Europe anxious for solution to growing rift between Moscow and Minsk as row over 'unpaid bills' escalates
* Luke Harding in Moscow
Belarus worker at a gas compressor station of the Yamal-Europe pipeline A gas compressor station of the Yamal-Europe pipeline near the town of Nesvizh. Belarus's president Alexander Lukashenko shut down the transit of Russian gas supplies to Europe. Photograph: Viktor Drachev/AFP/Getty Images
The president of Belarus, Alexander Lukashenko, today halted the flow of Russian gas across his territory to Europe and lambasted Moscow for suggesting that he had tried to pay his country's gas bill using "pies, butter and cheese".
A furious Lukashenko instructed his government to turn off the tap as part of an escalating quarrel with the Kremlin over unpaid bills. On Monday Russia's gas giant Gazprom cut its deliveries of gas to Belarus by 15%, effecting a further 15% cut .
Gazprom says Belarus has failed to pay a $192m debt accumulated since January. Belarus counters that Gazprom owes it $260m in transit fees. Announcing that he had shut down transit supplies via Belarus to the EU, Lukashenko admitted that the two countries were now facing an all-out "gas war".
"I ordered the government to cut transit via Belarus until Gazprom pays for transit," Lukashenko announced, speaking after a meeting in the capital, Minsk, with Russia's foreign minister, Sergei Lavrov.
Lukashenko then insisted: "We owe nothing to Gazprom. They owe us ... $260m for transit."
He accused Russia's president, Dmitry Medvedev, of humiliating Belarus, a Slavic neighbour and good friend. On Monday, Gazprom's chief executive, Alexei Miller, told Medvedev that Minsk had offered to settle its debts using machinery instead of hard currency.
In a deliciously sarcastic rejoinder, Medvedev remarked: "Gazprom can't accept anything but cash - neither pies, nor butter, nor cheese, nor pancakes." Recognising the insult, Lukashenko retorted: "When they are trying to insult us with meat chops, sausage, butter or pancakes we consider it as an insult for the Belarussian people."
Russia, the world's largest energy exporter, provides Europe with 25% of its gas, with four-fifths of this volume flowing via Ukraine and a fifth via a network across Belarus. Lithuania gets all of its gas via Belarus, while Poland and Germany are also customers. The gas also supplies the Russian enclave of Kaliningrad.
Ukraine's pro-Russian president, Viktor Yanukovych, promised to step up shipments to make up for any shortfalls in Siberian gas to Europe. In 2009, Russia's winter dispute with Ukraine's former pro-western Orange government saw gas supplies dry up across much of the EU, with Bulgaria, Moldova and Slovakia badly affected.
The European Union today said there were so far no signs that deliveries had been reduced. The dispute is less serious than the 2009 gas war with Ukraine because of the smaller volumes involved and the fact that it is summer. The EU is, moreover, bogged down with its own internal problems. It will be hoping the two sides will resolve their differences bilaterally.
The row highlights deteriorating relations between Moscow and Minsk. Last month, Lukashenko criticised the Kremlin's decision to recognise Kyrgyzstan's new interim government and even offered a home to its ousted president, Kurmanbek Bakiyev. Moscow had welcomed Bakiyev's removal in April following street protests, believing that he had grown too close to Washington.
The two neighbours are also at odds over a new customs' union that includes Russia, Belarus and Kazakhstan, and is due to come into effect on 1 July.
The project is politically and economically important for the Kremlin. Lukashenko, however, has delayed ratification in the hope of securing further concessions from Russia on oil and gas tariffs and other Soviet-era subsidies. Fyodor Lukyanov, editor-in-chief of the magazine Russia in Global Affairs, said Lukashenko was now involved in a dangerous "war of nerves" with Russia.
Asked why the dispute had blown up he said: "It's about money, of course. But it's also about politics. Lukashenko has for some time been trying to establish himself as a systemic opponent of Russian policy."
Lukashenko's support for Bakiyev amounted to a direct challenge to Moscow and its legitimacy as a leader in the whole post-Soviet area, he suggested. Ultimately, however, Lukashenko had no other option than to settle his quarrel with Moscow and reach a deal, Lukyanov added. "I think Lukashenko wants to achieve recognition from the Russian side that Belarus is a key partner," he said.
Belarus pays the lowest price among Russian gas customers and has bridled at recent increases, saying it should pay less for oil and gas if Russia is serious about close relations. Gas cuts could hurt Russia's already frayed reputation as a reliable supplier of energy.
Germany has urged both sides to end their dispute. "The gas row between Russia and Belarus must be solved bilaterally and quickly and must not lead to bottlenecks in supply to European buyers," German economy minister Rainer Bruderle said in a statement. "I don't anticipate any acute shortages for Germany, though."