Why Belarus matters now? Minsk-Moscow crisis and the opportunities for EU and China

The map shows the significant role of Belarus as a logistics hub in Europe interconnected with Russia, China, the Baltic Sea, and the Caucasus (Source: Logisticpark.by)

by Giuliano Bifolchi

Russia, Belarus and the never-ending confrontation on oil supply. This is what we have read and monitored in newspapers since the beginning of the new year. Originally the situation looked like the classical back and forth which has characterized and classified Moscow – Minsk relations but soon it became an international issue which interested the Baltic republics, Ukraine, the Caucasus, and the European Union with possible consequences also for China.

Minsk expressed discontent about Moscow’s condition on which it receives Russian oil and aimed at finding new solutions with a lower price. The Russian Federation could not satisfy Belarus request and the negotiations reached a stall point. Since Moscow and Minsk could not find an agreement on oil supply Russia stopped oil furniture to Belarus on January 1st, 2020 but partially restored it on January 4th, 2020.

Due to this problem, Belarus is studying a strategy to differentiate its import of 18 million tons of oil per year and reduce Minsk’s dependence on Moscow’s export. Looking at the map and considering the recent events, it could be possible to conclude that Minsk is evaluating a plan to import nearly 30% from Ukraine, another 30-40% from the Baltic republics and the rest from Russia and some European suppliers. In fact, on January 14th, 2020 the First Deputy Prime Minister of Belarus Dmitry Krutoy informed the media that the Belarusian government started evaluating oil imports from Azerbaijan, Ukraine, Poland, Kazakhstan and the Baltic countries.

Latvia tried to exploit this situation suggesting to Belarus to use the Latvian ports to import oil from around the world. On January 16th, 2020 during the meeting between the Latvian Prime Minister Arturs Krišjānis Kariņš and the Belarus President Alyaksandr Lukashenko it was highlighted the significant role of the Baltic republic in transport and logistics and Minsk’s possibility to cooperate with Latvia to export its products abroad and differentiate oil supplies (in 2019 Latvian ports allowed Belarus to import 3.7 million tons of oil products). According to Kariņš, the Latvian government expressed interests in developing business opportunities with Belarus although the modalities and the specific timing rely on the companies and the entrepreneurs.

In the Caucasus, the Republic of Azerbaijan wants to use this situation to strengthen its role in the energy market and secure its position in the EU Energy Security Strategy and Eastern Partnership Strategy. This is what emerged from the words of the Azerbaijani President Ilham Aliyev at the World Economic Forum in Davos when he highlighted that taking into consideration Baku’s contribution to the global and European energy security, the Caucasian republic has continued to efficaciously implement energy projects, including the Southern Gas Corridor. Regarding Russian – Belarus oil supply dispute, on January 14th, 2020 the deputy head of the Public Relations and Event Management Department of the Azerbaijani State Oil Company (SOCAR) Ibrahim Ahmadov reported to the local media that Azerbaijan has the potentiality to export oil to Belarus and diversify Minsk’s energy import. Last week SOCAR confirmed the possibility of supplying oil to Belarus asserting that Azerbaijan’s state company is considering the Odessa- Brody pipeline as an option to export oil to Minsk.

Belarus is a logistics hub which plays the role of a transit country between the West and the East. For this reason, Beijing is investing a substantial amount of money in Belarus market supporting the creation of the Industrial Park Great Stone as a special economic zone (SEZ) in the territory of Smolevichsky district near the Minsk National Airport. If Belarus will accomplish its strategy to diversify oil supply and decrease its dependence on the Russian Federation, the country will be more open to foreign investors and new commercial partnership, so China might upgrade its presence and role inside the country supporting the Belt and Road Initiative. The fact that Beijing has been investing a huge amount of financial funds in Central Asia, Belarus and possibly also in Ukraine can alarm the Kremlin which has always considered these countries as part of the Blizhnee Zarubezhe or ‘near abroad’, the area constituted by post-Soviet republics where the Kremlin still wants to play a major role imposing its influence and requesting the membership inside the Eurasian Economic Union.

Beijing’s Belt and Road Initiative to Europe. In this map it is highlighted the logistic role played by Belarus for the European-Chinese trade (Source: Nikkei Asian Review)

At the end of 2019 media reported the possibility that Belarus could have become part of the Russian Federation allowing the Kremlin to fortify its position in Central-Eastern Europe and support its demography considering the recent problems registered inside the country. On December 25th, 2019, in an interview with Russia’s Echo Moskvy radio station, the Belarus President Lukashenko rejected the ‘union state’ project warning that a possible future Kremlin’s powerful effort to transform Belarus a part of Russia could result in a confrontation and military hostilities with the West.

January is close to the end and Moscow – Minsk dispute has not found a solution. Belarus matters because of its strategic position in Eurasia, a region which according to geopolitics might shape the destiny and the future of the world. Since not only the Russian Federation but also the West and China have interests in Belarus, the outcome of this dispute might bring Minsk a little bit closer to Brussels, Beijing and aligned with other post-Soviet countries such as Latvia, Ukraine or Azerbaijan. The Kremlin has yet not counteracted at Minsk’s attempts of finding new partners and oil suppliers although some Russian experts and advisors have underlined that the price of the Russian oil is lower than that from Azerbaijan, Ukraine or the Baltics and if Belarus will decide to diversify its energy supply this action might negatively affect its economy.