Books on Belarus
Update No: 313 - (25/01/07)
Russia turns sour
Belarus, under the authoritarian President Alexander Lukashenka, has been one of
Russia's closest allies in the region. The countries signed a loose union treaty
in the mid-1990s and no visas are needed for land travel between them.
While Russia has supported the dictatorial Lukashenka in the face of severe
Western criticism, it has appeared uneasy over his heavy-handed suppression of
opposition and irritated at his insistence that small and poor Belarus can only
be unified with Russia on an equal basis.
Yeltsin played him along. But relations have been tense under Russian President
Vladimir Putin, who angered Lukashenka by floating an integration plan under
which Belarus would essentially become a province of Russia.
The polar bear-hug
If Belarus is not a Russian province, then it is a foreign country like any
other and should be treated as such. That is the Kremlin's new line.
Residents of Belarus' capital have stocked up on warm clothes and electric
heaters as fears rose that Russia was about to cut off the natural gas on which
the country depends. Russia says Belarus must pay more than twice as much for
gas this year - and even more later - and turn over a half-share in its pipeline
system, a major transit route to Europe, if it wants to avoid a gas shut-off.
The dispute bears strong echoes of last year's crisis between Russia and
Ukraine, which caused ripples of concern in Western Europe, whose supplies of
Russian gas were briefly disrupted. The price dispute with Ukraine in early 2006
resulted in temporary supply reductions to European customers, raising concerns
about Russia's reliability.
But in that case, Russia's price demand was seen as political pressure against a
Western-leaning government; this time it is against a country whose longtime
leader has close ties with Moscow.
Belarusian opposition leader Alexander Milinkevich suggested Gazprom's demands
are aimed at forcing President Alexander Lukashenka to cede control over the
pipeline network and other attributes of sovereignty in exchange for continued
Russian support for his authoritarian regime. "Through energy pressure, the
Kremlin is trying to force Lukashenka to integrate according to the Russian
scenario, which is extremely dangerous for Belarus," Milinkevich told The
"In the absence of a contract, there is not and cannot be a basis for the
delivery of gas to any country or any consumer in the world," Gazprom's
export division chief Alexander Medvedev said.
Lukashenka said the talks on Russian supplies were "very difficult"
and urged energy saving. "In the conditions of pressure on Belarus one must
know how to live within one's means and economize, especially on energy,"
Medvedev said a shut-off would not affect the 30 percent of Russian gas
deliveries to Europe that transit Belarus. Much of the Russian gas destined for
Poland and Germany, among other countries, goes through a pipeline that is
already owned by Gazprom but is under the day-to-day control of the Belarusian
pipeline network, Beltransgaz. "The issues of transit and supplies are not
linked and will not be linked," Medvedev said. But he also
raised the possibility that Belarus would seek to siphon gas meant for European
customers, saying that gas "will be delivered to the Russia-Belarus border.
How the Belarusians will conduct themselves I don't want to guess, but I hope it
won't come to that."
Medvedev said Gazprom had scrapped its initial demand that Belarus begin paying
US$200 per 1,000 cubic meters of gas in 2007. Under what he called a final
offer, Belarus would pay US$105 this year - well below world market prices, but
more than twice the US$47 it now pays.
The price would consist of US$75 in cash and US$30 in shares of Beltransgaz, he
said. It would increase annually at the same rate as prices for Russian
industrial consumers, reaching a market-style European price - minus the transit
cost and export duties, which will be exempted - in 2010. Gazprom would pay for
a half-share in Beltransgaz by allowing Belarus to pay US$30 per 1,000 cubic
meters in shares over the next four years.
The increasing price would be a severe blow to Belarus' Soviet-style state-run
industries, whose financial health - and, in turn, a portion of Lukashenka's
popularity - depends on cheap gas.
Deal is struck
The Minsk government had little choice but to comply with Moscow's demands.
On the New Year it did exactly that.
Lukashenka must be seething. He must realize that in the Yeltsin era he had far
more leverage with a weak and slighted Russia. Putin's Russia is a far more
formidable affair and does not take kindly to him. The sophisticated Putin
regards him as a clown, whereas Yeltsin saw him as a soul mate. They bonded over
many a tipple and manly session, while with Putin it is going to be a strictly
FOOD & DRINK
BBH acquires 30% of brewery for US$13.6m
Baltic Beverages Holding AB (BBH) has acquired 30 per cent of the Belarus
brewery Olivaria, Nikolai Dudko, the brewery's director, said, Interfax News
The deal was sealed in Minsk on December 20th. The brewery issued an additional
36,711 common shares with par value of 376,590 Belarusian roubles, which were
all purchased by BBH for US$13.6 million. BBH has also allocated a loan of
US$4.9 million to the brewery, Dudko said. The money will be invested in
development and be used to repay debts on earlier loans raised from Belarusian
banks, he said. Increasing the Olivaria charter capital and selling the
additional shares to BBH has reduced the EBRD stake in the brewery to 21 per
cent from 30 per cent. Private shareholders own about 49 per cent. The EBRD
acquired 30 per cent of additional Olivaria shares in the fall of 2005 for 8.97
billion Belarussian roubles (US$4.1 million). Olivaria holds about 10 per cent
of the Belarus beer market, Dudko said. The brewery was established in 1994 on
the basis of the Belarus brewery. The company plans to produce 36 million litres
of beer in 2006, up 37 per cent. Production is set to grow to 45 million litres
MINERALS & METALS
Steel mill to invest US$200m in 2007
Byelorussian Steel Works (BMZ) plans to invest US$200 million in development in
2007, Interfax News Agency reported on January 10th, citing Viktor Matochkin,
the deputy director general of Belarus' biggest steel mill.
Matochkin said the plant, from the Gomel region, would not have to curtail its
investments due to higher energy costs. "The project to build a pipe
rolling division is being carried out and construction has not stopped for a
single day so far this year due to the increase in energy costs. The same can be
said about other aspects of the investment program," Matochkin said.
Matochkin said BMZ would be paying 30 per cent more for gas this year, and that
electricity would also go up. "We are analysing economic and technical ways
to minimise losses from the rise in energy costs," he said. Electricity
charges from BMZ went up 29 per cent in 2006. They had previously risen 14 per
cent on average.