Wednesday, June 23, 2010

Has Lukashenko’s Fortune Turned?

By Jiri Kominek

The latest “gas war” involving Gazprom, and this time Minsk rather than Kyiv, appears to have more to do with the Kremlin attempting to reign in the renegade Belarusian President Alyaksandr Lukahsenka (Alexander Lukashenko) as a subordinate of Moscow than with unpaid gas bills.

While Gazprom began halting gas shipments to Belarus on June 21 over claims that Minsk owes $192 million USD in back payments, the following day Lukashenko ordered a gradual halt in gas shipments to the EU until the Russian gas giant pays $260 million USD in outstanding transit fees.

“This latest conflict is not about a few hundred million in gas fees, what we are witnessing is the culmination of a gradual decline in friendly relations between Russia and Belarus as the former appears to have had enough of Lukashenko who is successfully torpedoing their efforts to create a new Common Economic Space, in other words Moscow’s answer to the EU,” said Prague-based Russia expert Ondrej Soukup.

The relationship between Lukashenko and the Kremlin has been gradually declining over the past five years to the point where both sides cannot stand one another. There appear to be plenty of factors contributing to the Kremlin’s loss of patience with their man in Minsk. For one thing, Lukashenko’s relationship with self-exiled Russian tycoon Boris Berezovsky and the refusal to extradite former Kyrgyz President Kurmanbek Bakiev have not helped.

On more strategic matters, Lukashenko complicated the Kremlin’s efforts to integrate the former Soviet space along economic and geopolitical lines when he boycotted the Collective Security Treaty Organization (CSTO) summit in Moscow on June 14, 2009.

More recently, Belarusian officials chose not to turn up at the much touted and well-planned customs union summit in St. Petersburg on May 28 designed to forge closer economic ties between Russia, Belarus and Kazakhstan.

Although it took a while, Lukashenko has finally realized that with the creation of a customs union and the Common Economic Space the lion’s share of economic and political power will shift to Moscow, leaving him marginalized. After all, the Kremlin has been pressuring Belarus to sell state-owned assets ranging from oil refineries to banks for some time.

Hair-brained schemes to import a few tanker loads of crude oil from Venezuela via Ukraine will not secure Belarus’ independence from its giant, energy-rich neighbor to the East. The days when Lukashenko and his cronies were able to profit from cheap Russian crude oil converted into gasoline at refineries in Mozyr and Novopolotsk and then shipped to customers in the EU appear to be over. So are the massive profits earned by him and his cronies from such arrangements that were then funnelled via a daisy chain of opaque offshore companies registered in Austria, Latvia, St. Kitts and Nevis, and elsewhere.

“Lukashenko will have no choice but to call elections very soon in which he will present himself as the champion of national interests standing up to the rich and oppressive men inside the Kremlin who seek to undermine the sovereignty of Belarus,” said Ondrej Soukup. Soukup then added, “The Kremlin, however, appears to have fallen into its own trap since through its past support of Lukashenko it succeeded in stamping out any political alternatives to the dictator.”


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