Russia to Remove Duties on Oil Products Exports to Kyrgyzstan

By: EW News Desk Team   Date: 24 January 2011

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EW News Desk Team

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EconomyWatch, News Desk Team

 

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24 January 2011

Belarus will receive about $4 billion of duty free oil from Russia in 2011, Russian Prime Minister Vladimir Putin announced this week – Russia will also remove all duties on oil product exports to Kyrgyzstan.

Russia: Use of Energy as Political Tool

Russia is one of the largest producer and exporter of natural gas and oil – and has a history of using energy to its political advantage.

In 2006 and 2009, Russia stopped natural gas supplies to Ukraine when they wanted to send a political message to Europe.

Russian natural gas prices fluctuate from country to country – based on their political ties and relationships.

Pro- Western countries such as the Baltic States are charged over $300 per thousand cubic meters of natural gas, while Armenia enjoys lower prices – just over $100 per thousand cubic meters.

Russia’s ties with Kyrgyzstan and Belarus

Russia’s agreement with Kyrgyzstan and Belarus to relieve them of oil export duties came into effect after Kyrgyzstan’s government changed hands – the current government having closer political ties to Russia than the previous party.

Kyrgyzstan’s current government is being rewarded for their political loyalty to Russia with economic kickbacks – direct financial assistance and waiver of oil export duties.

As well as retaining Kyrgyzstan’s loyalty, Russia expects to gain the rights to supply fuel to the US Manas air base.

In Belarus, Russia is negotiating new oil and customs duties.

Russia has offered to remove all oil export duties, as long as Minsk joins into the common economic space with Russia along with Kazakhstan by 2012.

What does this mean for Belarus?

Well, Russia will be in effect, trading free oil duties for greater economic – and political – control over Belarus.

The Russian deputy finance minister made a statement announcing Russia’s intentions to unify its oil export duty charges and fees by April 2011 – But will a unified price for energy take away Russia’s bargaining power in the political arena?

Watch the video report on the Stratfor website.


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