BELARUS NEWS AND ANALYSIS

DATE:

01/06/2006

Belarus in talks over Russian gas

Gaspipe valves

Russia's gas deposits are a powerful economic and political tool

Senior officials from Belarus are due to arrive in Moscow on Thursday for talks about setting 2007 gas prices.

The meeting comes as Russia is looking to increase prices to many former parts of the Soviet Union after years of selling gas at discounted levels.

Attempts have met resistance from other nations and prompted European concerns after winter supplies were disrupted.

Belarus is one of Russia's closest allies, but has warned that any sudden price rise would mar the special links.

Cut price

The BBC's Stephen Eke in Moscow says Belarus currently pays about one-fifth of the market rate for Russian gas, the lowest rate among all national consumers.

"The discount is the result of Belarus's unique relationship with Russia, as well as many rounds of fraught negotiations over the past decade," he said.

"But Gazprom, Russia's gas giant and the sole supplier to Belarus, has made clear it expects all its consumers to pay, or eventually pay, market rates," he added.

According to the BBC's correspondent, the consequences of a price hike for Belarus would be severe.

"Subsidised energy has helped ensure that an unreformed, still centrally planned economy has not only stayed afloat, but has also achieved high rates of growth and some of the best living standards in the former Soviet Union," he said.

"It's also underpinned the idea of a special relationship between the two Slavic countries, both officially committed to building a union state.

"Over recent months, Russia's continuing support for Belarus has become increasingly valuable, as the European Union and US have moved to isolate a country they have called Europe's last dictatorship," Stephen Eke explained.

Background noise

However, the announcement that Russia is planning to increase prices has fuelled speculation about what may be behind the move.

"Economically, the move may be aimed at forcing Belarus to give up control of its gas pipelines and a number of valuable industrial assets Gazprom has expressed interest in," said the BBC's Moscow correspondent.

"But there may also be a political motive," he continued.

"Some officials have suggested that the threat of a price hike would encourage President Aleksandr Lukashenka to sign a constitutional act, which could, potentially, open the way to Belarus being incorporated into Russia," he said.

Source:

http://news.bbc.co.uk/1/hi/business/5036606.stm