BELARUS NEWS AND ANALYSIS

DATE:

10/11/2006

Kremlin says economic ties between Russia, Belarus must be market-based

The Associated Press

MOSCOW: The Kremlin said Friday that economic ties between Russia and Belarus must be based on market principles, after the two countries' leaders held talks dominated by Russian demands for a fourfold increase in the price paid for its gas deliveries.

In a brief statement after the meeting between President Vladimir Putin and his Belarusian counterpart, Alexander Lukashenko, the Kremlin said that bilateral economic relations should be built "on mutually beneficial terms based on market principles."

A Kremlin official in sharper comments earlier Friday said that Russia would regard "any attempt to politicize (the gas talks) as a form of pressure." The official was speaking on condition of anonymity because he was not authorized to speak to the media.

Belarus' inefficient Socialist-style command economy is propped up by cheap Russian gas imports, but after the former Soviet nation's autocratic leader rejected a Kremlin plan to incorporate the country into Russia, Moscow signaled an end to the subsidized energy supplies.

Russia wants to raise the price fourfold from US$50 (?39) per 1,000 cubic meters to US$200 (?155), but has indicated it could compromise if Belarus hands over 50 percent of its pipeline that transports Russian gas to western Europe.

Russian state gas monopoly Gazprom has raised its prices for other former Soviet countries in what it calls a long overdue recalibration to market prices.

However, OAO Gazprom's recent demand for a doubling of the price Georgia pays to US$230 (?180) is also seen as political punishment for Tbilisi's Western-leaning path.

And Ukraine's agreement keeping gas prices for next year fixed at US$130 (?100) is widely believed to have been negotiated at the cost of ceding to greater Russian influence, including a commitment to slow Kiev's bid to join the World Trade Organization until Moscow has first entered it.

Source:

http://www.iht.com/articles/ap/2006/11/10/business/EU_FIN_Russia_Belarus.php

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