Cash-Strapped Belarus Snubs Customs Talks

By Alex Anishyuk

The St. Petersburg Times

Russia and Kazakhstan said Friday that they planned to join the WTO together, but without Belarus, which snubbed a meeting on their trilateral customs union after Moscow ignored President Alexander Lukashenko's offer to trade Belarussian energy assets for lower fuel prices.

The prime ministers from Russia, Kazakhstan and Belarus had been scheduled to meet in St. Petersburg on Friday to sign documents on their customs union, which enters its second stage July 1. Prime Minister Vladimir Putin cast doubt on the deadline earlier in the week, saying 18 additional agreements needed to be signed.

Belarussian Prime Minister Sergei Sidorsky skipped the meeting because of "the current ongoing disagreements on some principal matters," spokesman Alexander Timoshenko told Interfax on Friday.

Despite the snub, Putin said Minsk was still welcome to join the customs union. But Moscow and Astana are ready to proceed with the union and accession talks to the World Trade Organization without Belarus.

"Of course, if we apply bilaterally as the customs union, it will be easier than if we applied trilaterally," Putin said during a news conference with his Kazakh counterpart, Karim Masimov. "The more sides participating in the process, the more problems. Because every state is protecting its economic interests."

After the first stage of the customs union formally came into force Jan. 1, Russia canceled a 36 percent discount on its oil export duty for Belarus. The move raised costs for Belarussian plants that refine and re-export Russian oil.

In return, Moscow dropped the duty altogether for 6.3 million metric tons of oil that Belarus needs for domestic consumption. But even the resulting $1.8 billion windfall could not cover the lost revenue for Belarus, which analysts estimated at $5 billion to $6 billion per year, or more than 10 percent of the country's entire economy.

"Since January, Minsk was deprived of a big part of its revenue, which makes it economically unfeasible for Minsk to proceed with the trilateral customs union," said Yaroslav Romanchuk, head of Mises Center, a Belarussian liberal think tank.

Lukashenko created a small sensation ahead of the Friday meeting when he said he was ready to sell control in Beltransgaz, which operates the Belarussian gas transportation system, to Gazprom in exchange for cheaper gas.

"I'm not opposed [to selling Beltrangaz] if they say that they will supply gas to Belarus at the internal Russian prices in exchange," Lukashenko said Thursday, Interfax reported. "If it is on equal terms, then [let them] take the controlling stake."

He also offered up the Mozyrsky oil refinery, one of the two plants that refines Russian crude, in exchange for oil at Russian domestic prices.


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