Due to absence of oil supply agreement Belarus’ forecast for 2017 could be failed

November 28, 2016 9:13
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Belarus is attempting to reintroduce higher tariffs on the Russian oil transit as an argument in the gas and oil dispute with Russia. Financial and reputational losses from the dispute have already exceeded the benefits from the conflict prolongation, and the absence of solution may lead to problems with the implementation of Belarus’ development plans for 2017.

Belarus intends to increase transit costs for the Russian oil through Belarus in 2017 by 20.5%. This step is yet another attempt to resolve the oil and gas dispute with Russia. Due to incomplete procedures regarding additional terms to the new agreements on gas supplies (the price of natural gas for Belarus may be reduced from USD 136 to USD 100 per 1000 cubic metres) and the lack of due payments for previous deliveries (USD 300 million in total), Russia carries out reduced oil supplies to the Belarusian refineries.

Belarus’ attempt to increase the transit tariff is yet another attempt to strengthen the negotiating position in the dispute with Russia over the terms of gas and oil supplies. As regards oil, Russia insists on the compliance with the commitments on counter-supply of gasoline and the reduction in tariffs for processing Russian oil, and Belarus - on reducing prizes for Russian companies for the oil supply. In early October 2016, Belarus unilaterally doubled the oil transit tariff. In a week, the parties reached an agreement on the terms of debt repayment, after which oil supplies would be resumed in the higher volume. As of early November 2016, the debt was still circa USD 300 million, i.e. Belarus did not confirm the intention to repay the debt with a transaction, hence, Russia did not resume the oil supply in set volumes.

The only advantage for Belarus to delay the payment for gas is that it preserves her international reserves. As of November 1st, 2016, Belarus’ international reserves totalled USD 4.8 billion. In order to meet commitments within the credit programme with the EFSR, as of January 1st, 2017, Belarus’ international reserves should be at least USD 4.9 billion. Amid negative trends in Belarus’ international trade, if she makes the payment of USD 300 million, she may be unable to meet the EFSR requirement on the key date, which may lead to the suspension of the remaining tranches. Due to curtailed oil supply to Belarus, Russia may save circa USD 400 million (an equivalent of 5 million tons of oil), while Belarus will lose a lion’s share of foreign exchange earnings. In addition, her ability to mitigate rouble exchange rate fluctuations will be reduced, and she will suffer reputation losses as a consumer country, which does not pay for the delivery of products at prices below market rates.

Further delay with the settlement is likely to delay the resumption of oil supply in agreed volume, to lead to budget losses from uncollected petrochemical duties, to reduce petrochemicals production, and finally, Russia may adjust possible compensation for gas supplies. As a result, Belarus’ forecast with 1.7% economic growth in 2017 could be in jeopardy and the currency shortage may prompt the authorities to search for additional sources to service the increased public debt in 2017.

Overall, the transit tariff for Russian oil is one of the few arguments Belarus can use to improve her position in the oil and gas dispute with Russia. Belarus is prompted to find additional external sources to repay the gas debt, so as the delay with the settlement of the oil and gas dispute could derail Belarus’ socio-economic development plans in 2017.

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The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.

In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.

The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.

There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.

That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.