Living the High Life in Minsk : Russian Energy Rents, Domestic Populism and Belarus' Impending

236 Pages·2014·9 MB·English

by  Margarita M. Balmaceda

About the Author Living the High Life in Minsk looks at the sources of
stability and instability in post-Soviet authoritarian
Margarita M. Balmaceda is Professor of Diploma- Living the High Life Living the High Life states through the case study of President Lukash-
cy and International Relations at Seton Hall University enka’s frm hold on power in Belarus. In particular,
and Associate at the Harvard Ukrainian Research In- it seeks to understand the role of energy relations,
stitute and the Davis Center for Russian and Eurasian in Minsk in Minsk policies, and discourses in the maintenance of this
Studies, Harvard University. She is also a member p ower. The central empirical question Balmaceda
of the Finnish Centre of Excellence in Russian Stud- Russian Energy Rents, Domestic Populism seeks to answer is what has been the role of energy
ies - Choices of Russian Modernisation funded by the “While Lukashenka is often referred to as “Europe’s last dictator,” nuanced
and Belarus’ Impending Crisis policies in the maintenance of Lukashenka’s power
Academy of Finland for 2012–2017. analyses of Belarusian politics have taken account of the real degree of popu- in Belarus? In particular, it analyzes the role of ener-
gy policies in the management of Lukashenka’s rela-
lar support he enjoyed for most of the period between 1994 and 2011 and
Margarita M. Balmaceda tionship with three constituencies crucial to his hold
possibly beyond. At a socio-political and social psychological level, this degree
on power: Russian actors, the Belarusian nomenkla-
of popular support may be explained by his ability to offer simple answers to
tura, and the Belarusian electorate.
the complex questions facing the country, and by the way in which he refects
In terms of foreign relations, the book focuses on the
the majority population’s dominant political culture. On the economic side,
factors explaining Lukashenka’s ability to project Be-
his ability to delay painful reforms has contributed signifcantly to his popular-
larus’ power in its relationship with Russia in such a
ity and, importantly, has helped legitimize his administration… This book ex-
way as to compensate for its objective high level of
plores three important aspects of this issue: First, how Lukashenka’s policies
dependency, assuring high levels of energy subsidies
vis-a-vis Russia have helped to improve living standards through a continued and rents continuing well beyond the initial worsen-
subsidization of the economy via an important stream of energy-related rents. ing of the relationship in c. 2004. In terms of domestic
Second, how domestic-oriented energy policies have also contributed to the relations, Balmaceda examines Lukashenka’s specif-
maintenance of the economic model. Third, how, at times of crisis in the Rus- ic use of those energy rents in such a way as to as-
sian subsidization model, Lukashenka’s rhetoric on energy issues helped to sure the continuing support of both the Belarusian
limit dissatisfaction with his policies and, on the contrary, allowed him to use nomenklatura and the Belarusian electorate.
the situation and the opposition’s response to it to seek to disqualify it in the
eyes of the population.”— From the Introduction
“… a remarkable contribution to our understanding of authoritarian resilience
in Belarus; students of transition, political reform and system legitimacy will be
richly rewarded by reading this work.”—Alex Danilovich, Department of Politics
and International Relations at the Kurdistan University-Hawler
ISBN 978-615-5225-19-2
Central European University Press 90000 >
Budapest – New York
Sales and information:
Living the High Life
in Minsk
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Living the High Life
in Minsk
Russian Energy Rents, Domestic Populism
and Belarus’ Impending Crisis
Margarita M. Balmaceda
Budapest – New York
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1
© 2014 by Margarita M. Balmaceda
Published in 2014 by
Central European University Press
An imprint of the Central European University Limited Liability Company
Nádor utca 11, H-1051 Budapest, Hungary
Tel: [phone] or 327-3000
Fax: [phone]
E-mail:
Table of Contents
List of Tables, Graphs and Figures ix
Preface and Acknowledgements xi
Note on Sources and Transliteration xv
1. Introduction 1
2. Belarus: Between Russia and the West, and at the Very Core
of the Soviet System 19
3. Te “High Years”: Energy and Russian-Belarusian Relations,
194–204 3
4. Nomenklatura Players, Energy Corruption, and Belarus’
“Energy-Political Model” 93
5. Te “Low Years”: Energy and Russian–Belarusian Relations,
2004–2009 117
6. Te Energy Prologue and the Afermath to the 2010 Elections:
from Euphoria to Forced Concessions 159
7. Conclusion 179
Map 192
Bibliography 193
Index 213
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chapter 1
viii
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Introduction
List of Tables, Graphs and Figures
Table 1.1 Belarus’ potential rent pools in the gas area in comparative perspective,
2001–2006, in US$ 11
Table 3.1 Pricing of Gazprom’s gas to Belarus, selected FSU states, and Germany,
1991 and 2001–2011, in US$/tcm 51
Table 3.2 Gas supplies to Belarus from Gazprom and other suppliers, 1999–2004
Figure 3.3 Main actors in the Belarusian oil market, 1994–2011 57
Table 3.4 Belarusian oil-market players: key developments, 1994–2011 58
Graph 3.5 Transit of Russian oil via Belarus, in million tons, and % of Russian
exports to non-CIS states , 2000–2010 60
Graph 3.6 Destination of Belarusian refned oil products exports, in percentages,
196–2010 62
Table 3.7 Belarus: Foreign trade of oil and oil products, 2000–2004 64
Table 3.8 Belarus’ trade balances in oil and oil products, 1996–2004, in million tons 65
Table 3.9 Gas import prices and prices paid by end users, in US$/tcm, 1999–2004 74
Table 3.10 Cost coverage by tarifs for expenditures for services provided by communal
services provider ZhKKh, in % (January 1st of each year) 75
Table 3.11 Export duties on light oil products, in US$/ton, levied by Russia and Belarus,
205–207 82
Table 5.1 Transit of Russian natural gas via Belarus, in billion cubic meters, 2001–2011 122
Table 5.2 Gas import prices and prices paid by end users, in US$/tcm, 2003–2011 137
Table 5.3 GDP, energy use and energy intensity in Belarus, 1990–2011 142–43
Table 5.4 Belarus: Foreign trade of oil and oil products, 2004–2011 146–47
Graph 5.5 Estimated proft margins for oil refning and export operations in Belarus,
as percentage of the export price of Belarusian oil products, 2005–2010 149
Table 5.6 Foreign trade operations in oil and gas (including oil products) and Belarus’
trade balances, in billion US$, 2004-2011 151
Table 6.1 Main changes in the Russian–Belarusian oil trade system and their domestic
efects, 1999–2011 162
vii
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1
Dedicated to the memory of Irina Bugrova (1956–2011)
vi
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Preface and Acknowledgements
Preface and Acknowledgements
ometimes fate brings us unexpected and undeserved gifs that come to
Senrich our life path for many years to come. Such has been the case of
Belarus for me. Te long road from my frst visit to the country as a Fulbright
lecturer at the Belarusian State University in 1997 to the completion of this
manuscript has been a challenging but, above all, an enormously enriching
one. To try to make sense of the less transparent sector of the economy in
the least open country in Europe, with what on some long work evenings
seemed like the most contradictory statistics in the world, proved a truly try-
ing challenge. If I was to any degree successful in this endeavor, it was thanks
to the generosity and professionalism of many Belarusian colleagues, and to
countless discussions in the course of nearly 20 visits to Belarus since 1997. I
am privileged to have been able to go on this path, to have had the chance to
accompany the last 16 years of Belarus’ complex history, and in the process, to
be able to count on the support of many institutions beyond Belarus as well,
among others, the Fulbright Commission of the U.S. Department of Educa-
tion, the Smith-Richardson Foundation, the German Belarusian Society, the
Alexander von Humboldt Foundation, the Marie Curie Program of the Euro-
pean Commission, and Seton Hall University, Harvard University, and the
University of Helsinki. Te very beginning of this path, in 1996, was marked
by two individuals who, through Belarus, have had a lasting impact on my
life: my late colleague Hugh Hinton, who—always supportive of younger col-
leagues—insistently pointed to the Belarus vacancy announced at the Ful-
bright desk at the 1996 meeting of the AAASS in Boston, and Muriel Jofe,
who was standing behind that desk and, as the main person responsible for
Fulbright’s Belarus program, made it possible for this dream to become a real-
ity. Te last revisions of the manuscript were completed in the refective qui-
etness of the Alfried Krupp Wissenschafskolleg in Greifswald, Germany—
ix
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