting cheap drugs," Belarusian economist Leonid Zaiko told Vremya Novostei, a Russian newspaper. Belarus's gas tab is expected to exceed $1 billion in 2007, while inflation could more than double. Without Russian support, Lukashenko cannot keep wages high or pensions paid. Faced with these added economic burdens, Belarusians will agitate for greater political change. And, in contrast with previous years, Belarus now boasts a viable opposition candidate, Alexander Milinkevich, a bushy-bearded former physics professor. In his failed bid for president last year, he called for greater openness in government, future membership in the World Trade Organization, and less integration with Russia. With Belarusians blaming Russians for their energy woes, they may be more amenable to Milinkevich's idea of putting greater distance between Minsk and Moscow.

Economic pressures from Russia could also significantly alter Lukashenko's foreign policy. Resource-poor and bereft of allies, Belarus will be forced to look elsewhere for cheaper energy and export markets, perhaps even westward. "Somewhere along the line Lukashenko has to think about no longer giving the finger to Western Europe to get some market access," says Legvold. Belarus's strongman has already sought closer relations with other likeminded leaders, including Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad, both anti-American leaders of oil-rich nations. But this plan could backfire, too, as it keeps Belarus's economy beholden to erratic regimes abroad.

Political relations between Russia and Belarus may be irreparably damaged. Some analysts say the gas-price hike signals the Kremlin's growing distaste for Lukashenko's antics and is aimed more at regime change in Minsk than a more equitable gas price. President Vladimir Putin has never taken a liking to his Belarusian counterpart. "Putin can't stand Lukashenko," a U.S. diplomat in Minsk told me last year. The Kremlin was further dismayed by Lukashenko's rewriting of the constitution in 2004--and the sham referendum that followed--to allow him to run for a third term. There has also been growing uncertainty surrounding the proposed political union, which Moscow favors. Lukashenko backpedaled on the proposal after realizing that, if Belarus were absorbed by Russia, his power would be curbed, not enhanced. The gas fracas now postpones these unification plans indefinitely.

The energy row underscores how little leverage Belarus has left. Russia's industry and energy minister, Viktor B. Khristenko, announced that Russian gas could soon be able to circumvent Belarus, either by river, railroad, or the Baltic Sea, taking away one of Belarus's few aces in the hole. Belarus can also no longer play the geo-strategic card. Whereas Russia traditionally viewed Belarus as both a regional military ally and a buffer state to Europe, with NATO-Russian tensions receding Belarus is not the strategic asset it once was. Russia's primary concerns are no longer territorial but economic. "New oil wealth has been turned more into butter than guns," writes Fiona Hill of the Brookings Institution. So regime change in Belarus would not really damage Russia's regional ambitions and might even alleviate future altercations over gas prices. Lukashenko, in effect, has become dispensable.

That is not to say that Russia would prefer to lose Belarus, as it did Georgia and Ukraine, to pro-Western forces. Even though the opposition in Belarus has no aspirations to join NATO, Russia has always considered Belarus within its sphere of influence. And the 2,500-mile pipeline through which much of Russia's Europe-bound crude flows bisects Belarus. It also remains uncertain what impact Russia's gas crunch will have on Belarus' economy. Some economists say fears of its economy tanking are overblown. Similar forecasts of economic doom followed Ukraine's energy row last year but proved unfounded. Yet outside shocks on closed societies like Belarus can often create "dangerous instability," writes Ian Bremmer, president of the Eurasia Group, in The J Curve. More likely, the energy spat will start a slow, downward economic slide that could accelerate political change in Minsk, not provoke a full-blown revolution or create an economic failed state.

Instead of criticizing Russia, Europe should welcome the economic pressure on Belarus. Of course, Europeans favor unimpeded flows of gas and energy prices unencumbered by Putin's political whims, but they also would prefer a more democratic and pro-Western government to replace Lukashenko's regime. Brussels has little leverage over Belarus. But it knows that, if Moscow were to withdraw its political, economic, and military support from Minsk, this might bring about eventual political change. Europe finds itself in the awkward position of, at least privately, condoning Gazprom's bully-like behavior. A two-day disruption in its oil supply is a small price to pay for the eventual removal of Europe's last remaining dictator.

Lionel Beehner is a staff writer at the Council on Foreign Relations' website.

Source:

http://www.tnr.com/doc.mhtml?i=w070115&s=beehner011707