BELARUS NEWS AND ANALYSIS

DATE:

05/01/2007

New oil tax fuels Belarus, Russia trade spat

MOSCOW: Belarus and Russia clashed Thursday over a Belarussian demand for an oil transit tax, signalling a new flare-up in increasingly rancourous trade relations between the two neighbours.

The demand for a tax of 45 US dollars (34 euros) per tonne of oil was announced late Wednesday and delivered formally to Russian state-run oil transport company Transneft on Thursday, according to Viktor Azarov, spokesman for Belarus' oil refinery company Belneftekhim.

The tariff took effect at the start of the year and affects slightly fewer than 100 million tonnes of Russian oil annually transiting ex-Soviet Belarus to western Europe, Belarussian officials say.

Transneft deputy chairman Sergei Grigoryev told Echo of Moscow radio, however, that he had not heard of the tax, while Russia's economic development ministry said the new tax did not have "comparisons in international practice," ITAR-TASS news agency reported.

The ministry complained the tax had been imposed "without consultations with the Russian side, and in the opinion of the economic development ministry it contradicts current trade-economic agreements between Russia and Belarus."

The row came just days after Belarus narrowly averted a threatened cut-off in Russian natural gas supplies by agreeing to Russian monopoly Gazprom's demand for a more than doubling in price for imports.

Belarus' imposition of an oil transit tax responds to a Russian decision to impose export duties on crude oil that Belarus buys from Russia for refinery and sale onward to European clients. The duties took effect from the start of the year.

The two neighbours are in a formal, but largely symbolic political and economic union. Russia is the main financial backer of Belarus and authoritarian President Alexander Lukashenko's sole major foreign ally.

However, the New Year's trade spat has provoked angry accusations on both sides and revealed tensions within the partnership.

Lukashenko said Wednesday that he was ready to order reprisals if Russia did not meet its commitments on trade.

"If it does not, we are within our rights to act in turn. By that I mean to raise the question of the transit of oil through Belarus, payment for this transit, payment for the land that is used for oil and gas pipelines, Russian properties here," Lukashenko said.

Source:

http://www.thenews.com.pk/daily_detail.asp?id=37721

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