Putin’s Price

Without support from Russia, Belarus’ authoritarian leader, Alexander Lukashenko, would have a much more difficult time staying in power. A substantial share of recent economic growth in Belarus has come from the difference between the below-market prices it pays for oil and natural gas from Russia and the world-market prices it receives for refined products and for oil and gas transported to Western markets. But now the bill for Putin’s backing is starting to come due.

According to reports in the Russian newspaper Kommersant, Russia is demanding a share of the revenue that Belarus receives for the gasoline it exports; this gasoline is refined from Russian oil that is imported at subsidized rates. The Russian demand is estimated at roughly EUR 900 million, a not insignificant sum for a poor-ish country like Belarus. Furthermore, Gazprom, Russia’s state-owned natural gas monopoly, is tripling what it charges Belarus for gas beginning in 2007. Gazprom also wants control over the Belarusian company that transports gas through the country to Western Europe. Negotiations on these last two items are set to start in early May, but it’s hard to see what cards Belarus holds. Lukashenko will pay the price for Russian support.

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About Doug Merrill

Freelance journalist based in Tbilisi, following stints in Atlanta, Budapest, Munich, Warsaw and Washington. Worked for a German think tank, discovered it was incompatible with repaying US student loans. Spent two years in financial markets. Bicycled from Vilnius to Tallinn. Climbed highest mountains in two Alpine countries (the easy ones, though). American center-left, with strong yellow dog tendencies. Arrived in the Caucasus two weeks before its latest war.

1 thought on “Putin’s Price

  1. Given the recent reports from Tehran and the likely spike in oil prices, this cannot hurt that much. To be blunt, a share of the profits is simple fairness.

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