Jan 4, 2010 | 18:16 GMT

3 mins read

Belarus, Russia: A Customs Union's Growing Pains

Belarusian state oil firm Belneftekhim said Jan. 4 that oil supplies from Russia transiting Belarus to Europe were "flowing normally" after reports from the previous day stated that Russia had cut off oil supplies to Belarusian refineries Dec. 31. The countries have been discussing the price of oil and the export tariffs charged to the European countries that will receive the oil for 2010. They have yet to reach an agreement, with Belarusian officials saying Russia's prices are too high. These issues have not led to a complete oil cutoff. Russia sends 1.6 million barrels per day (bpd) across Belarus via the Druzhba pipeline, and 75 percent of that goes to Europe. The only cutoff came when Russia temporarily halted oil products to Belarusian refineries Naftan and Mozyr, whose refining capacities are 95,000 bpd and 88,000 bpd respectively. Supplies have since been restored. Even if Russia had cut off supplies completely, Belarus and the Europeans have enough in storage to last for about three weeks. Nonetheless, oil prices jumped more than 2 percent in Jan. 4 trading due to concerns over the cutoff. Many Western media outlets portray the Russo-Belarusian spat as a major falling out. However, the disagreement over oil shipments is part of the growing pains the two countries are experiencing as they begin their new customs union. The disagreement also serves as a midwinter reminder to the Europeans of their dependence on Russian energy supplies. Belarus' protestations during talks with Russia are political rather than technical. The countries have maintained close political ties since the fall of the Soviet Union, establishing a "union state" in 1997. But as of Jan. 1, the countries have also entered into a more official customs union (along with Kazakhstan), and Minsk and Moscow are still adjusting to this new relationship. Belarus feels like it deserves more respect and equal footing, while Russia — as the traditional regional power — is not eager to give up clout or let Belarus turn technical negotiations into a political show. The pricing disagreement is part of Russia and Belarus' transition into a more integrated relationship, not a serious disruption of relations, as Minsk is beholden to Moscow no matter how heated their arguments become. The spat is certainly not the first energy dispute involving Russia to emerge at the start of a new year; there were also the 2006 and 2009 natural gas cutoffs due to disputes between Russia and Ukraine. Similar cutoffs could be expected this winter, as Moscow and Kiev have not agreed on natural gas prices for 2010. But Ukraine is scheduled to hold presidential elections in January, and a crisis in that country could cost Russia politically, especially since Kiev has all but returned to the Russian fold. Instead, Russia has chosen Belarus as the medium for its new year's reminder to the Europeans of Moscow's control over critical energy supplies.

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