Word: russia
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...becoming a New Year's tradition in Europe to wake up on Jan. 1 with a big Russian headache. At the beginning of 2006 and 2009, Russia cut off energy supplies to Ukraine after disagreements over natural-gas prices, which subsequently caused fuel shortages in the European Union in the dead of winter. This January, all eyes are trained on Belarus, which has been having its own quarrel with Moscow over oil prices, threatening European energy supplies once again. But three weeks into the current standoff, there's been a twist: Kazakhstan, another former Soviet republic, stepped in last week...
...quarrel began typically enough. Belarus, like many ex-Soviet countries, has enjoyed subsidized oil and gas supplies from Russia for two decades, in part to ensure its loyalty after the collapse of the Soviet Union. It has even been allowed to buy Russian crude oil on the cheap, refine it at home and sell it on to Europe at a huge profit. But in the past three years, Belarusian President Alexander Lukashenko has started to assert his independence in subtle ways. Following the 2008 Russia-Georgia war, Lukashenko declined to recognize the breakaway Georgian republics of South Ossetia and Abkhazia...
...Then late last year, the spat escalated when Russia decided that Belarus no longer deserved its energy subsidies. When the two countries' existing oil contract expired on Dec. 31, Russia demanded additional payments of a whopping $2.5 billion, which amounts to about 5% of Belarus' entire economy. The Russian government also hinted that in order to keep oil prices down, Belarus should give Moscow a stake in its energy infrastructure - namely the oil refineries it uses to process oil for resale to Europe. This would play into Russia's larger aim of controlling the energy supply chain from...
...weeks, Belarus has refused to accept Russia's conditions, putting relations between the countries on ice and threatening to leave swaths of Europe in the cold. Talks between the two sides eventually dissolved into an exchange of letters with competing demands. But despite the tough position Lukashenko staked out, analysts believed that Russia would get its way in the end, as Belarus' economy and security are still deeply dependent on Russia despite improved relations with the West. Lukashenko admitted as much last month when he said that severing ties with the Kremlin - as Ukrainian President Viktor Yushchenko has done - would...
...Then, on Jan. 19, three weeks into the dispute, Kazakhstan stepped in with a game-changing offer. It said that if Russia refuses to provide oil to the Belarusian refineries, it would be happy to take Moscow's place. The Kazakhs also said they would be willing to buy a stake in Belarus' Naftan refinery, which Russia's largest oil companies have coveted. "The demands of Belarusian refineries will be filled by Kazakh oil," said Anatoly Smirnov, Kazakhstan's ambassador to Belarus, adding that the two nations' Presidents have already discussed the idea and "no one has refused...