Russia to continue work on Union State with Belarus - Putin

MOSCOW, February 1 (RIA Novosti) - Russia's president reaffirmed Thursday that Russia will continue to form a Union State with neighboring Belarus, despite the recent oil and gas standoff.

"We and Belarus still plan to continue building the Union State," Vladimir Putin said at an annual news conference in the Kremlin.

The president also said the two countries had ample opportunity to introduce a common currency and a common tariff on oil and oil products, to set the foundation for the future union.

The ex-Soviet neighbors declared their intention to build a Union State with a common economic, customs and political space in 1997. But negotiations have been complicated by a host of issues, including the energy-pricing row at the beginning of 2007, disagreements on a common currency, and tax issues.

During the energy standoff, Moscow briefly shut off supplies via Belarusian pipelines to several EU countries, damaging its image as a reliable energy supplier.

Putin defended Russia's stance on a gradual transition to market relations with Belarus, saying that it was put in motion now rather than a year ago only because the Russian leadership did not want to "damage the Belarusian president's popularity" before elections in the country in 2006.

However, Alexander Lukashenko, who won a landslide election last March, has lately assumed a tough stance on Moscow, traditionally his closest ally, claiming that bilateral relations have been steadily deteriorating over the past decade.

Earlier in the week, the authoritarian ruler accused Russia of carrying out a large-scale political and economic offensive against his country.

"With the current Russian leadership, a massive attack on Belarus has been underway for several years," he told Gennady Zyuganov, the leader of Russia's Communist Party, at talks in Minsk on January 30.

Lukashenko said he does not believe Russia is switching to market relations with former Soviet states and dismissed as "ridiculous" Russia's claims that it is subsidizing the Belarusian economy.

He also said that Belarus will never be a part of another country and called into question the proposed Union State with Russia.

In an apparent response to Lukashenko's comments, the Russian president said at the news conference that Russia is willing to consider any proposals for forming the Union State that might be acceptable for both countries, even if the members are considering full or partial sovereignty within the future union.

"If the current situation is such that the Belarusian leadership and the majority of the country's population prioritize sovereignty, let us search for the forms [of the future union] that would satisfy both sides," Putin said.

"We must find an optimal variant for cooperation and movement in this direction," the Russian leader said.