Trudny "Sojusznik" Bialorus w polityce Rosji. Prace OSW 2008. = Difficult "ally." Belarus in Russia's foreign policy. OSW Study 28/2008

Belarus holds a special position in Russian policy due to its geopolitical, military and transit significance. Russia's influence and position in the entire Eastern European region largely depend on how strong Russian influence in Belarus is. The process of Russian-Belarusian integration began in 1994, when Alyaksandr Lukashenka came to power in Minsk. At the time, Russia's policy towards Belarus was based on twomain assumptions. Firstly, the Kremlin supported Lukashenka's authoritarian regime. This allowed Russia to keep Belarus within its orbit of political influence and prevent other states from getting involved, since an undemocratic Belarus could not count on closer contacts with the West. Secondly, Russia heavily subsidised Belarus with cheap energy resources (way below the market price) and allowed the duty-free access of Belarusian goods to its market. Thus Belarus became a kind of 'sponsored authoritarianism' with a specific economic model, owing its existence to Russia's economic and political support. At the same time, Moscow's key objective in its policy towards Belarus was to make Minsk accept the Russian conditions concerning integration, which would in fact lead to Belarus' incorporation by the Russian Federation. However, Belarus managed to maintain its sovereignty, while Alyaksandr Lukashenka bandied the term 'integration' about in order to maintain the preferential model of his state's relations with Russia. Russia's intention to alter the nature of these bilateral relations became evident when Vladimir Putin took power in 2000. However, Moscow faced Minsk's refusal to accept the Russian integration plan (which, among other measures, provided for the takeover of Belarusian economic assets by Russian companies). This forced Russia to use its main tool against Minsk: the supplies of cheap gas and oil that had been sustaining Belarus' archaic economy. The most serious crisis in Russian-Belarusian relations broke out at the beginning of 2007, following Moscow's decision to raise the energy resource prices. This decision marked the beginning of the application of market principles to settlements between Moscow and Minsk. The key question this study is meant to answer concerns the consequences of the aforementioned decision by Russia for future Russian-Belarusian relations. Are they at a turning point? What are Russia's policy objectives? What results can come from the process of moving mutual relations onto an economic footing? What policy will replace Russia's 'sponsoring of Belarusian authoritarianism', which it has been implementing since 1994? Finally, what further measures will Russia undertake towards Belarus? The current study consists of five chapters. The first chapter offers a brief presentation of Belarus' significance and position in Russian policy. The second analyses the development of Russian-Belarusian political relations, first of all the establishment of the Union State, Belarus' position in Russian domestic policy and Russia's influence on Belarusian policy. The third chapter presents bilateral economic relations, primarily energy issues. The fourth chapter describes the state and perspectives of military cooperation between the two states. The fifth chapter presents conclusions, where the author attempts to define the essence of the ongoing re-evaluation in Russian-Belarusian relations and to project their future model.

Gazprom’s expansion in the EU: co-operation or domination? OSW Report, October 2009. Second edition, revised

Introduction. The energy sector, especially with regard to the gas trade, is one of the key areas of co-operation between the EU and Russia. However, the form this co-operation has taken has been giving rise to some concern, both in Brussels and in the EU member states. Questions arise as to whether the EU has not become excessively dependent on Russia for energy, and whether the presence of the Russian gas monopoly in the EU does not enable Russian interference with the development of EU energy policy. The objective of this series of OSW reports (for the previous edition,see Gazprom’s expansion in the EU: co-operation or domination? April 2008 – pdf 1.2 MB) is to provide facts which will permit an accurat answer to these questions to be formulated. Over the course of last year, two new factors strongly affected Gazprom’s capability to operate on the EU market. One was the ongoing global economic crisis, which has depressed demand for gas both in Russia and in Europe. Gazprom has cut both its own production and the quantities of gas it purchases from the Central Asian states, and the decrease in export revenues has forced the company to modify some of its current investment plans. Less demand for gas and the need to reduce production are also having a positive impact – the Russian company is likely to avoid the difficulties in meeting all of its export commitments which, only a year or so ago, it was expected to experience. The other factor affecting Gazprom’s expansion in Europe is the observed radicalisation of the rhetoric and actions of both the company itself and of the Russian authorities with regard to the gas sector as broadly understood. The gas crisis between Russia and Ukraine in January 2009, which resulted in a two-week interruption of gas supplies from Russia to Europe via Ukraine, was the most prominent example of this radicalisation. The hardening of rhetoric in the ongoing energy talks with the EU and other actors, and increased political and business activities designed to promote Russian gas interests in Europe, in particular the lobbying for the Nord Stream and South Stream projects, are further signs of this shift in tone. These issues raise the question of whether, and to what extent, the current condition of Gazprom’s finance will permit the company to implement the infrastructural projects it has been endorsing and its other investment plans in Europe. Another important question is whether the currently observed changes in how Gazprom operates will take on a more permanent character, and what consequences this will have for the European Union. The first part of this report discusses Gazprom’s production and export potential. The second comprehensively presents the scope and nature of Gazprom’s economic presence in the EU member states. Finally, the third part presents the Russian company’s methods of operation on foreign markets. The data presented in the report come mainly from the statistics of the International Energy Agency, the European Commission and Gazprom, as well as the Central Bank of Russia and the Russian Statistical Office. The figures presented here also include proprietary calculations by the OSW based on figures disclosed by energy companies and reports by professional press and news agencies.

The Great Game around Turkmenistan. OSW Point of View, August 2008

The rise of a new leader of the state of Turkmenistan – President Gurbanguly Berdymukhammedov, who became ruler of the central Asian state after the 21-year rule of Saparmurad Niyazov, the self-proclaimed Turkmenbashi, who died on December 21, 2006 – has initiated changes in Turkmenistan’s political life. The new president has broken with the previous policy of self-isolation, and has directed the country towards openness to the outside world. Opportunities have thereby arisen for competitors in the ‘Great Game’, to gain political influence in Turkmenistan and access to hitherto unexploited Turkmen deposits of gas and oil. A new stage in the Great Game, which has been played for influence in Central Asia and control of access to its energy resources for many years, can thus be said to have been launched, and Turkmenistan has become the main setting for it. The major actors involved are Russia, the United States, China and the European Union.

Bulgarian-Russian games in the energy sector: an outcome is getting closer. OSW Commentary No. 61, 2011-10-5

Bulgaria and Russia are entering the final phase of setting the conditions of their co-operation in the energy sector. A new gas contract is being negotiated because the currently applicable agreements will have expired by the end of 2012. The fate of two major energy projects – whose implementation depends on good co-operation between Sofia and Moscow: the Burgas– –Alexandroupolis oil pipeline and the construction of a Bulgarian nuclear power plant in Belene with Russian participation – is currently being decided. Another issue ever-present on the agenda is the future of the South Stream gas pipeline promoted by Russia, which is to run through Bulgarian territory. The outcome of all the aforementioned discussions and negotiations will determine for years the model of Bulgarian-Russian relations and may strongly affect the shape of the oil, gas and electricity markets in South-Eastern Europe.

The prospects for the EU-Ukraine free trade agreement. OSW Commentary No. 94, 2012-10-15

The European Union and Ukraine initialled the Deep and Comprehensive Free Trade Area Agreement (DCFTA) on 19 July 2012. The scope of the agreement which the EU and Ukraine reached following their negotiations is much more extensive than that of a typical free trade agreement. It envisages not only the lifting of tariff and extra-tariff barriers but also, more importantly, Kyiv adopting EU legal solutions and standards in this area. Whether the agreement will be signed and implemented is still an open question and depends on the existing political conditions. On the one hand, the repression imposed by the government in Kyiv on its political opponents (including the detention of the former prime minister, Yulia Tymoshenko) has provoked criticism from the EU, which refuses to sign the agreement if the government in Kyiv continues to violate democratic principles. The manner in which Ukraine’s parliamentary elections are conducted this October will be the key test. On the other hand, Russia is increasingly active in its efforts to involve Ukraine in the integration projects it has initiated (the Customs Union and the Eurasian Economic Community). It should be noted that Moscow has effective instruments to exert its will, such as the dependence of the Ukrainian economy on supplies of Russian oil and gas and on exports to the Russian market. Besides, Moscow also has political instruments at its disposal. It is impossible to participate in integration projects both with the EU and with Russia. Therefore, Kyiv will have to make a strategic decision and choose the direction of its economic integration. Unless Ukraine takes concrete action to implement its agreements with the EU, primarily including the free trade agreement, its economic dependence on Russia will grow, and it will be more likely to join the Russian integration projects.

Ukrainian economy on the verge of recession. OSW Commentary No. 96, 2012-11-21

In the third quarter of 2012, Ukraine’s economy recorded negative growth (-1.3%) for the first time since its 2009 economic crisis. Q4 GDP is projected to suffer a further decline, bringing Ukraine into formal recession. In addition to the worsening macroeconomic indicators, Ukraine is also facing a series of concomitant economic problems: a growing trade deficit, industrial decline, shrinking foreign exchange reserves, and the weakening of the hryvnia. Poor economic growth is expected to result in lower than projected budget revenues, which in turn could lead to the sequestration of the budget in December. The decline evident across the key economic indicators in the second half of 2012 brings to a close a period of relative economic stability and two years of economic growth, which had been seen as a significant personal achievement of President Viktor Yanukovych and the ruling Party of Regions. The health of the Ukrainian economy largely depends on the state of the country’s export- -oriented industries. The current economic forecasts for foreign markets are not very optimistic. It is impossible to determine whether the current economic downturn is likely to be merely temporary or whether it heralds the onset of a prolonged economic crisis. The limited capacity to deal with the growing economic problems may mean that Kiev will need to seek financial support from abroad. This is particularly significant with regard to external debt servicing, since in 2013 Ukraine will need to pay back around 9 billion USD, including over 5.5 billion USD to the International Monetary Fund. In order to overcome the recession and stabilise public finances, the government may be forced to take a series of unpopular measures, including raising the price of natural gas and utilities. These measures have been stipulated by the IMF as a condition of further financial assistance and the disbursement of the 12 billion USD stabilisation loan granted to Ukraine in July 2010. The only alternative for Western loans and economic reforms appears to be financial support from Russia. The price for Moscow’s help might however turn out to be very high, and precipitate a turn in Kiev’s foreign policy towards a gradual re-integration of former Soviet republics under Moscow-led geopolitical projects.