Lukashenko beat Putin to the punch
in confrontation over oil-price hike

By Yulia Latynina
Moscow radio talk show host

 Belarussian President Alexander Lukashenko has given his administration the assignment of replacing the $3.5 billion its economy lost as a result of higher prices for gas and crude oil from Russia. The two options suggested were the introduction of a rental fees for the land on which the pipeline to Europe stands and slapping a transit tax on Russian oil.

How Lukashenko arrived at the figure of $3.5 billion isn't clear. At the end of last year he said Moscow was subsidizing the Belarussian economy to the tune of a mere $180 million. Now, for some reason, the figure has climbed to $3.5 billion.

And $3.5 billion is not even the maximum. Lukashenko mentioned another figure, $20 billion to $25 billion, which he claims is the volume of Belarussian subsidies to Russia. So if and when he gets his $3.5 billion back, it's entirely possible he will be asking for another $25 billion.

What the actual sum might be is a moot point, since Lukashenko's grievance is groundless in the first place. It is like a con artist walking into a restaurant and confronting the owner, saying, "I ate a bad shrimp here and nearly died. I want $100,000 in compensation."

It's clear that the problem here is not the shrimp, but the con artist, who is engaged in a simple act of extortion.

It is important to understand that Lukashenko is behaving like the con artist in this story not because he lost his confrontation with Russia, but because he won. Russia had started out in April by demanding $200 per 1,000 square meters, but in the end settled for just over $46, plus a 50 percent share in Beltransgaz, the Belarussian pipeline operator, at a wildly inflated value of $5 billion. Russia had wanted to impose customs duties on oil exports to Belarus, but ended up backing off, thus making it possible for Lukashenko to resell the same oil to Europe after tacking on the same duties himself. Lukashenko managed to force Russia's hand with his insistent complaining about one bad shrimp.

It is clear why Russia ultimately caved in to Lukashenko's demands. In an extended conflict involving a pipeline closure, Russia stood to lose more than Belarus. As an oil producer, Russia would first have been forced to top off its storage tanks, and then to stop pumping oil, thereby violating contracts with foreign customers. This would have meant billions of dollars in losses. Belarus, as an oil importer, could have simply purchased the necessary quantities of oil from Ukraine. Lukashenko's tactics were designed to punish his Russian ally. The closure of the pipeline cost Russia more than it cost Belarus.

The two ways to deal with an irrational leader located in a strategically important zone are to: a) Send in the army, which is impossible because the Russian Army is a mess, as high- profile cases of hazing and the general reaction on the part of Defense Minister Sergei Ivanov have shown; or b) Support the opposition to the irrational leader and hope for his downfall, which is also an unacceptable approach due to the Kremlin's chronic allergy to the threat of regime change through revolution.

In other words, Russia, by virtue of its own phobias and weaknesses, stood before Belarus like the unfortunate restaurateur, trapped in his own restaurant by the con artist. There is no way the police can help, so the restaurant owner's hands are tied.

Taken all together, this is what Russia gets for being, at least according to the Kremlin, a great energy power. This is the way that energy riches increase the country's international influence.

Yulia Latynina hosts a political talk show on Ekho Mosk