Putin goes to Belarus for talks on union

2007

Vladimir Putin could become the leader of a land even larger than Russia — a development that may hinge on talks beginning Thursday in neighboring Belarus. Putin has unexpectedly revived efforts to create a single state from the two former Soviet republics — a merger that would expand his options for exercising power after he steps down from the Russian presidency next year. Putin heads to the Belarusian capital, Minsk, on Thursday for discussions on a framework for the long-debated union, fleshing out an existing agreement that has meant little in practice. A merger of Russia and Belarus could allow Putin to leave the Russian presidency as promised in May yet still remain a chief of state. "I wouldn't be surprised if Putin tries to speed up a union with Belarus ... to become the president of the unified state," said Gennady Zyuganov, Russia's Communist Party chief. Putin, who has indicated he will seek to retain significant influence after term limits force him from the Kremlin, does have at least one other option.

On Monday, he said he supported his protege, first deputy prime minister Dmitry Medvedev, to become Russia's next president. Medvedev instantly became the overwhelming favorite in the March 2 vote. Medvedev, in turn, asked Putin on Tuesday to be his prime minister. Putin has not commented publicly on the offer. But First Deputy Prime Minister Sergei Ivanov, a senior government official and close Putin ally, said Wednesday that Putin was unlikely to respond swiftly to the proposal. The creation of a single state could give Putin an alternative to the Russian prime minister's post. If the two countries can agree, it would mark the first merger of a former Soviet state with Russia since the Soviet Union split apart in 1991 — a step that would make many Russians proud.

But the move could damage Russia's relations with the West, especially if Moscow is seen as using pipelines that supply Belarus with natural gas to force the smaller country into an agreement. Ahead of Putin's visit, Belarus' beleaguered Western-oriented political opposition was already fighting the idea of a merger. Police on Wednesday forced some 200 protesters from a Minsk square where they waved flags and chanted "No union with imperial Russia!" One of the leaders of the opposition Young Front was knocked off his feet and stomped on by riot police. He was bundled into an ambulance, unconscious. Some analysts doubt a deal can be reached, because Belarus President Alexander Lukashenko — a Soviet-style leader dubbed Europe's last dictator by the West — is unlikely to cede power.

Lukashenko's office said last week the talks between Putin, Lukashenko and other ranking officials would focus on a draft constitution of a union. Russia's Ekho Moskvy radio quoted unidentified members of the Lukashenko administration as saying Moscow and Minsk had struck a deal: Putin, the sources said, would become president of a Russia-Belarus union while Lukashenko would become the speaker of its parliament. Officials in Moscow and Minsk have denied the report, but politicians and commentators in both countries agree that Putin's trip signals a renewed interest in the merger. When Medvedev proposed that Putin become prime minister, many analysts saw it as the Kremlin's preferred plan to maintain his influence. But some said Putin would never accept what would amount to a demotion.

Pavel Borodin, secretary of the existing Russian-Belarusian executive body, said Wednesday that drafts of the constitution being considered would give the president of a new unified country the power to rule over the current national governments. He said the new constitution would be subject to approval by each nation's parliament and would be put to voters in national referendums. Putin could find it difficult to persuade the Belarusian leader to relinquish his country's independence. And Lukashenko seems to lack the leverage needed to win an agreement that favors Belarus, which has a population of just 9.7 million compared to Russia's 141.4 million. "Putin and Lukashenko have sought to outmaneuver and cheat one another over the past few years," said Fyodor Lukyanov, the editor of Russia in Global Affairs magazine.

Russia and Belarus signed a union agreement in 1996 that envisaged close political, economic and military ties, but efforts to achieve a full merger have foundered. In the 1990s, Lukashenko pushed for the creation of a single state, apparently hoping to take reins from Russia's ailing President Boris Yeltsin. Putin's election in 2000 demolished Lukashenko's hopes to rule both countries. Two years later the Belarusian leader angrily rejected a Kremlin proposal for incorporating his nation into the Russian Federation — leaving him without a job. Bilateral relations soured. Lukashenko described Russia as a "huge monster," saying Moscow's actions were worse than those of Nazi Germany, which reduced much of Soviet Belarus to ruins in World War II.

If Lukashenko refuses to cede control, the Kremlin could try to force his hand by using its most powerful weapon: energy. At the year's start, Russia more than doubled the price of natural gas and imposed a customs duty making oil more expensive. To pay its bills, Belarus was forced to sell half of its national gas pipeline company to Gazprom, Russia's state gas monopoly. In August, Gazprom threatened to halt future natural gas shipments if Belarus failed to pay what it already owed. The two sides negotiated a settlement, but the threat of a further increase in energy prices still looms over Belarus' heavily subsidized, Soviet-style economy.

Source: http://www.guardian.co.uk/worldlates...148370,00.html

In related news:

Russia grants Belarus $1.5 billion stabilization loan

Russia and Belarus signed an agreement on Friday granting Belarus a $1.5 billion stabilization loan for 15 years at an interest rate of libor +0.75% and with a grace period of five years. Finance Ministers Alexei Kudrin of Russia and Nikolai Korbut of Belarus signed the agreement after talks between the two countries' leaders. Russian President Vladimir Putin and his Belarusian counterpart Alexander Lukashenko also attended a meeting of the Supreme Council of the Russia-Belarus Union State earlier in the day. "With a view to ensuring a smooth transition of bilateral energy cooperation to universal market principles and taking into account earlier agreements and contracts, Russia has decided to grant [Belarus] a state loan worth $1.5 billion," Putin said.

Belarus requested Russia to issue a $1.5 billion loan in February. In late November Kudrin said that the Russian government could grant it to the ex-Soviet republic before the end of the year. Addressing a news conference after the Union State session, Putin said that the price of Russian natural gas for Belarus would remain unchanged in 2008. The Russian leader added that Russian natural gas monopoly Gazprom would honor all commitments under contracts signed last year. "Gas prices for Belarus will certainly be raised, but within the levels fixed in last year's agreement. We will stick to previous contracts, despite the fact that Russia will buy gas at a higher price than we will sell to Belarus," said Putin. Turkmenistan earlier raised the price for its natural gas, which has been instrumental in gas contracts. The Russian leader also pledged support to Minsk in minimizing the consequences of price hikes.

"We will try to do everything to eliminate the consequences of gas price hikes for the Belarusian economy," Putin said. The two leaders reiterated that their countries would honor all commitments on Russian natural gas transits to Europe. "Supplies of natural gas and oil hugely contribute to strengthening stability across the whole of Europe," Lukashenko said. "We are making this contribution to stability and expect appropriate action on security provisions for our countries from Europe." On January 1, Russia raised the price of its gas supplies to Belarus to $100 per 1,000 cubic meters from $46.7 in 2006, which sparked an energy dispute between the two countries and triggered more accusations in Europe that Russia is using oil and gas as a political weapon.

Source: http://en.rian.ru/russia/20071214/92557535.html

Russia tipped to swallow Belarus

There has been growing speculation in Russia that the country is about to merge with neighbouring Belarus, and that President Vladimir Putin would head the new state. Russian media has been reporting that sources within the office of the President of Belarus, Alexander Lukashenko, say that a union with Russia is about to happen. The reports say that Mr Putin will may visit Belarus to sign a Constutional Act of Union late next week, and that the document has already been drafted. In a climate where speculation is rife about what Mr Putin will do next after he steps down from the Russian presidency in March, the reports say he could become the president of the new Union State. Officials from both countries have dismissed the reports, with the Kremlin calling them speculative fantasies.

Source: http://www.abc.net.au/news/stories/2...section=justin

Loveless brothers

Another Russian gas conflict was averted, but a short oil war broke out instead. Europe should take heed

RUSSIA and Belarus, its ex-Soviet neighbour, are supposedly brotherly Slavic nations that are in the process of forming a union state. There are indeed some striking family resemblances. Both have irascible authoritarian presidents—Russia's Vladimir Putin and Belarus's brutal Alyaksandr Lukashenka—and both are inclined to risky diplomatic brinkmanship. This week that similarity propelled them over the brink and into an unfraternal trade dispute. Brief though it may have been, it had important implications for Russia's energy dealings with Europe, and perhaps also for the future of benighted Belarus.

A year ago, wrangling over the price of gas sold by Russia to Ukraine briefly diminished the flow of gas through Ukraine to Europe. At the end of 2006, Belarusian resistance to Russia's demand that it too pay more for gas threatened to unleash another so-called “gas war”. The modest economic growth that Mr Lukashenka terms the “Belarus economic miracle”—which along with his total control of the media and harassment of opponents has shored up his regime—has in fact been largely based on massively discounted Russian gas imports.

In the event, the two countries cantankerously reached a deal on an increased gas price just before their New Year's Eve deadline. But a few days later, an oil war broke out instead: Russia imposed new duties on the crude oil it exports to Belarus (refining and re-exporting it have been a crucial money-spinner for Mr Lukashenka, in effect another big Russian subsidy to the Belarusian economy). In revenge, Belarus demanded a transit fee on the oil that crosses Belarus to other European customers. The Russians refused—and Belarus began siphoning off oil in lieu of payment. On the night of January 7th Russia stopped pumping oil into a pipeline network that crosses Belarus and delivers 12.5% of the European Union's oil needs. Supplies to Poland, Germany and others stopped flowing.

The two countries' tactics may be similar, but their muscle is not. Mr Putin talked of cutting oil production and rerouting supplies. The Russians also threatened duties on all Belarusian goods, many of which would struggle to find markets elsewhere. On January 10th, after the presidents talked on the telephone, Mr Lukashenka blinked; the transit fee was lifted; and oil began to flow again before Europe was seriously affected. Nevertheless, the short but nasty spat has telling lessons.

One is that, with the Russians in this mood, Mr Lukashenka's grip on Belarus may be in jeopardy. While others reviled him, Mr Putin stood by Mr Lukashenka during his rigged re-election last year. But Mr Putin's motive was more aversion to European meddling in Russia's “near abroad”, and to the so-called “colour revolutions” of the kind that overtook Ukraine in 2004, than affection for Mr Lukashenka. Personal relations between the two men are said to be rancid; a proper union between their two countries, a plan Mr Putin inherited from his predecessor, Boris Yeltsin, now looks fanciful. (Mr Lukashenka is said to have cooled on the idea after it became clear that he was unlikely to remain president after the merger.) In the absence of a reliable alternative, defenestrating Mr Lukashenka may not be part of Mr Putin's plan. But the new gas price alone could seriously damage Belarus's mostly state-owned factories and collective farms, and alienate ordinary Belarusians.

The affair also confirms the increasingly poisonous nature of Russia's dealings with many of its former vassals. Energy feuds are both a cause and a symptom of this trend. Georgia, Mr Putin's least favourite ex-Soviet neighbour, has been forced to accept a price for Russian gas that is more than twice the new one for Belarus. But supplies from neighbouring Azerbaijan are helping Georgia through the winter, and they may soon, says Nika Gilauri, Georgia's energy minister, replace Russian imports altogether. With its own oil and gas deposits in the Caspian Sea, Azerbaijan itself recently rejected what Hafiz Pashayev, the deputy foreign minister, describes as the “unreasonable” gas terms offered by Russia, and stopped importing Russian gas. It has also ceased sending its oil through Russian pipelines.

The most important lesson for Europe, however, is once again that over-reliance on Russian energy is dangerous. In principle, the Kremlin's drive to charge its neighbours more for gas is reasonable. Overall demand for Russian gas is outstripping supply; suppressing demand in the ex-Soviet states should make more gas available for export to the more lucrative European market. In the particular case of Belarus, the Russians deserve some sympathy. Until last year they were criticised for coddling Mr Lukashenka with preferential gas terms—and Belarus's re-export of duty-free Russian oil was, as one foreign observer in Minsk puts it, an obvious “scam”.

But however reasonable its aims, Russia's bullying and capricious methods, plus its volatile relationship with energy transit countries and carelessness over the impact on European consumers, have rightly alarmed European leaders. Though Mr Putin pledged to “do everything to secure the interests of Western consumers,” Germany's Angela Merkel spoke of damaged confidence. The Europeans should also note that Russia has emerged from its tussle with Belarus with a 50% stake in Belarus's gas pipeline (payment for which will partly offset the gas-price hike), strengthening the Kremlin's grip on Europe's energy infrastructure. An EU energy strategy released this week talked about the need for diversifying suppliers and dealing with them collectively: the quicker, the better.

Source: http://www.economist.com/world/europ...ory_id=8521935