BELARUS NEWS AND ANALYSIS

DATE:

14/12/2006

Putin, Lukashenko Head for Gas Talks

By Anna Smolchenko
Staff Writer

President Vladimir Putin is scheduled to meet with his Belarussian counterpart, Alexander Lukashenko, in Moscow on Friday amid an escalating trade dispute between the two countries.

Minsk on Thursday accused Russia of violating the trade agreement between the two countries by imposing full customs duties on crude-oil exports to Belarus as of Jan. 1.

The export duty on crude oil is $180.70 per ton.

Moscow has also announced a price hike on natural gas exports to Belarus, bringing prices to around $200 per 1,000 cubic meters.

At present, Minsk pays just $46.67 per 1,000 cubic meters.

"Russia's introduction of duties on exports to Belarus as of Jan. 1 violates a number of provisions on free trade between our two countries," Belarussian Foreign Ministry spokesman Alexei Popov told Interfax on Thursday.

It is widely believed that by hiking energy prices, Moscow is pressuring Minsk to accept its terms in a battle for control of Beltransgaz, the pipeline network that delivers gas through Belarus to Germany, Lithuania and Poland.

Gazprom is reportedly close to a deal that would give it partial control over the pipeline network in exchange for a lower gas price. Belarussian Foreign Minister Sergei Martynov said recently that a 50-50 joint-venture deal would be signed by Jan. 1. Minsk also indicated Thursday that it would pursue closer ties with Ukraine in the energy sector.

Gennady Nevyglas, Lukashenko's chief of staff, discussed increasing energy cooperation with his Ukrainian counterpart, Interfax reported. Nevyglas added that Lukashenko could meet with Ukrainian President Viktor Yushchenko in Chernobyl early next year.

Lukashenko and Putin will hold talks before a meeting of the Russia-Belarus Union, said a spokesman for the Belarussian Embassy who declined to be identified, in accordance with embassy policy.

"Lukashenko obviously understands that Russia is not joking this time," said Yaroslav Romanchuk, head of the Mizes Research Center, a liberal think tank in Minsk. "Lukashenko is clearly jittery, clearly lost."

Vladimir Bobrov, head of strategic development and investment at the Belarussian Energy Ministry, meanwhile expressed hope that an energy agreement would be reached soon.

"Because of Russia's interest in the mutual safety of our two countries in the energy sector and other sectors, I can say today that this process will not drag on for too long," Bobrov said to Interfax on Thursday.

Bobrov also played down the significance of the customs duties on crude oil, saying the Belarussian economy could withstand the blow in the short term.

Romanchuk estimated that the crude-oil duty coupled with the gas price hike could shave as much as 15 percent off Belarus' gross domestic product.

Worsening relations between the two countries are making the prospects of introducing a common currency and constitution even more bleak, said Ivan Makushok, spokesman for Pavel Borodin, head of the Russia-Belarus Union. Makushok said both issues had been struck from Friday's agenda.

Source:

http://www.moscowtimes.ru/stories/2006/12/15/041.html

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