Hostage of Love


News from Belarus: activist detained, activist arrested, journalist detained…

And now for something completely different: head of Russian potash giant Uralkali, Vladislav Baumgertner, arrested in Belarus.

Baumgertner is also chairman of the supervisory board of Belarusian Potash Company, a joint trader of Uralkali, and of Belarusian potash producer Belaruskali.

At the end of July 2013 Uralkali stopped exports through the joint cartel (BPC), citing Belarusian president Alyaksandr Lukashenka’s December 2012 decision to allow Belaruskali to export potash through other traders.

Minsk was outraged. Belarusian investigators have counted the losses of Belaruskali so far: $100 million.

The dissolution of the BPC cartel could cause the global potash price to fall. Which could bring Belarus’ losses up to $1 billion a year.

And probably even more, as Russians were responsible for sales, Belarusian side doesn’t have traders.

Baumgertner would not have travelled to Minsk unless the bait was sweet. They say the Prime Minister of Belarus arranged a meeting with him through his Russian counterpart Dmitry Medvedev.

After a brief discussion (or, as Russian press reports, after an angry monologue of the Belarusian head of government), Baumgertner tried to return to Moscow. And failed.

TV footage, aired on Belarusian state channels the same evening, showed him handcuffed. He is being kept in a KGB detention centre, accused of abuse of office. If found guilty, the head of Uralkali could spend up to 10 years in prison.

The Russian elite is quite shocked but not so active just yet.

Uralkali has refuted all the allegations. The Russian foreign ministry has demanded the release of Baumgertner and Russia’s eccentric ambassador in Minsk has made some angry comments and insists on visiting him.

The press in Russia has ridiculed this humble reaction to what it calls Belarus’ “outrageous provocation.”

Minsk’s action is understandable: In a time of external deficit growth, any loss is unbearable.

Potash fertilisers are the only considerable source of foreign currency in Belarus that is almost free from Russian control. Oil, which is processed in Belarus and sold in the West, originates from Russia. Belarus has so far resisted selling Belaruskali to Russia.

Meanwhile, this apparently risky venture is a game that Minsk can hardly lose.

It is a form of Russian-type machismo enacted on the eve of the next round of negotiations on Russian oil deliveries and another Russian loan.

The potash business in Russia does not belong to people from President Vladimir Putin’s team; it is rather Medvedev’s business.

Baumgertner’s arrest has so far not influenced the next tranche of loan money, approved by Russia.

At the same time, in case there are no concessions on the Russian side, or even a new “economic” war, Moscow can be blamed for economic failures in Belarus.

This could help Belarus President Alyaksandr Lukashenka escape the Eurasian Union, the Russian-led club to be launched in 2015.

A standoff with Russia is also an opportunity to mend relations with the West: one political prisoner was released by Belarus shortly after Baumgertner’s arrest.

The fact is. Moscow cannot let Belarus go, not from the Eurasian project, not to lose it to the West. So Minsk has taken the apparently risky move, knowing that its strategic partnership with Russia death could not end.

And Baumgertner is a hostage of love. Be it love of Belarusian revenue or Russia’s love of its old status as a regional power.

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  1. #1 by jon livesey on August 28, 2013 - 9:32 pm

    “Minsk’s action is understandable: In a time of external deficit growth, any loss is unbearable.”

    The word “understandable” is one of the trickiest words in the English language.

    Assad’s gassing of his own people is understandable: he risks losing office.

    Germany’s U-Boat campaign was understandable: they didn’t have a strong surface Navy.

  2. #2 by Victor on August 29, 2013 - 2:30 am

    The West should demand a Burma-like eventual transition instead of insisting on wholesale change. Otherwise Lukashenka and Belarus remain trapped.

  3. #3 by Yuliya on September 1, 2013 - 3:29 pm

    I wish more background was given about the reasons of this arrest. There was a lot of stuff happening before Russia pulled out of cartel. I wish more journalists and bloggers would investigate the kind of fraud Russians can manage in their own country and try to manage in Belarus as well. Especially if they want to buy cheap what is expensive.

    • #4 by guest on September 2, 2013 - 7:43 pm

      The cause for the collapse of the cartel has to do with your country, not Russia. Decree No.566 issued by the Belarusian President Alexander Lukashenko on 22 December 2012, cancelled the exclusive right of BPC to export Belarusian potash.

      This followed a warning from Uralkali’s Kerimov not to increase sales outside the BPC, although the company had tolerated some violations from Lukashenko and his son for years. Uralkali is betting that Brazil, India, and China will lift their import quotas once the commodity settles at a lower price so that it will capture a lot of market share.