European gas fears as Russia cuts supplies to Belarus

Russia has cut gas supplies to neighbouring Belarus over a payment dispute in a move that threatens to trigger a new European gas crisis.

By Andrew Osborn in Moscow

Dmitry Medvedev says Russia "cannot accept anything else: not pies, not butter, not cheese", as payment from Belarus for unpaid energy bill Photo: REUTERS

Energy giant Gazprom said it was reducing gas supplies by 15 per cent but warned it would swiftly increase that to as much as 85 per cent unless Belarus began co-operating.

That could have a serious knock-on effect for European countries as Russia sends about twenty per cent of the gas it supplies to Europe through the small former Soviet republic.

Gazprom insisted that no other countries would be affected but the European Union appeared to be taking no chances.

It said it was activating a special early warning system designed to deal with any crisis that might arise if the dispute drags on. Lithuania, Poland and Germany are the countries most at risk of disruption in such a scenario. The UK does not receive any of its gas via Belarus directly and is unlikely to be affected initially.

Gazprom said it had been forced to get tough with Belarus after the bill for unpaid Russian gas began to approach 200 million dollars and Belarus showed no signs of wanting to settle up. Belarus claims it is owed the same amount by Russia in unpaid transit fees. Russia said it has tried to settle the debt but that Belarus was not accepting payment.

The cut-off threatened to repeat previous crises caused when Russia has cut off gas supplies to Ukraine in the past. Just last year, a similar pricing dispute led to serious gas supply disruption across Europe. It is also likely to revive debate about Europe's growing dependence on Russia for its energy needs and fuel accusations that Russia uses its massive oil and gas resources as a political weapon.

Ruled by neo-Soviet dictator Alexander Lukashenko, Belarus has proved a truculent neighbour for Moscow in recent years. Though the two countries are theoretically supposed to be moving towards a 'Union government' with a single currency and other state attributes, progress has been slow.

The blunt-talking Mr Lukashenko has not shied away from heaping colourful scorn on Russia and Vladimir Putin, its prime minister. Mr Putin has often reciprocated in kind, belying strained personal relations with Mr Lukashenko. At the same time, Mr Lukashenko has tried to court the United States and the European Union in what he openly admits is an attempt to balance Russia's strong influence.

Russian President Dmitry Medvedev told Gazprom boss Alexei Miller on state television that Russia would accept only hard currency rather than goods which Belarus was apparently offering to barter in exchange.

"We cannot accept anything else: not pies, not butter, not cheese," Mr Medvedev said.

Russian analysts believe Belarus will quickly buckle under the pressure. Its inefficient Soviet-era command economy is almost totally dependant on Russian gas and it has no serious alternative sources of supply.


Partners: Social Network