Page 6 - FSUOGM Week 46 2021

FSUOGM COMMENTARY FSUOGM

Belarusian threat to halt Russian

gas transit is hollow

Russia not only owns the gas but also the pipelines

that are used to flow it through Belarus

BELARUS BELARUSIAN President Alexander
Lukashenko threatened on November 11 to cut
WHAT: off Russian gas transits to Europe, amid height-
Lukashenko has ened tensions with the EU over a migrant crisis
threatened to disrupt at its border with Poland. It appeared that the
Russian gas transit via threat was taken seriously by traders, with Euro-
his country. pean gas prices subsequently jumping on the
Belarusian leader’s words. In reality, however,
WHY: the threat is hollow. Belarus has no means of dis-
The threat is a response rupting Russian gas transit without incurring the
to potential EU sanctions wrath of Moscow – its only ally in Europe.
over a migrant crisis. Relations between Belarus and the EU col-
lapsed after the Belarusian presidential election
WHAT NEXT: in August 2020, which was widely dismissed as
The power to cut transit neither fair nor free, and was followed by a crack-
rests solely with Moscow down on the country’s opposition movement.
and not with Minsk. Tensions have reached a new height in the
last few weeks, with Brussels accusing Minsk of Russian-Belarusian relations."
encouraging migrants from the Middle East and The Yamal-Europe runs through Belarus
Africa to try to cross into neighbouring Poland, before passing through Poland and terminating
creating a border crisis. The EU is considering in Germany. It can carry up to 33bn cubic metres
additional sanctions to punish Belarus for its per year at full capacity, but in recent weeks it
actions. has sent a mere fraction of that amount. In some
Lukashenko responded to this threat with days it has made no westbound gas deliveries
one of his own on November 11. at all, instead making eastbound shipments to
“We are heating Europe, they are still Belarus from Poland.
threatening us that they will close the border,” Lukashenko traditionally relied on playing
Lukashenko said. “And if we shut off natural gas Russia and the EU against each other to secure
there? Therefore I would recommend that the concessions from either party and ensure that his
Polish leadership, Lithuanians and other head- regime continues. But the dynamic shifted after
less people think before speaking.” the 2020 presidential election. The EU and its
However, analysts dismiss that the threat is Western allies no longer recognise Lukashenko’s
serious. regime as legitimate, leaving Russia as Belarus’
"We do not think that Mr. Lukashenko would only ally. Russia is in turn pushing for closer
be able to stop gas transit via Belarus for a few political unity with Belarus through the creation
reasons," Sova Capital said in a research note. of the proposed Union State. Belarus has resisted
"First, [there is the] the 100% owner of Gaz- the idea, but now has far less leverage.
prom Transgaz Belarus, meaning the Russian While Lukashenko's threat may be hollow,
company controls the infrastructure and flow it is telling that he chooses this time to make it,
via Belarus. We also do not think that Russia coinciding with a gas crisis that exposed signif-
would allow Belarus to disrupt flows, as Russia icant flaws in European energy policy. The bloc
has material leverage over Belarus compared to has taken steps in recent years to restrict indig-
Ukraine." enous gas development, leaving it at the greater
"We think this threat is unlikely to be car- mercy of import supply. The EU has also taken
ried out," VTB Capital (VTBC) agreed. "It the threat seriously, as have markets, as both gov-
would lead to the loss of transit income and ernments and traders alike are nervous following
commercial fines being levied on Belarus, as weeks of rapid fluctuations in gas prices on the
well as potentially broader repercussions for wholesale market.™

P6 www. NEWSBASE .com Week 46 17•November•2021