Minsk puts hope on conflict of interests between Putin and Medvedev

On September 11^th, President Alexander Lukashenko met with Rosneft President Igor Sechin; on September 13^th; with Gazprom Chairman of the Board Alexey Miller; and on September 14^th with Sberbank Head German Gref.

The Belarusian government is trying to take advantage of contradictions between the camps of Russian President Vladimir Putin and Prime Minister Dmitry Medvedev. Meetings with key figures from Putin’s clan and the postponed ban by Rospotrebnadzor on the import of dairy products from Belarus may strengthen Belarus’ position in the short-term. The Belarusian president’s hope of clans fighting in Russia brings certain tactical benefits, which appear mainly in the Belarusian information space. Nevertheless, Belarus continues to suffer financial and reputational losses, becoming more vulnerable vis-à-vis Russian leadership.

During the past week Alexander Lukashenko met with two prominent members of Putin’s clan: Rosneft President Igor Sechin and Gazprom Chairman Alexey Miller. As presented by the Belarusian media, the conflict had purely a ‘domestic’ nature in Russia, in which Alexander Lukashenko took Vladimir Putin’s group side. The Belarusian president also used the meetings to show support for Belarus’ actions by Russia’s leadership in the ‘potash war’.

The meetings’ official results showed no major achievements, but this does not exclude backroom arrangements with Russian top-managers. Against the background of the protracted conflict in Russo-Belarusian relations, Lukashenko had to offer attractive terms during the high-level meeting in Minsk.

In particular, Belarus’ president said the following about Russian oil supply to Belarus: “…[the supply] will be to your refinery, because approximately one half of the Mozyr Refinery, which has its own decent markets, is now owned by Rosneft”. Previously, the Rosneft Head, when commenting on Transneft plans to cut oil supplies to Belarus, said, that “I need to supply crude oil to Mozyr Oil Refinery, my asset”. However, to date there is no official data about changes in the shareholders of JSC Mozyr Refinery. The Belarusian government owns 42.757 % of its shares, LLC MOR plus – 12.252 %, and Russian Slavneft – 42.581 % of the shares. Slavneft’s owners on par are Rosneft and Gazprom Neft. Alexey Miller is also Chairman of the Board at Gazprom Neft. Potentially, the main subject of discussion between Lukashenko and Russian top-managers was the change in the shareholding structure of the Mozyr Refinery.

During his entire presidency, Alexander Lukashenko tried to play an active role in the Russian domestic space. Best of all he succeeded in the late 1990s and early 2000s. However, the period ended with the election of President Putin, followed by consolidation of full power in his hands. Regardless of the conflict of interests between the camps of Vladimir Putin and Dmitry Medvedev, the Russian leadership’s approach to building relations with Belarus has remained unchanged since 2003.

Finally, the results of Russo-Belarusian meetings demonstrate that there has been a shift from Russia’s state support of the Belarusian economy towards Russian commercial and corporate structures. For example, Gazprom, which previously had full control over the Belarusian gas transportation system, has once again raised the price for gas supplies to Belarus in 2014. Rosneft is becoming more involved in oil supply to Belarus. Sberbank becomes the main creditor of virtually all industrial giants in Belarus, including Belaruskali, BelAZ, and Mozyr Oil Refinery. In addition, the issue of assets redistribution at the Mozyr Refinery is addressed non-transparently.

Thus, Belarus has to pay for the Kremlin’s favours – in one way or another. Belarus’ play on the contradictions between different Russian elite groups brings tactical gains but is unable to reverse Belarus’ increasing dependence on Russia. Finally, Russia continues increasing its presence in Belarus’ military and economy and Belarus is forced to pass on its most profitable assets to its ally.