Russia, Belarus feud hits supplies to Europe

In what can be described as a change of heart, Moscow has stopped supplying cheap energy to Belarus. The move comes after the former realized that its munificence was being abused by the latter. Moscow decided to end the largesse after supplying cheap oil to Belarus for 15 years.

Russian crude oil stopped flowing to Western Europe affecting supplies to Poland, Germany and Ukraine after a disruption in Druzhba, a major pipeline running through Belarus.

The shutdown of Druzhba, came a week after Russia and Belarus discussed the supplies of natural gas to Belarus and their prices. Russia claimed that the cheap crude it sends to Belarus was being refined there, and then resold as petrol and diesel at market rates. In nutshell, it accused Belarus of enriching itself at the expense of Russia. It was at that time that the Russian government decided to impose an export tariff on the crude oil it sends to its erstwhile ally.

Under the new accord, Russia began charging Belarus $100 for every thousand cubic meters of natural gas, which is more than double the $46 it charged in 2006. Moreover, the new agreement states that prices will go on rising steadily through 2011 to reach the level now charged to Western European countries, which is $265 for each thousand cubic meters. This has become the moot point.

The dispute has renewed apprehensions in Europe about the consistency of energy supplies from Russia. Poland’s deputy economics minister, Piotr Naimski said, “This shows us once again that arguments among various countries of the former Soviet Union, between suppliers and transit countries, mean that these deliveries are unreliable from our perspective.”

Russia's deputy trade minister said that the shutdown was a “force-majeure", something that Russia was very hesitant to do, but had no other choice.

The Belarusian economy on the other hand is precariously placed. Without cheap oil and gas, that economy is bound to plunge into crisis.