BELARUS NEWS AND ANALYSIS

DATE:

14/12/2006

Oil duties for Belarus violate earlier accords - Foreign Ministry.

MINSK, December 14 (Itar-Tass) - The introduction by the Russian government of customs duties on oil supplies to Belarus violates the earlier accords between the two countries, which stipulate a free trade regime without conditions or restrictions, Belarussian Foreign Ministry spokesman Andrei Popov told a news briefing on Thursday.

Popov cited the protocol on free trade between the two countries signed in January 1995. "It's the essence of Belarus' position as of today," he noted.

Russia will cancel preferential export duties on oil delivered to Belarus from January 1, 2007.

The Russian government said in a statement on November 16, 2006, that the decision was made in the view of protecting the interests of the Russian Federation, taking into consideration the abrogation by the Republic of Belarus of the agreement between the governments of Russia and Belarus on the procedure of distributing and booking, to the budges of the two countries, the export customs duties on the products exported by Belarussian companies, which are made of Russian raw materials.

The Federation Council upper house of the Russian parliament supported the government decision. Senators believe that it will not hamper the formation of a union state with Belarus.

Deputy of the Parliamentary Assembly of Russia and Belarus, deputy chairman of the Federation Council committee on natural resources Vasily Duma said "difficulties of the transitional period must be shared."

"Our allies should count on their own strength, upgrade their equipment and lower production costs; because the republic still has Soviet-era oil refining equipment," Duma said.

Member of the committee on CIS affairs Oleg Panteleyev said Russia will continue to build the Union State, but in a market environment.

Meanwhile, Belarussian experts predicted an 8-percent decrease in the republic's GDP as a result of the cancellation of preferential plans of oil supplies.

"The Belarussian economy has been functioning in very favorable external conditions for ten years: it never worked at world prices of fuels, having unhindered access to the Russian market, and so it was developing successfully," head of the Mizes research center, Minsk, Yaroslav Romanchuk said.

"The republic will have to very seriously adjust its whole economic policy, getting used to work in free market conditions," Romanchuk said.

Source:

http://www.itar-tass.com/eng/level2.html?NewsID=11083679&PageNum=0