BELARUS NEWS AND ANALYSIS

DATE:

06/01/2007

Belarus files customs case against Russian pipeline company in escalating oil-duty dispute

The Associated Press

MOSCOW: Belarus stepped up its dispute over oil duties with Russia, announcing Saturday that it has started a customs case against Russia's pipeline operator, the Belarusian state news agency reported.

Russia's trade ministry in turn indicated it could take retaliatory measures against Belarus.

Belarus this week announced it would charge an import duty of US$45 (?34) per ton of Russian oil shipped to Western Europe in pipelines that cross Belarus. The move followed Russia's imposition of an export duty of US$180 (?135) a ton on oil sold to Belarus.

The dispute so far has not affected Russian oil shipments to Europe.

Russia has called the Belarusian duty a violation of a bilateral trade agreement and out of line with international practice, saying duties can be charged only by a country that imports or exports a commodity, not one through which the commodity passes.

But Belarus appeared determined to push the issue. The Customs Service has filed a case against the head of Transneft, the Russian company that owns the pipelines passing through Belarus, for failure to make proper declarations, the state news agency Belta reported. Transneft officials could not be reached for comment late Saturday on the case, which is to be heard in court on Monday.

The Russian Trade and Economic Development Ministry, meanwhile, summoned the Belarusian ambassador to a meeting where a note calling for immediate cancellation of the duty was delivered, Russian news agencies cited Deputy Economic Development Minister Andrei Sharonov as saying.

If the duty is not rescinded "we will have to look for adequate measures that will make our Belarusian partners give a more serious look to the situation," he was quoted as saying by the news agency Interfax.

Russia and Minsk have been sparring for months over energy issues. Under a contract signed in the last minutes of 2006, Belarus grudgingly agreed to pay Russia's natural gas monopoly more than twice as much as before for the gas, on which it depends for industry and home heating.

After the collapse of the Soviet Union, Russia sold gas to ex-Soviet republics at prices far below what the gas would fetch on the European market. Cheap gas has been key to the survival of Belarusian industry, most of which remains under state control under the leadership of President Alexander Lukashenko, an open admirer of the Soviet centralized economy system.

Belarus also had profited from importing Russian oil duty-free, processing it and selling the products abroad.

The oil and gas disputes have put an intense strain on relations between Belarus and its giant neighbor.

In recent years, ties between Belarus and Russia have been close. With leaders in several other former republics turning toward the United States and European Union, the Kremlin has seen Belarus as a military ally and a buffer against the expanding NATO alliance.

But there are signs of growing Kremlin frustration with Lukashenko - a pariah in the West because of his suppression of dissent and persecution of political opponents - and an increasing feeling that he is taking advantage of Moscow's support without giving enough in return.

Although Moscow supported Lukashenko when he won a third term in March after scrapping term limits, giving a victory derided in the West as a farce a seal of approval through a Russian-dominated observer group, some observers see the Kremlin growing tired of Lukashenko.

Source:

http://www.iht.com/articles/ap/2007/01/06/europe/EU-GEN-Russia-Belarus-Oil.php