Russia’s Gazprom are to cut off gas to Belarus, in a row over unpaid bills.  According to Gazprom, Belarus are more than $450 million behind in payments, and so they are left with no choice but to cut supplies by 45% from Friday (August 3rd).

As this cutoff seems to be related to Belarus’ reluctance, or inability to pay its bills, rather than a direct political crisis, I don’t really have a problem with this.  Business is business. 

I’m more worried about whether this will impact on supplies to downstream customers.  Approximately 20% of all the gas that Gazprom supplies to EU countries goes through Belarus. 

According to Gazprom, plans are in place to ensure supplies:

Gazprom spokesman Ilya Kochevrin said: “Should Belarus start illegal offtake of gas, we have a concrete plan so customers get their gas. If they do that, we will go to court and increase supplies via alternative [routes].”

I will be impressed if Gazprom manage to pull this off without compromising the supplies to their other customers.

Award for slightly odd headline of the week has to go to RIA Novosti author Andrei Suzdaltsev for his opinion piece on the gloomy future prospects for Belarussian President Alexander Lukashenko:

Lukashenko: Russia’s ally or sponge?

____or____

I picked up some incoming traffic from Matthew Yglesias’ blog today. Wondering what was going on, I wondered over to his site, to find the following story about the Russian decision to shut down the flow of oil through Belarus:

All of Europe gets cut off from crude oil supplies, apparently.

His source is the New York Times, of all places, which has run a story with the headline:

Russian Crude Stops Flowing to Europe

Russian crude oil stopped flowing to Western Europe through a major pipeline across Belarus, officials here and in Europe said.

It isn’t until the fourth paragraph until the NY Times even mention the fact that only Germany, Poland and Ukraine are actually affected by the cutoff. And even then, it’s only in passing.

This isn’t really a criticism of Matthew - the NY Times story is incredibly misleading. But I found it fascinating to see how a little regional spat has turned into a public perception that big, bad Russia is turning off the lights all over Europe.

Update: Now Instapundit has picked up the meme.

It looks as though Russia’s neighbours have made a New Year’s resolution for 2007 - to demonstrate to Russia that they too can flex their energy muscles. In the past few days:

• Belarus have slapped a tax on Russian oil transiting Belarus, and siphoning off Transneft’s oil to pay for it.  In response, Transneft have shut off the oil supply to huge chunks of Central Europe.
• Azerbaijan have stopped exporting oil to Russia, after failing to agree a price
• Georgia have signed a deal to buy gas from Turkey, instead of Russia (actually this was late last year, but its always good to get a headstart on New Year’s resolutions…).

Some of these moves are sensible, others aren’t. Either way, though, these moves don’t do Russia a lot of good – as ye reap, so shall ye sow.

(By the way - I’m posting this by phone while on the move, so no links at the moment. I’ll update with links tomorrow, but you can find details of each of these stories on the BBC News website).

Belarus’ decision to slap an oil tax of $45 per tonne on Russian oil transiting through Belarus (mostly en route to Poland and Germany) strikes me as an ill-considered reaction to the already signed deal to increase the rate Belarus pays for Russian gas to the global market rate. Effectively, it seems as though, Belarus have launched their counteroffensive after the war’s decisive battle has been lost. By taking this approach now, Belarus will bear the brunt of German and Polish irritation. And, what will they actually gain?

Azerbaijan’s decision is an odd one, which broke just as I was writing this article. There are conflicting reports as to what has actually happened, with some news agencies reporting that they have cut of oil supplies to Russia, others reporting that they have cut off supplies to Europe that were transiting through Russia. I wonder, though, if it will achieve all that much, other than to make Azerbaijan seem like yet another unreliable supplier of oil in Western European eyes. Things may become clearer by the morning – if so, I’ll post an update.

Georgia’s decision strikes me as much more sensible. Now that Russia is no longer offering massive subsidies on the price of gas, it isn’t an attractive choice of supplier. These days, countries perceive Russia as an unreliable supplier - one prone to using its gas supplies as a weapon. Given this, if a country can find another country willing to supply gas at the same price as Russia, they’d have to be crazy not to switch suppliers. (and in this case, I wouldn’t be at all surprised to discover that Turkey either undercut Russia’s prices, or offered some kind of sweetener to smooth the deal’ progress).

Russia is the biggest loser in this whole debacle. As I mentioned above, they way they’ve handled these price increases - linking them to political threat, and using them to bully countries into selling energy assets for a song - has created a perception among their customers - current and future - that they are an unreliable, unprincipled and bullying business partner.

Russia may well earn more per cubic meter of gas sold than it did last year, but if it is not careful, it may well find that is has less and less customers for its gas, driving down overall income. At the same time it will have lost friends around the globe, making its geopolitical aims that much harder to achieve.

Update: Tim comments below that “Russia is playing an exceptionally strong hand very very badly”.

This mornings newspapers show just how badly Russia has handled things, and how poor its image is in European capitals.  Splashed all over the front page of the (London) Times in big bold type is the headline “Russia turns off Europe’s oil supply“.

(While technically, the headline is correct - Russian firm Transneft turned off the oil - I’m more inclined to pin the blame on Belarus.  They imposed a ludicrously large tax on Russian oil transported through Belarussian pipelines and, when Transneft didn’t pay, began to siphon off oil in lieu of payment.  True, this was done in response to the way Russia imposed huge gas price increases on Belarus but, as I’ve explained above, I don’t think this was a particularly sensible reaction by Belarus).

Just minutes before Gazprom implemented their threat to cut of gas supplies to Belarus, a deal was reached to secure gas deliveries until 2011.

Under the terms of the deal, Belarus will pay $100 per thousand cubic metres this year, but the price will steadily rise until it reaches around $250 per thousand cubic metres in 2011.  This will bring prices into line with the current market rate.

Belarus also - reluctantly - agreed to sell half of their gas distribution network to Gazprom for $2.5 billion.  Not such a great deal when you consider they originally valued the network at $16 billion.  The decision to sell a 50% stake was odd too - usually stakes of 49% or 51% are sold, to give someone overall control.  I’m at a loss to explain this aspect of the deal. 

As you can imagine - the Belarussian Prime Minister wasn’t happy:

“As you know, 60 percent of the Belarusian people are victims of Chernobyl [nuclear disaster]. So, we have to go to these victims of Chornobyl, we have to go to the elderly and explain to them that the price for gas has been raised twice more than we expected.”

So, don’t expect relations between Russia and Belarus to be quite as cosy as they have been over the past few years. 

But there is one small upside - Russia’s main gas ‘weapon’ in recent years has been the threat of ending gas subsidies to former Soviet states.  Once Belarus begins paying market rates, the Russian government will lose one of its main foreign policy levers. 

Finland holds the rotating EU presidency at the moment and Prime Minister Matti Vanhanen has used his outgoing speech to make clear his feelings about relations with Russia:

I am not altogether sure that Russia is heading in the right direction. We need to see a firmer commitment to democracy, the rule of law and the market economy. We do not want Russia to go in an authoritarian direction. We are fully entitled to be concerned at the way things are going in Russia.

He also found time to take a pop at Belarus, which he described as a “black hole” and a “disgrace to Europe”.

Strong words indeed from a country with a long tradition of neutrality. 

(Thanks to Copydude for pointing out the speech’s contents to me).

It looks as if relations between Belarus and Russia are becoming increasingly strained, as reports come through that no agreement has been reached on the future of gas prices. 

Although there has been no official announement yet on the outcome of the talks, Reuters are reporting that the talks went so badly that Lukashenko decided to skip the evening’s planned entertainment: 

He returned to Minsk, skipping a Kremlin dinner and a planned trip to an ice-hockey match.

Presumably, he didn’t get to do any Christmas shopping, either.  

Anyway, how did this dispute come about?  Russia are insisting that Belarus pays for its gas supplies at the full market rate, which would be more than double, and possibly even four times as much as Belarus currently pays.  Russia, in its generosity has agreed to waive the increase, but only if Belarus agrees to sell its gas distribution network, Beltransgas, for $4 billion. 

The problem is, Belarus doesn’t want to sell one of its prize assets, which it values at closer to $16 billion.

Where this leaves the prospect of political union between Russia and Belarus, I don’t know. 

It should, though, act as a warning to those authoritarian leaders who want to cosy up to Russia.  Freindship means very little to the Kremlin when it comes to selling gas these days.

Volodymyr Campaign are organising a walk in London, as a part of their call for democracy in Belarus:

At the suggestion of Students for Global Democracy, who are organising the walks worldwide, the overall length of the walk will be approximately 12 km to symbolise the 12 years Lukashenka has been in power. If you don’t think you can manage the whole distance, you are welcome to walk as far as you can or to join us at any of the points along the way.

They’ll be passing a whole group of post-Soviet states’ embassies, the walk culminating outside the Belarus embassy.  If you’re interested in taking part, drop them a line.

Update: I forgot to mention - the walk will be taking place on Saturday 15 October.

Despite an international arms embargo affecting both government and rebel forces, it appears that military equipment from the Former Soviet Union is still managing to make its way into the Ivory Coast, the Telegraph reports:

Gen Fall, who commands 6,000 troops, said there was evidence to suggest that the vehicles, which had been ordered by Ivory Coast’s army and brought in on a ship flying a Danish flag, had come from Russia. He urged that an official protest should be lodged.

The apparent violation of the embargo is not the only such example. In a separate document, Gen Fall reported that a man "speaking Russian on his mobile phone" was seen working on government-owned aircraft at Abidjan airport, with three other engineers.

And on another occasion five men of "East European origin" were seen inspecting military aircraft.

I’d say that there is a pretty strong chance this equipment came in with, if not the official sanction of an FSU state, then a nod and a wink.  Whether it came originally from Belarus or Russia isn’t certain, although I’d say Belarus is certainly a strong candidate even though, as a landlocked country it would have to ship its wares through a foreign port (and perhaps this explains the Danish ship coming from a Russian port…).   

Although there is an embargo in place, if a government supplying arms (lets say it is the aforementioned Belarus - for the sake of convenience, of course, and not at all to imply that they are the supplier in question) can circumvent that embargo it can realise significant benefits - both short and long term.

Many African countries, although they have the money to buy an air-force in the first place, lack the technical expertise or the infrastructure to maintain it.  They lack the ability to manufacture spare parts, they lack technicians and, most importantly, they lack the trained pilots to turn an unwieldy hunk of metal into an effective airborne killing machine.  So usually, whenever an African country buys an aircraft from a FSU state, they buy a ‘care package’ to go with it, including a technical support staff and pilots.  (This isn’t to say that African states have no technicians or pilots at all, just that their own are usually less well trained.  Imported expertise, although costlier, is far more proficient, and therefore more cost-effective).

The Ivory Coast will most likely have purchased one of these ‘care packages’ from Belarus, and will not be able to effectively operate their air force without outside support.  For Belarus, even though there is now an embargo, there are strong incentives to continue this support, even if it means they have to do so in a manner that is technically illegal.  Belarus, if it can prove its worth as a reliable supplier that continues to maintain its equipment, even in a demanding environment (i.e. an illegal one), will comprehensively demonstrate its reliability as a supplier.  Belarus will be hoping that Ivory Coast will, after the embargo is over, make them their ’supplier of choice’ and thus winning them contracts worth tens (perhaps hundreds) of millions of dollars.  And the benefits wouldn’t just include a relationship with Ivory Coast either - in fact, the Ivory Coast are small fry compared to the potential market out there.  There are plenty of other African governments in the market for an air-force, and many of these governments will also be concerned that they too might one day find themselves under an embargo.  These governments will hopefully be so impressed by Belarus’ integrity, and dedication to fulfilling its obligations, that they too will make Belarus their first port of call when seeking out their next airborne killing machine. 

Plus, of course, there is plenty of money to be made in the short-term from sanctions busting…

(Hat tip to Bill Roggio of Winds of Change for pointing me in the direction of the original Telegraph article).

Following last week’s meeting between Russian President Vladimir Putin and President of Belarus Alexander Lukashenko, many observers - myself included - chose to make fun of the way in which Lukashenko related or, rather, did not relate to Putin’s pet labrador. But perhaps more was agreed at their meeting than we originally thought..

Pavel Felgenhauer has been talking to an unidentified but "informed" source in the Kremlin:

Putin and Lukashenko apparently
agreed on a joint strategy to prevent popular democratic revolutions
from overthrowing their regimes. The Kremlin insider, speaking on
condition of anonymity, told me that a tentative agreement has been
reached that would drastically speed up the process of merging Russia
and Belarus into a bastion opposing Western-sponsored democratic change.

In a year or so, a referendum
will be held in Russia and Belarus to merge the two nations. The
Russian Constitution will be rewritten, and the State Duma will be
disbanded to create a new joint parliament. The countries’ defense and
foreign ministries will be merged. Putin will be re-elected sometime in
2007 for seven years to be president of the new joint nation with
Lukashenko as vice president. Such a combination would solve the
so-called problem of 2008, the need to replace Putin, whose second and
last term as president under the current Constitution will soon end.
Lukashenko will run with Putin as vice president, assured that the
Kremlin will be his after Putin’s seven-year term ends.

So, do I think Putin and Lukashenko will run for election in 2007 on a joint ticket?  Well, probably not.  But, maybe.  Both men - particularly Lukashenko - are running scared of a potential democratic revolution which could leave them out in the cold.  Sometimes regimes that seem calm on the surface have hidden depths which seeth with turmoil.  As Felgenhauer notes in his article:

Putin and his close cohorts have reason to be
worried. The ruling elite is split today, and not in Putin’s favor.
Over the last year, discontent has spread rapidly, engulfing previously
loyal parts of the bureaucracy. It’s not well known to the general
public, but no secret to insiders: The middle ranks of the military,
security services and law enforcement are today disgusted with Kremlin
policies and no longer support Putin’s regime.

It’s amazing how quickly a revolution can come, and they regularly take not only observers, but the politicians who are overthrown by surprise.

But, equally, there are strong reasons why this potential union may never take place.  From Putin’s perspective, the whole deal smacks of desperation and a lack of subtlety. People may just turn around and laugh at him.  Lukashenko, meanwhile, will be carefully considering just how he can
persuade Putin that a man with a very small power base can remain
important enough to not be simply discarded when no longer needed.  Will Lukashenko be better off playing the role of "bullfrog of Belarus pond" for the role of "little fish swimming next to the great white shark of the post-Soviet sea"?

It’s 3:40am and I can’t sleep.  So, what better to do than read Publius Pundit? 

Belarus is the latest country in Robert’s sights, and this is just a part of what he has to say:

Regardless of Russian assistance, I’m setting at maximum September 2006 the date of Belarus’ revolution, the time of their next presidential election. No amount of gas deals and government dependence on Moscow will extend the government’s lifespan, as people power has a certain way of finding alternative means of reliance (read: looking westward).

The US will play an important role in this revolution — the US provides much financial and practical support for pro-democracy groups.  But, being so far away, the primary support the US can provide is inspirational.  It is, I believe, the proximity of the EU which means that Belarus will, sooner or later, be captured in democracy’s orbit.

One of the articles Robert cites notes that the EU has a 1,000 km border with Belarus.  Isn’t that amazing to imagine?  Just 16 years ago, the EEC (as the EU was then) only stretched as far as the East German border.  The rapid expansion of the EU over the past few years means that, instead of being some faraway utopia, the riches of democracy are practically within touching distance of the Belarussian people.  The organisers of Belarus’ opposition know that one last big push is all they need, and I’m sure they are planning to bring things to a head in September next year. 

Apologies if my writing was a little rambling. I think I’ve probably already said much of this before.  I just felt the need to write, is all. I could write so much more, but I can feel my cold medication beginning to kick in, so it’s back to bed for me.

But before I do, if you haven’t already, go read Robert’s article in its entirety. 

Vladimir Putin and his dog met with Belarussian President Lukashenko on Monday.  Here is how Kommersant reported their elaborately staged press conference:

The three main heroes – Vladimir Putin, Aleksandr Lukashenko, and Koni the Labrador [the Putin family dog] – entered the room a few minutes later. The president of Belarus did his best to get the dog’s attention. He petted him and kept trying to talk to him (he had obviously given up similar attempts with the Russian president much earlier). Koni put up with these persistent tokens of affection without complaint, but reserved the right not to return the affection. […]

The presidents sat in the chairs prepared for them. Koni lay at their feet.

“As far as I know, you and I have no problems, Aleksandr Grigoryevich,” Putin said to start the conversation, pretending that relations between the Belarussian president and his favorite dog were none of his business.

Read the whole article at Kommersant.com

An opposition protest in Minsk yesterday was broken up by truncheon wielding police. 

Showing he will not tolerate demonstrations like those that drove the presidents of Georgia, Ukraine and now Kyrgyzstan from power, [President] Lukashenko sent police into the streets Friday to disperse an estimated 1,000 protesters who chanted “Down with Lukashenko!” and “Long Live Belarus!”

34 protestors were arrested and, according to the Guardian, will be prosecuted.

Police spokesman Oleg Khlebchenko said prosecutors had opened a criminal cases for mass acts breaching the peace and could charge many of those detained - who would face up to a three-year jail sentence. The criminal case also could end up resulting in charges against people considered to be the organizers of the protest as well as those detained.

The Guardian went on to quote opposition leader Andrei Klimov.

“The opening of a criminal case shows that Lukashenko has really taken fright at the events in Kyrgyzstan, Ukraine and Georgia and is trying to crush any manifestation of democracy,” said Klimov, who was still at liberty on Saturday.

“The last dictatorship in Europe is surviving on fear and repression,” he said.

There is a fair chance that Lukashenko can continue to suppress opposition protests through violent means for the next year or so.  People in Belarus are not so much angry at Lukashenko’s government, but resentful and, while angry people tend towards taking action, resentful people tend more towards apathy.  The main reason that today’s protest failed was that the majority of Minsk’s residents are not yet angry enough to put themselves in harms way. 

A quick look at the three most important revolutions of the last year shows that they were all prompted by a single event - stolen elections in both Ukraine and Kyrgyzstan, and the assassination of an opposition leader in Lebanon.  These events were seen as sufficiently outrageous by the general public that it prompted them to shrug of their apathy and take to the streets.

The next Presidential election in Belarus is scheduled to take place in 2006.  Lukashenko has already served two presidential terms, but last year he rammed through a constitutional amendment that will allow him to serve a third term - assuming, of course, that he gets elected.  The 2006 election that he needs to win is likely to be marred by major fraud, in the same way as Ukraine and Kyrgyzstan’s were, and that is when the people of Belarus will have a single event to pin their anger on.

Daniel Drezner discusses a Peter Savodnik article which compares the different approaches of the EU and the US to aid and democracy promotion in Belarus.  The US directed much of its funding to groups opposed to the Belarussian government and promptly saw its aid programmes shut down.  Meanwhile the EU, which subits all of its aid through the TACIS programme for approval by President Lukashenko, is still there funding nebulous programmes that have no direct impact on democracy promotion.

Drezner comes down broadly on the side of the EU’s approach, noting that:

If the EU were to pursue a more "American" approach with its aid, Lukashenko would doubtless boot them out of the country as well. I’m no real fan of the EU’s current strategy, but it’s far from clear that there’s a better alternative. 

He then goes on to ask the question of his readers: what would you do to democratise Belarus?  The comments discussion which follows his post is fascinating, and I’d highly recommend checking it out.  Currently opinion seems to be divided between those who think that democracy is best promoted through targetting Belarus directly, and those who think Belarus is so dominated by Russia that it has no chance of democratising until Russia does.

The Sunday Times has a two-page summary article about the steps Aleksandr Lukashenko is taking to retain his hold on power, and the obstacles that the Belarussian opposition, which has tried to learn from the experiences of Ukraine, face:

The president has tightened his grip further since the “orange revolution” that brought the pro-western Viktor Yushchenko to power in neighbouring Ukraine. Several activists who attended the street protests there were beaten by KGB officers on their return.

Last month Mikhail Marinich, a leading opposition figure, was jailed for five years on charges of stealing computers from the American embassy — even though the embassy said it had lent them to him.

“Events in Ukraine have made him even more paranoid,” said Zinaida Goncharova, the wife of Viktor Goncharov, an opposition leader who vanished with a friend nearly six years ago after leaving a Minsk bathhouse.

Don’t expect times to get much easier for the opposition.  Lukashenko has just announced that he is to take over direct control of the Belarussian KGB (yes, they’re still called KGB in Belarus!):

"I am not going to give control over the KGB to some civil society, as our neighbors so beautifully put it. Control by civil society means disruption of the law enforcement structures," Lukashenko said while opening a meeting with the KGB’s leadership on Tuesday.