BELARUS NEWS AND ANALYSIS

DATE:

17/06/2009

Russia, Belarus solve milk row but gas row looms

By Dmitry Zhdannikov and Andrei Makhovsky

MOSCOW/MINSK, June 17 (Reuters) - A row over a ban on imports of Belarussian dairy goods to Russia was resolved on Wednesday, but Moscow demanded payment from Minsk of $230 million in gas arrears.

The milk row further damaged relations between the two Slav neighbours who have long pledged but failed to build a "union state".

Belarus on Wednesday lifted its day-old strict customs controls imposed on roads to Russia after Russia scrapped its ban on dairy product imports from Belarus.

But Minsk signalled it can again resort to strict controls.

"The movement of Belarussian milk will be restarted across our border very soon," said Belarussian Agriculture Minister Semyon Shapiro.

Although the milk war may be heading to an end, energy issues remain an irritant.

Russia's gas export monopoly Gazprom (GAZP.MM) has demanded Belarus pays $230 million in gas arrears, Interfax news agency reported, citing the Russian embassy in Minsk.

Russia supplies a quarter of Europe's gas needs mainly via the territory of Ukraine but also via Belarus, which is a key transit route for Russian gas to Germany and Poland.

Russia froze a $500-million loan to Belarus last month. Lukashenko said Moscow refused the money because he turned down Kremlin demands to recognise the breakaway Georgian regions of Abkhazia and South Ossetia as independent states.

The latest spat between the neighbours came to a head on Sunday when Lukashenko snubbed the Kremlin by pulling out of a security summit after Moscow banned Belarussian dairy products on health grounds.

Russian President Dmitry Medvedev then called for an end to Belarus's "hysterics". Russia toned down its rhetoric on Monday, and Prime Minister Vladimir Putin told his cabinet not to say anything that might upset Minsk. (Reporting by Dmitry Solovyov; editing by Philippa Fletcher)

Source:

http://uk.reuters.com/article/oilRpt/idUKLH87655120090617

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