BELARUS NEWS AND ANALYSIS

DATE:

04/01/2007

Russia says Belarusian oil duty violates bilateral agreement

The Associated Press

MOSCOW: The Ministry of Economic Development said Thursday that Belarus' imposition of a stiff import duty for Russian oil transiting Belarus violates a bilateral trade agreement, Russian news agencies reported.

Belarus, angry over Russia imposing a duty on oil exports to Belarus and over Russia's doubling its price for natural gas, on Wednesday announced it would impose an import duty of US$45 (?34) per metric ton of oil that Russia ships to Western Europe.

Two pipelines crossing Belarus take oil to Poland, Germany and the Baltic countries. The duty would effectively raise the cost of a barrel of Russian oil by about US$6.50 (?4.90).

A spokesman for the Belarusian Foreign Ministry, Andrei Popov, said the country will not block oil headed for other countries.

"Belarus is strictly observing its international obligations for guaranteeing free transit through its territory," he said Thursday.

The doubling of gas prices and the Russian export duty were a twin blow to Belarus, whose economy is mostly under central control and whose industries have depended on cheap Russian gas. The US$100 per 1,000 cubic meters that Belarus now pays for gas is still well below Russia's price for Western Europe, but Russia says its price for Belarus will rise to world-market levels by 2011.

Belarus also had profited by importing Russian oil at comparatively low cost, processing it and selling the products abroad.

The Russian ministry said in a statement that the duty on transit oil shipments contradicts a free-trade agreement signed between Russia and Belarus in 1992, in which "each side should guarantee the uninhibited transit through its territory of goods produced on the customs territory of the other side," the ITAR-Tass news agency said.

Belarus has similarly argued that the Russian export duty violates the bilateral agreement.

Sergei Grigoriyev, a spokesman for Transneft, the Russian company that operates the pipelines crossing Belarus, told The Associated Press his company had not received any documents from Belarus demanding the duty.

The Russian ministry's statement said that "world practice" says import duties should be imposed only on goods that are produced in or purchased by the country establishing the duty, ITAR-Tass said.

Deputy Economic Development Minister Andrei Sharonov said on Ekho Moskvy radio Thursday that "we should discuss mutual claims and find a mutual resolution, and not demonstrate an arsenal of retaliatory measures to each other."

The politically charged dispute reflects strained relations between Belarus and Russia, whose close ties go back centuries. In recent years, Russian President Vladimir Putin's Kremlin has apparently grown weary of providing political and economic support for Belarus' authoritarian President Alexander Lukashenko, under whom Belarus has increasingly become a pariah state in Europe.

Lukashenko, an open admirer of the Soviet Union, has retained much of Belarus' Soviet-style command economy. Belarus' suppression of opposition and independent media has been widely criticized in the West.

Associated Press Writer Yuras Karmanau in Minsk, Belarus, contributed to this report.

Source:

http://www.iht.com/articles/ap/2007/01/04/europe/EU_GEN_Russia_Belarus.php

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