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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Belarusian authorities resume political cycle: repressions follow liberalisation
March 27, 2017 10:42
Фото: Vasily Fedosenko/Reuters

The Belarusian authorities have revived the cyclical political agenda, including preventive crackdown with the use of force during the Freedom Day rally in Minsk and a loyal attitude to the participants in the opposition events in the regions. The protest rally in Minsk has evidenced that the Belarusian society has freed from the post-Maidan syndrome and showed high self-organisation capacity during the event in the absence of opposition leaders. In the future, the authorities are likely to expand the framework for sanctioned and legal activity for the moderate opposition in order to reduce the potential for street protests.

The Freedom Day march in Minsk on March 25th, 2017 was marked by unprecedented and brutal detentions before and during the event.

The Belarusian leadership has managed to stretch in time the political cycle - liberalization followed by repressions - and move beyond the electoral campaigns. Simultaneously, Minsk has demonstrated a rather high mobilisation potential under political slogans, despite the pressure from the state media and security forces before and during Freedom Day, including the presence of armed officers and new special equipment to disperse demonstrations in the streets of Minsk. That said, in other towns (Vitebsk, Gomel, Brest and Grodno) the Freedom Day march led by the opposition, was sanctioned by the local authorities (except Vitebsk), albeit there were fewer participants than in February and March protests against the decree on social dependants.

The Belarusian leadership has depersonalised (removed leaders) the protest, preventively weakened the protest movement, and has not opted for the harsh crackdown like in 2010 with many injured and hundreds arrested. For instance, some party leaders were preventively arrested or detained (Lebedko, Rymashevsky, Gubarevich, Neklyaev, Logvinets, Severinets) before the event. Nikolai Statkevich has disappeared and his whereabouts are currently unknown. Some could not pass through the police cordons (Yanukevich and Kostusev) or participated in the rallies in the regions (Dmitriev, Korotkevich and Milinkevich).

Despite the lack of protest leaders, some demonstrators managed to self-organize and march down the Minsk centre. The march was unauthorised but gathered several thousand participants. Many were detained by the law enforcement and later released without charges. In addition, the Belarusian law enforcers used some tactics of the western riot police against peaceful protesters, allegedly in order to mitigate the criticism from Western capitals.

Nevertheless, the Belarusian authorities have used the entire set of propaganda and power mechanisms applied during the highly politicised 2006 and 2010 elections - criminal prosecution of the opposition leaders, preventive detentions and arrests of activists, harsh propaganda campaign in the state media and, finally, the crackdown on the protest action in Minsk with the use of force.

Overall, the mobilisation potential of the Belarusian society remains high and the authorities are likely to expand the legal framework for public participation in politics in order to absorb superfluous tension.