Identifier | Created | Classification | Origin |
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07MINSK13 | 2007-01-05 13:56:00 | CONFIDENTIAL | Embassy Minsk |
VZCZCXRO0767 RR RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR DE RUEHSK #0013/01 0051356 ZNY CCCCC ZZH R 051356Z JAN 07 FM AMEMBASSY MINSK TO RUEHC/SECSTATE WASHDC 5498 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE RHMFISS/DEPT OF ENERGY WASHINGTON DC RUEHVEN/USMISSION USOSCE 1391 RUEHBS/USEU BRUSSELS RHMFISS/HQ USEUCOM VAIHINGEN GE RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK |
C O N F I D E N T I A L SECTION 01 OF 02 MINSK 000013 |
1. (C) On January 3, Belarusian PM Sergey Sidorskiy announced duties of USD 45/ton on Russian crude oil shipped via pipeline through Belarus effective from January 1. If crude shipments were to continue at their 2006 volume, Transneft would pay the GOB USD 3.1 billion in duties. Lukashenko explicitly tied the duty to Russia's imposition of export duties on oil sold to Belarus. The GOB still hopes to settle differences over oil, because it stands to lose economically if a trade war with Russia continues. Politically, Belarusians think that Lukashenko's approach will surely alienate the Russian elite even further. End summary. Transneft, Can You Spare USD 3 Billion? -------------------------- 2. (U) On January 3, PM Sergey Sidorskiy told press the GOB had set USD 45/ton as the duty on Russian crude transiting Belarus. On December 31, the Belarusian Council of Ministers passed a resolution imposing a duty effective January 1 at a rate to be determined later. On January 4, the state oil company, Belneftekhim, announced it had informed Transneft of the USD 45 duty. 3. (SBU) Speaking at a January 3 conference, Lukashenko linked the decision to Russia's imposition of an export duty on oil shipped to Belarus (ref A). He stated Russia's move had worsened conditions for Belarusian oil refineries and necessitated action from the GOB to protect its budget and jobs. On January 4, MFA Spokesman Andrey Popov affirmed the duty was not intended to disrupt oil shipments through Belarus. 4. (SBU) Russia exports approximately 70 million tons of oil annually through Belarus (another 20 million tons are sold to Belarus). If Russia were to continue exporting the same rate, Belarusian customs would collect over USD 3 billion in duties from Transneft. Not surprisingly, this is the same amount the GOR would stand to collect due to its new export duty on oil sales to Belarus. Naturally, Russian companies would seek alternate routes, but Olga Tochitskaya, Deputy Director at the Institute for Privatization and Management, said in the short term Russian options would be limited. Likely Russian Countermeasures: Negotiation or a Trade War -------------------------- -------------------------- 5. (C) PM Sidorskiy did not give reporters details of his three-hour January meeting with Russian PM Mikhail Fradkov, but he did claim both sides agreed to work diligently to resolve their differences over oil. Belarus was certainly pleased with the status quo ante, and Lukashenko declared January 3 that even a 50-50 split of the export duty would suit Belarus. Mises Research Center Yaroslav Romanchuk told Acting Pol/E Chief such an outcome was unlikely, but Belarus might realistically hope to reduce the duty to 70 percent (from its current rate of 85 percent of the usual export duty). 6. (C) Barring successful negotiations over oil, Romanchuk, Tochitskaya and economist Mikhail Zalesskiy said Russia would likely limit Belarusian firms' access to the Russian market. All three agreed such a move would threaten Belarus' economy. Zalesskiy added that Russia would discourage its oil companies from using the Naftan and Mozyr oil refineries. He believed excess capacity in Russian refineries might be able to take up the slack. He did note Russian firms themselves could lose out from pressure on Belarusian refineries given Slavneft's stake in the Mozyr refinery and Lukoil's network of gas stations in Belarus. If Push Comes to Shove ... Lukashenko Lists Other Threats -------------------------- -------------------------- 7. (C) While until fairly late in the gas negotiations Minsk had limited its threats (ref B), on December 29 Lukashenko MINSK 00000013 002 OF 002 mentioned charging Russia for its military bases in Belarus and even charging Russian planes to fly over Belarusian airspace. Lukashenko again mentioned military bases January 3. Tatyana Manenok of the independent weekly "Belarusy i rynok" believes a threat to the bases would likely cause Russian Deputy Prime Minister and Defense Minister Sergey Ivanov to step in to defuse a crisis. 8. (C) Our interlocutors noted Lukashenko was not giving the impression of someone ready to back down. Zalesskiy said it looks like Lukashenko is ready for a fight. Romanchuk characterized Belarus' decision to impose a duty as hasty, and said Lukashenko was showing his desperation. Tochitskaya said the decision may have been purely emotional. Director of the Wider Europe NGO Vyacheslav Pozdnyak told Acting Pol/E Chief Lukashenko appears to be under great psychological pressure, and will respond with pressure of his own hoping Moscow will back down. Comment: Russia Has to Dance with the One They Brought? -------------------------- -------------------------- 9. (C) Lukashenko likely believes threats to cut off gas supplies to Europe helped him win significant concessions in gas negotiations (ref B). Thus, it does not seem illogical to us that he would attempt to win further concessions through a new round of threats, this time to Russia's oil interests. Perhaps Lukashenko is purposely cultivating his image as a rabid provincial in hopes that Moscow, like independent analysts in Minsk, believe the Belarusian president is irrational enough to escalate the row beyond the realm of economics if the Kremlin does not compromise over oil duties. 10. (C) Tochitskaya said her Russian contacts told her Lukashenko would soon become public enemy number one in Moscow if energy relations were not resolved shortly. Romanchuk added Lukashenko had definitely shown himself as the wrong person to protect Russia's interests in Belarus. However, Moscow remains without a clear alternative to the current dictator (refs C and D). If the conflict continues, Moscow's prospects of a better option do not look any better this spring. As Aleksandr Milinkevich noted in a January 4 interview, Lukashenko's popularity has risen after the gas dispute. Lukashenko is certainly hoping Putin will decide the best course is to pass off the Belarus problem to Russia's next president. Moore |