BELARUS NEWS AND ANALYSIS

DATE:

02/08/2007

Russian Firm May Cut Gas Supply to Belarus

By Anton Troianovski
Special to The Washington Post

MOSCOW, Aug. 1 -- Gazprom, Russia's state-controlled natural gas monopoly, said Wednesday it will cut off nearly half of its shipments to Belarus within two days, raising fears that the gas supply to many European countries could be disrupted.

The Russian company said that Belarus owes it $456 million but that it will keep the gas flowing if Belarus offers an acceptable settlement by Friday morning.

Gazprom's move was the latest example of Russia's strong-arm tactics in energy export disputes with its neighbors. In the European Union, which receives more than 20 percent of its Russian gas imports through Belarus, the announcement renewed concern about the Continent's reliance on Gazprom.

"We take these developments very seriously," said European Union spokesman Martin Selmayr, according to the Associated Press. He called on Russia and Belarus "to resolve the dispute without delay."

Russia contends that its tactics are justified, saying it is merely moving toward a system of pricing gas at market levels, ending subsidies that originated in the Soviet era.

Belarus agreed at the end of 2006 to more than double the price it paid for gas from Russia. Gazprom asserted on Wednesday that $456 million was now due, saying a grace period outlined in the contract had expired last week.

"Today is already August 1. However, at the present time there has been no payment of the debt . . . nor any guarantees that this debt will be paid," Gazprom spokesman Sergei Kupryanov told reporters Wednesday. Belarus had no immediate public response.

The company insisted Wednesday that Belarus would be required to allow gas meant for other countries to continue to pass across its territory untouched. But a similar dispute between Russia and Ukraine in early 2006 caused a sharp drop in Russian gas reaching Central and Western Europe from Ukraine.

Alexander Lukashenko, the authoritarian president of Belarus, has been seeking a loan from Moscow to help stabilize the country's ailing economy, whose state-controlled heavy industry has suffered from the higher gas prices.

Alexei Makarkin, an analyst at the Center for Political Technologies in Moscow, said Lukashenko hopes to use his control of the Belarus pipeline to prompt other European countries to pressure Russia into accepting some of his demands.

On Wednesday evening, there were signs that Belarus was trying to settle the dispute. The deputy chairman of the country's national bank, Vasily Matyshevsky, told the Interfax news agency that his bank was ready to convert part of its foreign exchange reserves to settle the debt with Gazprom.

Source:

http://www.washingtonpost.com/wp-dyn/content/article/2007/08/01/AR2007080102348.html