Loveless brothers

Jan 11th 2007 | MOSCOW
From The Economist print edition

AFP

Another Russian gas conflict was averted, but a short oil war broke out instead. Europe should take heed

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RUSSIA and Belarus, its ex-Soviet neighbour, are supposedly brotherly Slavic nations that are in the process of forming a union state. There are indeed some striking family resemblances. Both have irascible authoritarian presidents—Russia's Vladimir Putin and Belarus's brutal Alyaksandr Lukashenka—and both are inclined to risky diplomatic brinkmanship. This week that similarity propelled them over the brink and into an unfraternal trade dispute. Brief though it may have been, it had important implications for Russia's energy dealings with Europe, and perhaps also for the future of benighted Belarus.

A year ago, wrangling over the price of gas sold by Russia to Ukraine briefly diminished the flow of gas through Ukraine to Europe. At the end of 2006, Belarusian resistance to Russia's demand that it too pay more for gas threatened to unleash another so-called “gas war”. The modest economic growth that Mr Lukashenka terms the “Belarus economic miracle”—which along with his total control of the media and harassment of opponents has shored up his regime—has in fact been largely based on massively discounted Russian gas imports.

In the event, the two countries cantankerously reached a deal on an increased gas price just before their New Year's Eve deadline. But a few days later, an oil war broke out instead: Russia imposed new duties on the crude oil it exports to Belarus (refining and re-exporting it have been a crucial money-spinner for Mr Lukashenka, in effect another big Russian subsidy to the Belarusian economy). In revenge, Belarus demanded a transit fee on the oil that crosses Belarus to other European customers. The Russians refused—and Belarus began siphoning off oil in lieu of payment. On the night of January 7th Russia stopped pumping oil into a pipeline network that crosses Belarus and delivers 12.5% of the European Union's oil needs. Supplies to Poland, Germany and others stopped flowing.

The two countries' tactics may be similar, but their muscle is not. Mr Putin talked of cutting oil production and rerouting supplies. The Russians also threatened duties on all Belarusian goods, many of which would struggle to find markets elsewhere. On January 10th, after the presidents talked on the telephone, Mr Lukashenka blinked; the transit fee was lifted; and oil began to flow again before Europe was seriously affected. Nevertheless, the short but nasty spat has telling lessons.

One is that, with the Russians in this mood, Mr Lukashenka's grip on Belarus may be in jeopardy. While others reviled him, Mr Putin stood by Mr Lukashenka during his rigged re-election last year. But Mr Putin's motive was more aversion to European meddling in Russia's “near abroad”, and to the so-called “colour revolutions” of the kind that overtook Ukraine in 2004, than affection for Mr Lukashenka. Personal relations between the two men are said to be rancid; a proper union between their two countries, a plan Mr Putin inherited from his predecessor, Boris Yeltsin, now looks fanciful. (Mr Lukashenka is said to have cooled on the idea after it became clear that he was unlikely to remain president after the merger.) In the absence of a reliable alternative, defenestrating Mr Lukashenka may not be part of Mr Putin's plan. But the new gas price alone could seriously damage Belarus's mostly state-owned factories and collective farms, and alienate ordinary Belarusians.

The affair also confirms the increasingly poisonous nature of Russia's dealings with many of its former vassals. Energy feuds are both a cause and a symptom of this trend. Georgia, Mr Putin's least favourite ex-Soviet neighbour, has been forced to accept a price for Russian gas that is more than twice the new one for Belarus. But supplies from neighbouring Azerbaijan are helping Georgia through the winter, and they may soon, says Nika Gilauri, Georgia's energy minister, replace Russian imports altogether. With its own oil and gas deposits in the Caspian Sea, Azerbaijan itself recently rejected what Hafiz Pashayev, the deputy foreign minister, describes as the “unreasonable” gas terms offered by Russia, and stopped importing Russian gas. It has also ceased sending its oil through Russian pipelines.

The most important lesson for Europe, however, is once again that over-reliance on Russian energy is dangerous. In principle, the Kremlin's drive to charge its neighbours more for gas is reasonable. Overall demand for Russian gas is outstripping supply; suppressing demand in the ex-Soviet states should make more gas available for export to the more lucrative European market. In the particular case of Belarus, the Russians deserve some sympathy. Until last year they were criticised for coddling Mr Lukashenka with preferential gas terms—and Belarus's re-export of duty-free Russian oil was, as one foreign observer in Minsk puts it, an obvious “scam”.

But however reasonable its aims, Russia's bullying and capricious methods, plus its volatile relationship with energy transit countries and carelessness over the impact on European consumers, have rightly alarmed European leaders. Though Mr Putin pledged to “do everything to secure the interests of Western consumers,” Germany's Angela Merkel spoke of damaged confidence. The Europeans should also note that Russia has emerged from its tussle with Belarus with a 50% stake in Belarus's gas pipeline (payment for which will partly offset the gas-price hike), strengthening the Kremlin's grip on Europe's energy infrastructure. An EU energy strategy released this week talked about the need for diversifying suppliers and dealing with them collectively: the quicker, the better.