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Poland, Belarus & Ukraine Report: December 27, 2005

27 December 2005, Volume 7, Number 43
WHERE DOES RUSSIA-BELARUS UNION GO FROM HERE? It has been nearly 10 years since Russia and Belarus declared their will to form a common state. In September, Belarusian President Alyaksandr Lukashenka promised "landmark" decisions to be made by the end of this year regarding Belarus's integration with Russia. However, his meeting with Russian President Vladimir Putin on 15 December did not provide any clue as to what those decisions might be.

It was long expected that Lukashenka and Putin would meet in Moscow, in mid-November or mid-December, within the framework of the Higher Council of the Russia-Belarus Union State. That forum also includes the prime ministers and foreign ministers of both countries. Back in September, Lukashenka suggested that this upcoming meeting would be "significant, momentous, and landmark, particularly in furthering our unity."

But Lukashenka's meeting with Putin in the Russian sea resort of Sochi on 15 December was held on very short notice. And, contrary to expectations, it was devoted to economic matters, not political. "I want to confirm our agreements regarding relations between our financial agencies," Putin said. "You will recall our talks about the need to support our Belarusian partners and achieve balanced decisions with respect to energy supplies. The Russian government has prepared the necessary documents and I hope they will be adopted by the end of this year."

Did Lukashenka really want to meet Putin just to confirm that Belarus will receive Russian gas in 2006 at the same price as this year, that is, at $46.68 per 1,000 cubic meters? Putin promised not to increase this price for Belarus as early as in April, and Gazprom officials have reconfirmed this pledge on more than one occasion.

It was indirectly confirmed that Lukashenka may have discussed political issues with Putin when, the following day, Belarus's lower house of parliament hastily and unexpectedly announced that next year's presidential election will take place on 19 March. The election will take place four months ahead of the latest date allowed for the vote by the country's constitution.

Many Belarusian and Russian commentators have said that Lukashenka met with Putin primarily to communicate his decision to hold the presidential election at an earlier date and seek the Kremlin's approval for his anticipated third term. Whatever answer he might have received from Putin, Lukashenka looked rather pleased when thanking the Russian president for continuing gas and oil supplies at discount prices. "I want to thank you, Vladimir Vladimirovich [Putin], because your government and your energy companies have carried out your order and we have practically finalized our contract for gas and oil supplies to Belarus," Lukashenka said. "We have learned to save, and to save well. This year we may have not even imported the agreed volumes of gas and oil in full because our supplies have been sufficient for our economy."

It is likely that, once again, Putin will back Lukashenka's bid for the presidency. After the Rose Revolution in Georgia in 2003 and the Orange Revolution in Ukraine in 2004, Moscow seems to have developed an allergy for any other "colored revolution" in the post-Soviet area. Therefore, Lukashenka, a loyal political ally of Russia since his inauguration in 1994, could count on the Kremlin's political and economic support for his reelection this time as well.

It is not clear, however, what Lukashenka had to promise to Putin in exchange for such support. Last year, Moscow unambiguously indicated that it wants control over Beltranshaz, the state-run operator of Belarus's gas-pipeline network. Lukashenka, who promised in 2002 to set up a Belarusian-Russian venture to run Belarusian gas pipelines, backed down on his decision in 2004. That provoked an angry response from Gazprom, which even cut off Belarus's gas flow for one day.

Earlier this month in Moscow, Belarusian Deputy Prime Minister Uladzimir Syamashka said the talks about the purchase of a stake in Beltranshaz by Gazprom have been reopened.

The most recent Lukashenka-Putin meeting also appears to signal that Moscow has shifted its attention from political to economic issues in its relations with Minsk even further than before.

Earlier this month, Russia-Belarus Union State Secretary Pavel Borodin divulged to journalists that both sides are currently working on no fewer than nine versions of the Constitutional Act of both states, that is, a common-state constitution. However, neither Lukashenka nor Putin found it necessary to say a word about this issue after their talks in Sochi.

This may not be so surprising when one recalls that Russia's clearest stance so far on integration with Belarus was formulated by Putin in August 2002. Putin then proposed an "ultimate unification" of both states by incorporating Belarus into the Russian Federation as a whole or dividing it into seven new federal regions. Arguably, such a form of integration hardly needs any additional constitution at all.

At that time Lukashenka indignantly rejected this incorporation proposal. But will he be able to withstand such an integration scenario during his anticipated third term, when economic considerations might force the Kremlin to increase gas prices for Russia's staunchest post-Soviet ally as well? (Jan Maksymiuk)

EARLY PRESIDENTIAL VOTE MEANS SPARSE CANDIDATE LIST. Lawmakers in Belarus last week set the date of the country's presidential election not for July, as had been earlier suggested, but for 19 March.

That decision leaves potential candidates with far less time to prepare for the race. Hopefuls now have just three days until 23 December to meet the first requirement in the registration process -- collecting the names of at least 100 supporters to form a nomination group.

Critics say the earlier date is part of a strategy by incumbent President Alyaksandr Lukashenka to ensure his reelection to a third term and to deflate the threat of the political opposition.

In addition to Lukashenka, there are currently five potential candidates vying for a spot on Belarus's presidential ballot.

By 27 December -- when the nomination groups are formally announced -- there may be fewer. And by the 19 March vote, fewer still.

One challenger expected to stay on the ballot is Alyaksandr Milinkevich, the candidate of the united opposition forces.

Milinkevich announced his intention to enter the race in early October. Since then, he has conducted a grass roots campaign to build a support base, often going door-to-door in an attempt to meet potential voters.

Milinkevich is better prepared than most -- his nomination group will have far beyond the minimum 100 people required for registration. Still, he told RFE/RL's Belarus Service the new, early date for the presidential vote is a setback nonetheless.

"To include people in your nomination group, you need to talk with each of them [to make sure] they won't resign afterwards," Milinkevich said. "We have had our list of activists for a long time already. This work is being done now, [but] the group will not be as large as I had expected. I thought that by the summer we could have as many as 10,000 people. We will have fewer people [now]. However, they will be numbered in thousands, not hundreds."

Few observers were surprised by the decision to move up the date of the election -- or that the move was announced one day after Lukashenka met with his Russian counterpart Vladimir Putin.

Russia, wary of a new "color revolution" in its post-Soviet backyard, is determined to see Lukashenka remain in power. It is also eager to gain greater control of Belarusian gas pipelines -- something it can do best with a pliable ally in the presidential office.

In return, it is providing Belarusians with some of the cheapest natural gas in the Commonwealth of Independent States -- while very publicly subjecting Orange Revolution Ukraine and Rose Revolution Georgia to fierce price hikes.

Lukashenka orchestrated his own reelection bid with a public referendum in October 2004. The poll, which was widely criticized in the West, allowed him to seek an unprecedented third term.

Few expect him to lose. But Milinkevich and other potential candidates -- like Syarhey Haydukevich, leader of the Belarusian Liberal Democratic Party -- hope to use the election to draw attention to what they say are Belarus's growing ranks of the politically and socially discontent.

"I will gather a nomination group as I have promised; I'm obliged to show that [my party] has the necessary structures. But I haven't made a decision yet. If it turns out that the situation isn't serious, I won't take part [in the election]," Haydukevich said.

Candidate hopefuls also include Alyaksandr Kazulin, leader of the Belarusian Social Democratic Party (Hramada); Zyanon Paznyak, the exiled leader of the Conservative Christian Party; and former General Valery Fralou, who as an opposition lawmaker staged a hunger strike in 2004.

They have until 23 December to turn in their nomination group lists. Those that manage to qualify for registration will be announced on 27 December. Then each group will have just four weeks (29 December-27 January) to gather at least 100,000 signatures needed for a candidate to be formally added to the ballot.

The early election date has other potential consequences as well. Some observers have suggested the earlier date is meant to keep Belarus off the radar of the international community, which will be focused on Ukraine, where parliamentary elections will be held just one week later.

It is not yet certain if international election monitors will be on hand for the Belarusian ballot. The Lukashenka regime has accused foreign organizations of seeking to influence the outcome by providing funds and other aid to the opposition.

Central Election Commission Secretary Mikalay Lazavik told RFE/RL's Belarus Service that monitors will be present -- as long as they have no political agenda. "If they want to come here as observers, and not as participants in the political process, then why not? We're always open to cooperation," Lazavik said.

Both the European Union and the United States have called for the vote to be free and fair, and pledged, if it is not, to toughen sanctions against Lukashenka's administration. (Daisy Sindelar, with RFE/RL's Belarus Service)

WILL RUSSIAN-UKRAINIAN GAS ROW GO TO SWEDISH ARBITRATION? Despite an apparent war of nerves behind the current Russian-Ukrainian dispute over gas supplies to and transit across Ukraine in 2006, official Kyiv has been showing a fairly relaxed attitude in public to Moscow's demand that gas prices next year be increased more than fourfold from the current level of $50 per 1,000 cubic meters.

Ukrainian President Viktor Yushchenko said earlier this week that Gazprom is taking an "irresponsible approach" in demanding such a price hike. "I cannot comment on the statements of Gazprom officials that the price [for gas] in Ukraine will be $220 or $230 for 1,000 cubic meters. Why not $500 or $700? You know, this is not a basis for a political dialogue," Yushchenko said on 20 December. "Those people who believe it is possible to do it [introduce new gas prices] starting 1 January -- I wouldn't call them professionals."

Ukrainian Prime Minister Yuriy Yekhanurov, who failed to find a way out of the gas impasse in talks with Russian Prime Minister Mikhail Fradkov in Moscow on 19 December, did not seem to be particularly worried either. He told journalists in Kyiv the following day that the new gas price proposed by Moscow was "taken from the top of one's head" and cannot be discussed seriously.

Moreover, Yekhanurov assured reporters that Moscow is not going to break the existing gas delivery and transit contract with Ukraine. "We have a contract [in force] and all issues, if there are any problems, can be settled in the Stockholm court [Arbitration Institute of the Stockholm Chamber of Commerce]," he added.

What contract was Yekhanurov talking about? And why was he apparently confident that Ukraine could prevail in a potential arbitration case in Stockholm?

Naftohaz Ukrayiny, Ukraine's gas-transport company, announced on 7 December that it has a document in which Gazprom obliged itself to supply Ukraine with gas in 2005-09 at $50 per 1,000 cubic meters as payment for Russian gas transit across Ukraine in that period.

Naftohaz specified that the document at issue is a 2004 addendum to the 2002 contract with Gazprom on conditions and volumes of Russian gas transit across Ukraine in 2003-13. The addendum, Naftohaz said, explicitly fixes the gas transit tariff at $1.09 per 1,000 cubic meters per 100 kilometers and the gas price supplied to Ukraine as payment for transit at $50 per 1,000 cubic meters in 2005-09.

Gazprom immediately reacted to this Ukrainian assertion with a statement saying that Russian gas shipment to and across Ukraine, in accordance with an intergovernmental accord of 2001, is primarily regulated by annual intergovernmental protocols that establish volumes and prices of Russian gas delivery and transit on an annual basis.

According to Gazprom, the 2002 commercial contract on gas delivery and transit with Naftohaz Ukrayiny for 2003-13 is of secondary importance. In other words, Gazprom explained, if Moscow and Kyiv fail to sign a relevant gas protocol for 2006, the 2004 addendum to the existing gas contract will automatically become null and void.

However, Ukrainian lawyers are of a different opinion. Three of them argued in the 17-23 December issue of the Kyiv-based weekly "Zerkalo nedeli" that the 2001 intergovernmental agreement does not provide for rescinding the 2002 commercial contract if an annual protocol has not been signed.

These lawyers also dismissed Gazprom's claim that annual gas protocols can be treated as basic documents for determining gas-supply volumes and prices for Ukraine. None of the previously signed gas protocols, they said in "Zerkalo nedeli," has taken legal effect because none of them has ever been ratified by the Ukrainian parliament. Despite this fact, the lawyers emphasized, Gazprom did not interrupt gas supplies to Ukraine in the past even for a day.

Therefore, they conclude, if Moscow and Kyiv fail to sign such a gas protocol for 2006, the conditions and prices of gas delivery and transit will legally remain the same as this year, as provided for by the 2002 commercial contract.

The 2002 contract and the 2004 addendum to it stipulate that if Gazprom and Naftohaz Ukrayiny cannot agree on the interpretation of some provisions in these documents during at least 45 days, they may appeal to the Arbitration Institute of the Stockholm Chamber of Commerce for an authoritative resolution. If both companies agree to file such an appeal, the ensuing ruling of the Stockholm institute would be binding for both sides.

Russian politicians and Gazprom executives have so far not responded to Yekhanurov's suggestion that they might resort to Swedish arbitration in the ongoing gas dispute with Ukraine. Why?

One possible answer is that Moscow may not be sure whether its arguments are sufficiently strong to convince the Swedish arbitrators.

But it seems more likely that decision makers in Moscow see the current gas row with Ukraine not as a commercial dispute, which can be objectively assessed by international arbiters, but primarily as a form of political pressure on Ukraine's Orange Revolution government on the eve of the crucial 2006 parliamentary elections. If so, then the dispute will need primarily political decisions in Moscow and Kyiv in order to end in a mutually acceptable compromise. (Jan Maksymiuk)

KYIV BRINGS BLACK SEA FLEET INTO GAS DISPUTE. In the midst of ongoing gas talks, Ukrainian President Viktor Yushchenko suggested on 20 December that the Kremlin should pay more to base its Black Sea Fleet in Crimea. Russia currently pays $98 million annually to station the fleet -- left over from Soviet times -- in the port of Sevastopol.

Many analysts are doubtful that Ukraine playing the Black Sea Fleet card will have much effect. Nikolai Petrov, a political analyst at the Carnegie Center in Moscow, said the Black Sea Fleet has already lost its strategic importance for Russia.

"On the one hand, during the 15 years that Ukraine has existed as an independent state, the Black Sea Fleet has on the whole lost its importance as a military-strategic unit," Petrov said. "On the other hand, Ukraine has used the fleet as an instrument of pressure many times and now it does not have this kind of urgency or importance that it had at the beginning of the 1990s."

Not all analysts think along the same lines. Tatyana Stanovaya, who heads the analytical department at the Center for Political Technologies, a Moscow-based think tank, said strategic considerations play a secondary role in the Black Sea Fleet issue. "In this case, the psychological angle is of utmost importance. If Russia is forced to move the fleet out, it will be a serious blow to Russia's image, it will discredit Russian foreign policy and it will be considered to be a serious set back in [President Vladimir] Putin's policy in Russia," Stanovaya said.

However, Stanovaya said the Ukrainian side will probably be reluctant to put the Sevastopol base issue on the table. "Kyiv cannot link these two problems [gas and the base] in the negotiations with Gazprom," she said. "Only Yushchenko can link these topics in negotiations with Putin. So far, the [gas] negotiations haven't reached such a high level."

Some analysts have said that, in addition to raising the Black Sea Fleet issue, Ukraine could take advantage of other Russian vulnerabilities -- such as its military's reliance on two early warning radar stations, located in the Ukrainian cities of Mukacheve and Sevastopol.

The two countries also have a high level of military codependence -- something that Ukraine could use as leverage.

The Russian military still relies on the Ukrainian defense industry for spare parts and for the maintenance of equipment designed and manufactured in Ukraine during Soviet times. Such equipment includes intercontinental ballistic missiles and Antonov planes. Ukraine also supplies air-to-air missiles to Russia, gas-turbine engines for some warships, and engines for almost all Russian-made helicopters. Analyst Petrov, however, thinks it unlikely that Ukraine will exert such pressure -- as it could mean Kyiv shooting itself in the foot.

"If Ukraine stops selling to Russia its heavy-industry products, and also military equipment, without any doubt it will create problems for the Russian economy and for the Russian military complex. However, it will also create big problems for the Ukrainian economy too, as it has no other place to sell these products other than Russia," Petrov said.

Kyiv is largely dependent on Russian gas. A radical increase in prices could lead to unpredictable economic and social consequences.

Russian President Vladimir Putin said recently that Ukraine's consumption of gas at below-market prices had cost Russia $4.6 billion.

Russian gas monopoly Gazprom wants Ukraine to pay up to $250 for 1,000 cubic meters of gas compared to $50 under an existing deal. Recent talks in Moscow between the two prime ministers failed to hatch out an agreement. (Valentinas Mite)