Oil supplies from Russia as most effective tool to influence Belarus’ leadership

April 22, 2016 18:38

On September 17th, the Russian Energy Ministry reported that in Q4 2013, 3.1 million tons of Russian oil will be supplied to Belarus.

Following the Russian Energy Ministry’s announcement to reduce the oil supply in Q4 2013, Belarus said it could extradite the Uralkali CEO to Russia, which implies that it has realized the consequences of the ‘potash conflict’ escalating further. A reduced oil supply in Q4 may significantly affect the performance of Belarusian refineries, the main donors to the 2013 budget. Russia may offer to maintain the volume of oil supply in 2014, but under the condition that it may acquire assets.

After the visit of Rosneft Head, Sechin, Belarus hoped that the supply of oil in Q4 2013 would be 5.5-5.7 million tons, making it circa 22 million tons in 2013 (i.e. 1 million tons less than originally planned). By late October, the Mozyr Refinery will have finished repairing its catalytic cracking unit which reduces the need for the crude oil by about 0.8-0.9 million tons.

However, the Russian Energy Ministry threatens to reduce oil pipeline supplies to Belarus to a minimum. Shipment of oil by rail is limited by existing capacities (300 thousand tons per month) and higher costs. Therefore, refineries might face a significant reduction in capacity utilization, which is extremely undesirable given the growing budgetary hole.

For these economic reasons Belarus had to change its tone while talking about the ‘potash conflict’. Belaruskali is running at half its capacity, and preliminary estimates indicate that the exports of potash fell in August to 44,000 tons, much lower than the average monthly export volume in H1 2013 (550,000 tons). Claims by Rospotrebnadzor against dairy and meat products, coupled with potential significant reductions in crude oil refining, threaten the Belarusian economy with an uncontrolled collapse. Potentially, the country’s gold reserves could be used to alleviate the situation, but their level is insufficient and might reduce even further if the ‘potash conflict’ escalates. The Belarusian authorities have no choice but to try to solve the conflict concerning the Uralkali CEO’s arrest peacefully.

The situation is not in Belarus’ favour. Statements about Uralkali’s ‘bankruptcy’ may have a significant impact on reconciliation negotiations between former partners in the Belarusian Potash Company (BPC). The Russian government has adopted the 2014 – 2016 budget, which envisages cuts in spending on social programmes. Belarus needs to find a very strong argument to keep the supply of oil in 2014 at the required level, since Russia may seek to gain additional budgetary proceeds via reorientating its oil exports (increase exports of oil to third countries, which, unlike Belarus, make full duty payments). The sale of a Belarusian oil refinery asset could be such an argument. Alternatively, the volume of duty-free supply of oil to Belarus might be substantially reduced.

By reducing the supply of oil to Belarus, Russia has efficiently solved the ‘Belarusian’ problem. Belarus has no alternatives for oil imports on favourable terms and desperately needs financial resources, making the privatization of some large state-owned enterprises inevitable.

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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.