Putin Wields The Energy Blade Against Belarus
Another day, another Russia-Eastern Europe stand-off involving an antagonistic Putin flexing his energy muscle. This time, it’s Belarus taking the hit: its supply of Russian oil will be cut by roughly 25 percent.
So what happened? Belarus arrested the CEO of the Russian potash firm Uralkali on Monday after the company pulled out of a “trade relationship” (read: price-fixing cartel) with Belarus’s state-owned potash mining company Belaruskali. Belarus relied on that relationship for a large chunk of its export revenue. Russia then cut Belarus’s oil supplies and threatened the “cash-strapped” state’s dairy industry. The Wall Street Journal reports:
Belarus arrested Uralkali’s Mr. Baumgertner on Monday after he met with the Belarusian prime minister. Police accused Mr. Baumgertner of causing damage to Belaruskali and the Belarusian state by running the potash-trading partnership, known as Belarusian Potash Co., in the interests of Uralkali….
On Tuesday, Mr. Baumgertner was ordered held in custody for two months while the investigation is carried out. A Russian official in Minsk said Mr. Baumgertner’s lawyers will appeal the arrest in a Belarusian court next week….
“It’s a war between Belarus and Russia,” said Belarusian political analyst Alexander Klaskovsky. “It’s not the first time Russia and Belarus have squabbled in this way.”
Of course, Moscow is insisting that the oil cut-back is due to planned maintenance, and that Minsk knew of the move ahead of time. While we suspect that the supply reduction wasn’t just routine, we don’t doubt that Belarus could have anticipated it. For Putin, using the country’s outsized oil and gas resources as a choke chain on its neighbors is nothing new.