BELARUS NEWS AND ANALYSIS

DATE:

11/01/2007

Belarus yields to pressure from Moscow in oil dispute

ú Deal means deliveries to EU could resume soon

ú Pipeline to reopen after transit tax is scrapped

Luke Harding in Moscow

Russia and Belarus appeared last night to have agreed a deal that is likely to mean the swift resumption of oil deliveries to Europe, possibly within hours.

After days of intense Russian pressure, and the threat yesterday of an all-out trade war, Belarus said it was ending its dispute with Moscow and scrapping a controversial tax on Russian oil imports.

The deal came after a call between President Vladimir Putin of Russia and Belarus's ruler, Alexander Lukashenko, Minsk said. The president's office said papers allowing the oil to flow through the Druzhba pipeline, which crosses Belarus, would be signed by tomorrow, though oil deliveries could begin today.

Russian government officials last night indicated that the first 79,000 tonnes of oil now in Belarus's oil depots will be pumped to western consumers. "The government, taking into consideration bilateral agreements with the Russian government, has taken the decision ... to cancel the state duty for the transit of oil along the state pipeline network," Belarus's prime minister, Sergei Sidorsky, announced. "I hope that within two days we will be able to overcome all disagreements - on oil, oil products and other sensitive groups of commodities on the Russian and Belarussian markets." He is to fly to Moscow later today.

Kremlin officials described the decision as a "cause for restrained optimism".

The deal will bring relief across the EU. On Tuesday Germany's chancellor, Angela Merkel, accused Mr Putin of unacceptable conduct for closing the oil pipeline, which is crucial to Europe's energy needs. Moscow turned off the tap on Sunday morning as part of its row with Belarus over pricing and taxes.

Belarus appeared to have caved in after Moscow announced that it was preparing measures to hurt Belarus's creaking Soviet-style economy. According to reports, officials were planning to impose taxes on all Belarussian imports. More than half of Belarus's exports go to Russia - $6bn (?3bn) worth in total.

At the same time, queues of cars formed on the Russian border with Belarus after Moscow imposed restrictions requiring Belarussian drivers to apply for temporary vehicle entry certificates.

Some analysts cautioned that the dispute might not be over yet. Yevgeny Volk, a Moscow-based analyst with the US thinktank Heritage Foundation, said: "No one in Moscow trusts Lukashenko, who is a master of bluff and who has deceived Russia on many occasions."

Moscow and Minsk had been locked in a row over oil pricing and duties since Belarus grudgingly accepted a last minute deal more than doubling the price of its natural gas from Russia. The Kremlin was keen to stop Belarus re-exporting petrol products made from processing cheap Russian oil. It recently imposed an export duty of $180 a tonne on oil sold to Belarus.

Belarus then imposed an import tax of $45 a tonne on Russian oil shipped to western Europe across its territory. This was scrapped yesterday, paving the way for resumption of oil deliveries to Poland, Germany and other European countries.

Source:

http://www.guardian.co.uk/oil/story/0,,1987443,00.html?gusrc=rss&feed=1