BELARUS NEWS AND ANALYSIS

DATE:

19/01/2007

Lukashenko says Belarus faces difficult years after Russia raises energy prices

The Associated Press

MINSK, Belarus: President Alexander Lukashenko warned Belarusians on Friday they would have to tighten their belts over the next few years in the wake of price rises for Russian energy.

"The new economic conditions that our country has found itself in makes higher demands on all of us," Lukashenko said. "The next three or four years will not be an easy time."

Lukashenko has relied heavily on cheap Russian natural gas and oil to fuel his country's largely Soviet-style, centrally controlled economy and maintain popularity. He grudgingly agreed to pay more than twice the previous price for gas this year - and even more in coming years - in a bitter price dispute late last year.

The outcome of a subsequent dispute over oil supplies and transit fees will reduce the profits Belarus makes by refining Russian oil and selling the products.

"Nobody will give us cheap oil and gas, not even the closest countries, our allies," Lukashenko said, referring to Russia more warmly than he did during the disputes. "But this does not mean that the country's leadership will stop fighting for less expensive resources.

"The government has never abandoned you in troubled times and never will," he said, speaking to workers at factory that makes refrigerators.

He said Belarus would push ahead with a five-year plan to modernize factories and make the economy more efficient, and would stick to targets of 9 percent growth in gross domestic product, and inflation no higher than 8 percent this year. "In no case will we slow down the tempo," he said.

Russian President Vladimir Putin said Monday that the gas and oil deals would prompt Belarus to conduct free-market reforms, but that even under their terms, Moscow's energy subsidies to the country next year would amount to US$5.8 billion (?4.5 billion), equivalent to more than 40 percent of Belarusian budget revenues.

Source:

http://www.iht.com/articles/ap/2007/01/19/business/EU-FIN-Belarus-Economy.php