As before in the case of the Customs Union, Russia is now undermining the emerging Common Economic Space (CES) of its closest neighbors and partners, by trying to enforce an uneven balance of power. Today’s Russia is actively using the alleged breakthrough in relations with its closest CIS partners, which was crowned with the establishment of the Common Economic Space, as a major foreign-policy trump card. It also seems that, as the presidents of Russia, Belarus, and Kazakhstan signed a number of CES legal and standard-setting documents in early December 2010, the three closest — at least formally — partners solved their erstwhile problems. Yet the Russian side has put quite a big “fly in the ointment” once more, as far as relations with its allies are concerned. Just like a year earlier, in the case of the Customs Union, Russia planted a veritable “time bomb” of inequitable relations under the CES in late 2010-early 2011. If not disposed of in time, the “bomb” may explode at any moment.
It is again the question of a duty on the Russian oil being supplied to Belarus. Back in December 2009 the sound-minded Russians were astonished when Minsk was suddenly told to accept the calculations that Moscow had made arbitrarily by God knows what methods, from which it followed that from then on, in accordance with interstate agreements, the oil being supplied to Belarus should be divided into two parts. The lesser part, intended (in Russia’s opinion) “for domestic consumption” by the neighbors, would have been delivered across the border duty-free, while the other, far larger, part would have been — quite contrary to the Customs Union principles — subject to a 100-percent duty. This unprecedented demand was caused by an allegation that Belarus processes part of its oil at its own refineries, after which it exports it as high-octane fuel, thus reaping a benefit.
The very idea of dividing any commodity into parts for “internal” and “external” consumption is totally absurd and runs counter to the very logic of relations within the Customs Union, which was established to ensure trade without any barriers. Moreover, it is the natural right of any buyer to use the bought commodity at his own discretion: to consume it outright, store it, or process it. It is Russia’s own business that, satisfying the appetites of raw-material tycoons and thoroughly corrupt bureaucrats, it exports more and more crude oil, but why can Belarus not process the oil it buys on Customs Union conditions at its perfectly equipped and modernized refineries? Incidentally, if Russia wants to draw an additional profit from its own exported oil but does not have a sufficient number of facilities to crack it into gasoline and kerosene, who forbids it to try to conclude a comprehensive complementary production agreement with neighboring Belarus? The principle is very simple: we give you more oil, and you give us a part of the high-octane fuel you made from it. Dozens of countries cooperate under this model, but this experience does not seem to be an argument or a guideline for Russia.
Instead, as we remember, the partnership came under intense pressure on New Year’s Eve 2010, which, quite naturally, resulted in a much expected conflict. It took several rounds of Russian-Belarusian negotiations to temporarily settle the dispute — temporarily, because it is clear that there can be no Customs Union based on double standards. For example, last summer when Russia gathered a poor crop of buckwheat, it insisted — citing the Customs Union regulations — that it had the right to buy buckwheat from its Belarusian neighbor without any limits or surcharges but, at the same time, continued to assert the right to deliver limited supplies of oil to Belarus and dip into the latter’s pocket. Naturally, this kind of behavior would have provoked new conflicts.
Meanwhile, it is now high time to sign agreements on the CES which is, in general, a step forward compared with the Customs Union, for it calls for a free cross-border movement of not only goods but also capitals and labor across the territory of the three states. The oil duty problem looked totally absurd in this context and seemed to have been settled during the negotiations. But it turned out that, in reality, Russia agreed not to levy a duty on oil but still stuck to the notorious principle of dividing it into the above-mentioned two parts. From now on, the oil itself should run across the Russia-Belarus internal border duty-free, but, on Belarus’ external border, the products derived from “the other part” of the oil imported from Russia, will be placed under control and be subject to a 100-percent duty which will in turn be filling Russian coffers.
As a result, Belarus is again being forced, by hook or by crook, to pay twice for the goods. Only this time it is within the framework of a structure pompously called the Common Economic Space. And, again, Russia envisions no restrictions for itself with respect to any variety of Belarusian goods: the freedom of movement and use of commodities is being applied in this case without any exceptions. So is there any equality among the partners? Will this year also be marked by double standards?
Moreover, if such a “great power” is engaged in such petty thievery, what can other states expect from it?
Oleg Cherkovets is a Moscow-based Doctor of Sciences (Economics)
