BELARUS NEWS AND ANALYSIS

DATE:

02/08/2007

Belarus asks Chavez for help on gas debt

By Isabel Gorst in Moscow and Richard Lapper in Sao Paolo

Belarus has turned to Venezuela to help pay back a $456m debt to Russia for gas supplies after Moscow threatened to halve its gas deliveries, Alexander Lukashenko, Belarusan president, said on Thursday.

"I have instructed the government to reach into the reserve fund for $460m to pay Russia for gas. Hugo Chavez [the president of Venezuela] and our other friends can give us credits today. Even foreign commercial banks are prepared to lend to Belarus," the Itar-Tass news agency quoted Mr Lukashenko as saying.

Gazprom, the state-owned Russian gas group, greeted the Belarusan leader's words with scepticism. It said: "They must explain what they mean. It's one thing to say you are going to pay a debt and another thing to actually pay."

The company said Gazprom's threat to reduce gas supplies to Belarus this morning "was still on the table". On Thursday night a delegation from Beltransgaz, the Belarussian state gas distribution company, rushed to Moscow for emergency talks with Gazprom about settlement of the outstanding debt payments.

Rodrigo Cabezas, Venezuelan finance minister, said on Thursday night: "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." Foreign ministry officials were unable to confirm or deny the loan agreement.

A Venezuelan loan to Belarus would not be surprising. Mr Chavez visited the country in June, describing Mr Lukashenko as a "brother in arms".

Belarusan ministers have been in Caracas and several "strategic" industrial agreements reached. These include joint ventures in energy, a plan to develop a gas pipeline for Venezuela and a $500m joint investment fund.

Agencies have also reported that Mr Chavez intends to buy up to $1bn in arms from Belarus.

A supply cut to Belarus could threaten countries in northern Europe importing Russian gas through Belarusan transit pipelines, a charge Gazprom denies.

Source:

http://www.ft.com/cms/s/c9e356c8-4132-11dc-8f37-0000779fd2ac.html