Medvedev Pledges Support For Belarusian Economy

MOSCOW (Reuters) - Russian President Dmitry Medvedev pledged to support the beleaguered Belarusian economy, in a fresh sign from Moscow that it does not intend to relinquish its ties with the ex-Soviet neighbor.

Minsk has faced increasingly difficult economic conditions as it battles the global financial crisis, seeking to offset its uneasy reliance on traditional ally Moscow with renewed relations with the European Union.

After lengthy talks to mark the tenth anniversary of their "union state" -- which joins Belarus and Russia in a loose political union as they continue to discuss ever closer ties -- Medvedev and Belarusian leader Alyaksandr Lukashenka praised what they described as the countries' close fraternal bonds.

At the meeting, Lukashenka had sought loans and the maintenance of lower oil prices from Russia, a source familiar with the talks told Reuters.

"We did and will continue to conduct a policy aimed at supporting the Belarusian economy," Medvedev said.

Belarus, whose economy has been run along Soviet-style command lines by Lukashenka since 1994 and which is heavily dependent on subsidies from resource-rich Russia, suffered heavily from the global crisis.

On December 4, Lukashenka sacked his government's economy, trade, and tax ministers in a reshuffle aimed at tackling economic stagnation.

Exports from Belarus halved this year as demand and prices for Belarusian machinery and agricultural and chemical products plummeted. Gross domestic product fell 1 percent in the first 10 months after years of growth.

Lukashenka, who has frequently criticized Moscow, stuck to his prepared script and avoided any repeat of previous attacks on Russia's prominent politicians.

Lukashenka wants more trade with Europe while still receiving cheap Russian gas, said Moscow Carnegie Center's deputy director Sam Greene. For Russia, the costs of maintaining relations are relatively low.

"Russia is economically important to Belarus because it is subsidizing it, but what drives growth for Belarus is trade with Europe," Greene told Reuters after the meeting ended.

"Medvedev doesn't have a lot of friends and doesn't want to lose one. There's never been a Russian leader who has been able to outmaneuver Lukashenka, so it's not in the interests of Russian leaders to antagonize him," Greene said.

After the talks, officials in the joint secretariat were quoted by Interfax news agency as saying that oil and gas prices to Belarus would be held at current levels in 2010 -- a possible sign of the continued support Medvedev pledged.

Lukashenka, once dubbed the "last dictator in Europe" by former U.S. Secretary of State Condoleezza Rice because of his repressive policies, has sought to mend ties with the neighboring EU.

Last week he hosted Italian Prime Minister Silvio Berlosconi in Minsk, ending a decade of isolation.

But he has tried to prevent the thaw in relations with the West from affecting his vital economic ties with Moscow, which remains Belarus' closest partner, despite a series of energy and trade rows in the past three years.


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