BELARUS NEWS AND ANALYSIS

DATE:

15/12/2006

Belarusian President Lukashenko to meet Russia's Putin in Moscow on Friday

The Associated Press

MOSCOW: Belarusian President Alexander Lukashenko and Russian President Vladimir Putin were to meet in Moscow on Friday amid rising tensions over Moscow's intention to raise energy prices for Belarus, which has long benefited from substantial Kremlin subsidies.

Kremlin officials said the two leaders were to take part in a meeting of the body that is administering their countries' loose union and that Friday's meeting would focus on such issues as confirming the union budget for 2007 and coordinating foreign policy.

But the issue of rising Russian energy prices, which has infuriated close ally Belarus, was bound to come up.

Earlier this week, the Russian Cabinet decided to raise customs duties on oil exports to Belarus. The increase, which Russian exporters will pass along to Belarus, will deprive Minsk of profits it has reaped by exporting oil products made of cheap Russian oil. Some estimates attribute as much as 8 percent of Belarus' total gross domestic product to the re-export of oil products.

Russia's state gas monopoly Gazprom has also said it would quadruple the natural gas price for Belarus starting next year. Lukashenko has resisted Russia's push for control over Belarus' gas pipeline that also carries Russian gas further on into Europe, which analysts consider the quid pro quo for cheaper energy prices.

Both moves will badly pinch Belarus' Soviet-style, centrally planned economy, which has relied on cheap energy from Moscow.

"Russia has declared an energy war against Belarus which will lead to a collapse of Belarus' economy, which is built on the Soviet model," Mikhail Chigir, a former Belarusian prime minister turned opposition activist, said Thursday in Minsk.

Lukashenko has become a pariah in the West for cracking down on dissent and extending his rule through flawed votes, and Moscow has been Belarus' main sponsor and ally. But the Kremlin has lately been keeping more of a distance from Minsk and tensions have built up in recent years.

The Russia-Belarus Union has remained largely on paper. Lukashenko rejected a Kremlin-proposed merger plan, and talks on creating a single currency have stalled.

AP reporter Yuras Karmanau contributed to this story from Minsk, Belarus.

Source:

http://www.iht.com/articles/ap/2006/12/15/europe/EU_GEN_Russia_Belarus.php