BELARUS NEWS AND ANALYSIS

DATE:

02/08/2007

Belarus president pledges to pay US$460 million gas debt to Russia

MOSCOW (AP) - The Belarusian president said Thursday that his country would pay a US$460 million (ý337 million) gas bill to Russia in the next few days, possibly with the help of Venezuelan President Hugo Chavez, as a Friday morning cutoff threatened by Russia's natural gas monopoly approached. Gazprom said Wednesday that it would nearly halve the volume of gas Belarus receives if it did not pay the debt. That sparked fears Belarus could siphon gas from pipelines taking 20 percent of Russia's gas exports to Europe, and rekindled bitter memories of Gazprom's past disputes with Ukraine and Belarus. Alexander Lukashenko's comments in Minsk suggested another protracted dispute was not likely.

"I gave the order for the money to be taken from our reserves and for the payment of $460 million to be made,> an angry Lukashenko told a gathering of Belarusian officials. A delegation from Belarus pipeline operator Beltransgas will continue negotiations Friday morning in Moscow before a 10:00 a.m. deadline (0600GMT), he said. he said in televised comments. The gas standoff grows out of a hard-fought deal signed in the last minutes of 2006 that obliged Belarus to pay US$100 (ý73) per 1,000 cubic meters of gas, instead of US$46 (ý34). The agreement allowed Minsk to pay US$55 (ý40) per 1,000 cubic meters for the first half of the year, but required payment of the balance of US$456 million (ý334 million) to Gazprom by July 23. Lukashenko said Russia had offered it a loan with an 8.5 percent interest rate to pay the debt _ terms he described as unfavorable.

"The government of Belarus has been negotiating with Russia about this credit ... it's getting humiliating,> he said in the speech before Belarusian officials. Lukashenko said. Disputes over energy supplies have pushed relations between the traditional allies to a new low, and Alexander Lukashenko said he would be turning to including Venezuela's Chavez, for help paying the debt. On a trip to Belarus in June, Chavez called for a strategic partnership with the ex-Soviet nation, calling his Belarusian counterpart a and lamenting the pressure he said the United States was putting on both Minsk and Caracas.

The United States and other Western nations have dubbed Belarus because of Lukashenko's relentless crackdown on dissent and free media. "Yes we will return the money, we will be left without reserves, but our good friends including Hugo Chavez have promised to provide a credit on favorable terms,> he said. He added that other banks were also prepared to provide loans, and the reserves would be replenished in a month. Venezuelan Finance Minister Rodrigo Cabezas touched on the issue Thursday, but did not offer specifics. "On the subject of the loan to Belarus, the (Finance) Ministry still does not know the details. This is an issue that is being handled by the Foreign Ministry now,> Cabezas said. The Foreign Ministry did not immediately comment on the matter. Market watchers doubted that the standoff would escalate.

"Even if there are cuts, history has shown that a resolution will come in a matter of days at the most,> said Valery Nesterov, oil-and-gas analyst at the Troika Dialog investment bank, referring to pricing disputes with Ukraine and Belarus in January 2006 and early this year. While previous conflicts had focused on complex gas supply contracts, Nesterov said. Nesterov predicted a certain amount of consternation in Europe, but suggested the case could ultimately increase support for a pipeline being built under the Baltic Sea by Gazprom and Germany. Gazprom's announcement Wednesday had triggered memories of a pricing dispute with Ukraine that saw supplies to the EU drop in the first days of 2006 as Ukraine siphoned gas from a transit pipeline after Gazprom halted direct shipments. Gazprom supplies a quarter of the gas used by Europe, and the incident drove home Europe's dependence on Russia for energy. In a statement Thursday, the European Commission called on Russia and Belarus to come quickly to a settlement and Source:

http://www.pr-inside.com/belarus-president-pledges-to-pay-us-r193292.htm

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