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Belarus's strong-arm Uralkali ploy likey to end unhappily

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Belarus is playing a high stakes game in its effort to get potash prices higher.

The former Soviet Union country's arrest of Vladislav Baumgertner, the chief executive of Russian potash giant Uralkali, appears to be little more than an effort to gain leverage in a spat over the fertilizer.

Uralkali late in July walked out of the Belarusian Potash Company cartel with Belarus's Belaruskali, which controlled more than 40% of world exports, and warned that a result prices could fall from some $400 a tonne to less than $300 a tonne.

Even if Belarus, which relies on potash revenues for some 20% of its budget takings, succeeds in gaining some victory from what amounts to taking a hostage – Mr Baumgertner is charged with offences of abuse of power which can carry a jail sentence of 10 years – it will likely prove pyrrhic.

Uralkali deal?

It is not impossible, if unlikely, that Belarus could yet turn its hostage-taking into new potash tie-up with Uralkali.

Holding Mr Baumgertner hardly looks the behaviour which will bring Uralkali back to the negotiating table.

And Suleyman Kerimov, the top Uralkali shareholder and a tough operator, is unlikely to give in to Belarus blackmail.

But perhaps Belarus can offer enough sweeteners, along with Mr Baumgertner's freedom, to win Mr Kerimov over, perhaps through offering him a stake in Belruskali, which has long been seen as a privatisation candidate, at a mouth-watering price.

Strapped for cash

However, even if Alexander Lukashenko, the Belarus president, does defy first appearances by having a cunning plan up his sleeve, it is difficult to see how his strong-arm arrest of Mr Baumgertner will attract anything but contempt from Russia.

That matters, given that Belarus relies on its neighbour not just for trade but bailouts, such as a $3bn injection in 2011, besides gas.

(While Belarus has a building programme for nuclear power plants under way, they will not start entering service for at least another four years, on the government's own estimates.)

And the country's apparent desperation for a deal to support potash prices hints at just how desperate it is to support its finances.

Fishy claims

Mr Lukashenko has a habit of riling his Russian counterpart, Vladimir Putin.

Just as Uralkali was breaking up BPC, Mr Lukashenko was telling a government meeting how he had wrenched a 126-pound (57 kg) fish out of the Pripyat river – trumping Mr Putin, who a week earlier claimed to have hooked a 46-pound pike in Siberia.

However, Mr Baumgertner is a far bigger catch.

Mr Lukashenko will need political wizardry to ensure that the hunter does not end up as the hunted.

By Agrimoney.com

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