BELARUS NEWS AND ANALYSIS

DATE:

14/11/2007

Belarus considers response to U.S. oil sanctions

By Andrei Makhovsky

MINSK, Nov 14 (Reuters) - Belarus said on Wednesday it was considering retaliatory moves against the United States in response to financial sanctions on oil processor Belneftekhim.

The Bush administration, which has dubbed ex-Soviet Belarus "the last dictatorship in Europe", on Tuesday prohibited Americans doing business with the refining and petrochemical firm and froze any assets it has under U.S. jurisdiction. International banks often follow U.S. banks in such bans.

"We appeal to the United States to refrain from the practice of trying to intimidate our country," Foreign Ministry spokesman Andri Popov told a news conference. "Should there be unfriendly actions by the United States, Belarus will be obliged to react in appropriate fashion."

Belneftekhim, the Belarussian State Concern for Oil and Chemistry, has a wholly owned U.S. subsidiary, Belneftekhim USA Inc., and is made up of more than 50 petroleum and petrochemical businesses.

Belarus depends almost solely on Russia for the crude oil it refines. Beleneftekhim controls two refineries in Belarus as well as a potash plant and provides one-fifth of all Belarus's foreign currency earnings.

The United States and European Union accuse President Alexander Lukashenko of hounding and jailing opponents, muzzling the media and rigging polls, including his re-election to a third term last year.

Since that election and the four days of large protests it sparked, Lukashenko and dozens of officials have been barred entry to both the United States and the 27-nation EU.

The United States has little investment in Belarus and it was not clear what form any retaliation might take.

Belarus has appealed for better ties with the West since quarrelling with Russia this year over energy price increases, but rejects any suggestion it must first improve its human rights record.

Oil analysts said Washington's latest measure was likely to have little effect on the Belarussian economy as volumes of oil shipped to the United States were small.

"Specific companies may suffer but in terms of the entire economy, the influence will not be great," said one market participant.

He said the move, however, may have some effect on Belarussian plans from the end of this year to extract up to five million tonnes of oil in Venezuela, whose flamboyant president Hugo Chavez is close to Lukashenko. Minsk had planned to sell some of this oil on to the United States. (Writing by Ron Popeski; editing by Ralph Boulton)

Source:

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=oilRpt&storyID=2007-11-14T131137Z_01_L14884736_RTRIDST_0_BELARUS-USA.XML

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