BELARUS NEWS AND ANALYSIS

DATE:

16/01/2007

Putin Praises Belarus-Russia Gas Deal

Combined Reports

An agreement to settle an energy dispute between Russia and Belarus is a good compromise that represents a subsidy of $5.8 billion for Minsk this year, President Vladimir Putin said Monday.

"This is a payment by Russia for a calm, smooth, comradely method of transition to a market relationship and it is fraternal support for the Belarussian people," Putin said at a Cabinet meeting, parts of which were shown on state television.

"In terms of gas, this support will amount to around $3.3 billion. And in oil and oil products it will constitute $2.5 billion. So $5.8 billion in total -- and that's just in energy," he said.

Putin's comments follow a deal Friday to resolve an energy dispute between the two neighbors, in which Moscow demanded higher prices and Minsk slapped a new tariff on Russian oil transit.

The spat culminated in Russia shutting down a huge oil pipeline that runs across Belarus. The move, which cut off 10 percent of Europe's oil supplies for more than 60 hours, forced Belarus to back down.

Putin said the deal was acceptable to Russia's partners and represented a smooth transition that would take place over several years.

"Our Finance Ministry says the entire Belarussian budget in 2007 will be $14 billion. That means our support is equivalent to about 41 percent. I think we can agree that's a lot," Putin said.

"Russia's direct or indirect support for the Belarussian economy will continue for a long time."

But he pointed to Belarus' acceptance of new oil import tariffs, saying the total package of Russia's support would be "significantly reduced" starting from this year.

The dispute added to European fears about Moscow's reliability as an energy supplier -- a reputation that had already been damaged by last year's price dispute with Ukraine and temporary shortages of Russian gas to European customers.

Both disputes and energy price hikes for other former Soviet republics have drawn criticism of Russia from Western nations, which have accused Moscow of using its vast mineral wealth as a political weapon.

Belarussian President Alexander Lukashenko has long been a pariah in the West for extending his rule through flawed elections and stifling dissent. He has relied on cheap Russian energy resources and resisted free-market reforms.

Russia and Belarus have a union agreement involving close political, economic and military ties, but the Kremlin has shown increasing irritation with Lukashenko, who has resisted Moscow's push for control over Belarus' energy pipelines and other assets.

(Reuters, AP)

Source:

http://www.themoscowtimes.com/stories/2007/01/16/017.html