Russia Shores Up ‘Near Abroad’ With Belarus Oil Deal

Russia Shores Up ‘Near Abroad’ With Belarus Oil Deal

In the ongoing saga of Russian energy diplomacy -- intimately tied to Moscow's attempts to consolidate its influence in its "near abroad" -- the Dec. 9 oil-trade agreement with Belarus goes down as an important marker of Russia's reinvigorated authority in its immediate neighborhood. With President Viktor Yanukovych now exercising increasingly authoritarian control in Ukraine, and Belarus no longer flirting with the West, Moscow can safely assume that the two-decade era of Western institutions and influence expanding eastward has been put on hold indefinitely.

This turning point is concurrent with a thawing of relations between Russia and many Western countries, most notably the United States and Poland. It appears that, in return for Moscow's acquiescence to increased economic and political pressure on Iran over Tehran's nuclear program, the West has ceded Ukraine and Belarus as zones of geopolitical competition. (Whether this implicit bargain also applies to the South Caucasus, especially Georgia and Azerbaijan, remains debatable.) Belarus had toyed with closer relations with the West beginning in 2007. But Minsk has now clearly turned in Moscow's direction following the oil-trade agreement and a flurry of Western condemnation over the government's crackdown on opposition protestors after the Dec. 19 presidential election.

In the first instance, the oil-trade agreement stemmed from the fiscal pressures that both Russia and Belarus are enduring. Primarily due to the fall in oil and natural-gas prices from late-2008 onward, the Russian government's budget tipped into deficit in 2009 and is expected to stay there unless oil prices rise well above $100 per barrel. As a result, subsidized oil and gas exports to neighboring countries like Belarus are no longer affordable for Russia, prompting Moscow to attempt to raise oil and gas export prices.

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