MOSCOW, (Igor Tomberg for RIA Novosti)
Gas prices for Belarus "should be at least three times higher," said Alexander Ryazanov, deputy CEO of Gazprom. This means about $140 per 1,000 cu m.
The news shocked the Minsk authorities, which had said they were ready to pay a higher price but apparently did not imagine it would be so high. The price rise will tear nearly a $2 billion hole in the Belarusian budget.
According to a contract between Gazprom and Beltransgaz, the Belarusian state-owned gas company whose pipelines carry Russian gas to Europe, this year the Russian gas monopoly is to deliver 21 billion cu m of gas at 2005 prices ($46.68). In return, Minsk promised to assist Gazprom's operation in the republic, notably not to change gas transit tariffs.
First, the two states are creating a union state, Gazprom deputy CEO Alexander Medvedev, director general of Gazexport (a 100% subsidiary of Gazprom), said, explaining the non-market price. Second, Belarus is the only country where Gazprom owns the trunk gas pipeline and leases the land under it. And third, the gas holding has resumed takeover negotiations with Beltransgaz, he said. If the negotiations are successful, Gazprom will take under its control the entire Belarusian gas transportation network.
But the talks are apparently skidding because Ryazanov said a price compromise was contingent on Gazprom's involvement in the gas transportation and distribution infrastructure of consumers.
Minsk flew into a fury. Such statements "are an element of blackmail and outrageous behavior," said Stepan Pisarevich, head of the Belarusian upper house's commission on the economy, budget and finance. Price rising is an unavoidable element of discussions on the creation of a joint venture on the basis of Beltransgaz and Gazprom, he said.
Pisarevich recalled that gas prices for Belarus were stipulated in the Union State Treaty and the agreement on creating equal conditions for economic entities.
Prime Minister Sergei Sidorsky said almost the same. "The Belarusian government will adhere to the existing agreements on equal energy prices for the economic entities of the Union State," he said.
Gazprom has the same price policy for all former Soviet republics, company press secretary Sergei Kupriyanov said when commenting on the harsh statement by Belarusian politicians. The gas price for Belarus is based not only on the Union State Treaty, he said, but also on other documents regarding gas pricing and the creation of a JV on the basis of Beltransgaz. Kupriyanov said the JV was to be created in 2003.
But some Belarusian politicians view the situation differently. Roman Vnuchko, head of the lower house's commission on the monetary and credit policy and banking, said Gazprom exposed itself to blackmail by selling gas to Belarus at Russia's domestic prices.
"Belarus is a headache for Gazprom; it is a precedent that prevents the gas holding from raising prices for other partners," Vnuchko said.
Settling price relations with friendly Armenia was another difficulty. As if on prompting, Gazprom's top managers made their statement about leveling off prices for all consumers during the visit by the Armenian president.
Gazprom (and the state as its beneficiary) are often accused of a selective approach. Though gas prices were rapidly raised for other ex-Soviet states, Belarus continued to get the fuel at Russia's domestic prices. Therefore, the latest decision of Gazprom looks like a political win for the gas holding and the Russian authorities.
However, the level at which information is made public is also important. The holding's management is not in a position to set prices for Belarus. Politics is too closely connected with the economy in the case of Belarus. Belarussian experts claim that Vladimir Putin had once offered Alexander Lukashenko to give economic entities, both state and private ones, a free hand in solving their economic problems. Presidents should discuss purely political matters, Putin allegedly said.
This is exactly what Gazexport head Ryazanov meant: Gas prices and the issue of ownership of the gas transportation infrastructure are purely economic matters.
Gazprom will hardly triple gas prices for Belarus next year because the republican economy would not survive even a double price. The issue is to be discussed by politicians, and the results of playing the "gas card" may surprise even Gazprom. This may accelerate the merger of Belarus and Russia or transition to the common currency.
However, the current situation has again put the finger on Moscow's resolve to throw around its energy weight in foreign policy.
Igor Tomberg is a leading researcher of the Institute of Economics at the Russian Academy of Sciences.
The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.
