Belarusian negotiations with Russia on strategic assets become tougher

On 18 July President Lukashenko met with the leadership of the Boulle Mining Group. During the meeting they talked about the possible involvement of the Group in the exploration and development of potash deposits in Belarus.

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Belarusian President raises the stakes while bargaining for the main privatization asset, “Belaruskaliy”, as well as for other assets to be sold to Russia. As a consequence, there might be a med-term decrease in the selling price of Belarusian assets, and a short-term increase of political pressure on Belarus by Russia.

Following the meeting with businessmen from the Boulle Mining Group, President Alexander Lukashenko made it clear that he considers the Belarusian mineral wealth as a separate asset, which could be privatized, regardless of the sale of the shares of “Belaruskaly”. Thereby the President has demonstrated that he was ready to play on the contradictions between the interests of Russian and Western business.

However the economic crisis that Belarus faces today affects prices of strategic assets. For instance, the launch of the Russian gas pipeline “Nord Stream” will allow “Gazprom” to ignore proposals of the President of Belarus to link the sale of the remaining package of “Beltransgaz” with preferential gas prices in 2012.

The actions of the Belarusian President provoked an immediate backlash by Russia. On 19 July Russian Prime Minister Vladimir Putin expressed regret about rising tensions between Russia and Belarus, as well as about human rights violations. On the next day, Russian Ambassador Alexander Surikov in an interview with an independent news agency “BelaPAN” emphasized that the sale of assets should not be linked to energy prices.

Vladimir Putin consolidated with Russian President Dmitry Medvedev, who earlier expressed sharp criticism of Alexander Lunaksenko and his inability to negotiate. As a consequence of the unified position of the top management of the Russian Federation on the Belarusian issue, Russia will take a tougher position during the negotiations on the price of Belarusian assets with energy prices as an adjunct.