BELARUS NEWS AND ANALYSIS

DATE:

10/11/2006

Russia, Belarus to pursue market norms in relations - Kremlin

MOSCOW, November 10 (RIA Novosti) - The presidents of Russia and Belarus said Friday they will be guided by free market principles as they seek to broaden bilateral economic ties, the Kremlin press office reported.

Russia has moved to raise natural gas prices for its former Soviet allies to a European level since switching to a free market economy, triggering bitter disputes with some of them.

For Belarus, which currently pays about $50 per 1,000 cubic meters of gas, Russia has announced a four-fold price increase as of 2007.

The Kremlin said Vladimir Putin and Alexander Lukashenko met to discuss an upcoming summit of the Commonwealth of Independent States, including reform of the post-Soviet organization and sensitive bilateral issues.

"A major focus was given to issues related to the buildup of the [Russia-Belarus] Union State, as well as bilateral trade and economic relations. The heads of state said relations will be developed on a mutually beneficial basis in keeping with market principles and with account for a high level of relations between the two countries," the Kremlin said, without elaborating further.

Russia and Belarus are staunch advocates of the 11-nation CIS, which has been criticized by some of its members as ineffective and Russian-dominated. Belarus will host the CIS summit November 28 on the agenda, including economic integration, spending on CIS organizations in 2007, and reform proposals from the energy-rich Central Asian republic of Kazakhstan.

The two have also been working to create a Union State since 1997, which envisions a common economic, customs, and political space, but talks stalled recently over a host of issues, including gas prices.

Russia's gas monopoly Gazprom, which has unsuccessfully sought to acquire pipelines in Belarus, demanded in early November that the country pay $200 per 1,000 cubic meters for gas deliveries starting in 2007. Lukashenko has blasted the move as tantamount to "severing economic ties" between the long-standing allies.

Russia has also sought to prevent losses being inflicted on the Russian budget from oil supplied to Belarus, refined there, and then re-exported to third countries.

Russian officials said the volume of crude supplied to Belarus significantly exceeds the country's domestic demand, and the Russian budget sustains major losses from exporting its oil duty-free to Belarus, which sells it to third countries after refining it, since "all taxes go to the Belarusian budget."

In a bid to find alternative energy sources, Belarus has held talks with energy-rich Caucasus republic of Azerbaijan, Venezuela, and other countries.

Source:

http://en.rian.ru/russia/20061110/55533923.html

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