BELARUS NEWS AND ANALYSIS

DATE:

01/01/2007

Russia, Belarus Reach Last-Minute Gas-Price Deal

By Bill Gasperini

Moscow

Russia and Belarus signed a new price deal for Russian gas just two minutes before a midnight deadline New Year's Eve. The deal, reached after lengthy, top-level negotiations, avoided a potential cut-off of gas to Belarus that could also have affected supplies to western Europe. Bill Gasperini reports for VOA from Moscow.

The Belarus prime minister signed the new agreement with the chairman of Russia's energy company, Gazprom, just as the new year was about to arrive.

Under the deal, Belarus will pay more than double the current price of $47 dollars for 1,000 cubic meters of natural gas, a sum that is still far lower than western European levels. But under the terms of the agreement, the price will continue to rise gradually during the next five years.

While the new contract ended a long-running dispute between the two neighbors, the hard-line president of Belarus denounced the deal as a "blow to our centuries-old friendship."

Alexander Lukashenko also warned of economic hardship ahead, as his Soviet-style economy is forced to adapt to the higher energy prices.

But the economic impact for Belarus will be eased somewhat, as Gazprom will pay higher transit fees for gas that is sent to western Europe through pipelines across Belarus.

Gazprom officials sought to reassure the Belarusian delegation that the deal is a good one.

After explaining the details of the agreement, Gazprom chairman Alexei Miller said the terms of the contract are the best that the Russian gas company has offered to any of the ex-Soviet states.

Western Europe was watching the negotiations closely. One year ago, Russia cut gas to Ukraine over a similar price dispute. While an agreement was reached in a matter of days, the cut-off led to a shortfall of gas supplies to western Europe and shook confidence in Russia's reliability as a major energy exporter.

Critics say the Kremlin uses its vast reserves of gas and oil as a political weapon against neighbors with which it has disagreements, such as Georgia and Ukraine.

Source:

http://www.voanews.com/english/2007-01-01-voa13.cfm