Minsk demonstrates readiness to make concessions to the Kremlin

On March 15^th, Presidents Lukashenko and Putin will meet at the Supreme Council of the Belarus and Russia Union State meeting.

In the upcoming talks with Putin, President Lukashenko aims to agree on exchanging energy trade preferences within the Eurasian Economic Union, an important project for the Kremlin. Signals, sent by Belarus, indicate that Minsk is ready to waive at least part of the oil and oil products sales proceeds.

Belarus’ the most pressing economic issue to be discussed at the Supreme State Council meeting is the signing of the 23 million tons oil supply agreement for 2013. Belarus’ readiness to compromise is demonstrated by the replacement of the longtime negotiator – First Deputy Prime Minister Vladimir Semashko, known for his non-compromising negotiating style – with more diplomatic and pliant Prime Minister Myasnikovich. The replacement was signed by the President on March 4^th.

Also, on March 6^th, Belneftekhim management said about its readiness to cooperate with five selected Russian oil suppliers. This de facto monopoly of oil supplies to Belarus has already been criticized by the Belarusian government, but the President Lukashenko’s decision recognized Russia’s rectitude.

Thus, Belarus has demonstrated readiness to sacrifice part of its oil refining profits in exchange for requested oil supply volumes and preservation of the Eurasian integration links. In the given circumstances, this strategy is the most beneficial for Belarus since it does not require privatization of the Belarusian enterprises and envisages only reduced profits from crude oil refining, supplied on commission.

However, Russia’s response suggests that the Kremlin may not agree with this proposal. In particular, on March 4^th, Union State Secretary Grigory Rapota said that the oil supply agreement was not likely to be signed at the Presidents’ meeting, because of the Union State Council of Ministers’ capacity in these issues.