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Furious Belarus Bows to Gazprom

Belarussian President Alexander Lukashenko on Thursday furiously accused Russia of resorting to "terrorism" by cutting gas supplies but then caved in to demands that Belarus pay more for Russian gas.

Gazprom said gas shipments -- which also travel across Belarus to Europe and the Kaliningrad exclave -- were fully restored Thursday afternoon.

Lukashenko said Gazprom's switch-off of supplies at 6 p.m. Wednesday was the most hideous act seen by Belarus since World War II and warned that it would "gas" relations with Russia.

"I think this was an act of terrorism of the grandest scale, when in minus 20-degree cold a country -- not some people but half of whom have Russian blood running in their veins -- is deprived of natural gas," Lukashenko said in remarks posted on the presidential web site.

Lukashenko, however, ordered his government to pay the higher gas prices demanded by Russia -- an increase that is expected to add $200 million to Belarus' gas bill this year.

"We must sign an agreement on [President Vladimir] Putin's terms. If Putin wants us to pay this much, let's collect it. Let's take it from medications, from Chernobyl veterans, from those who rotted in the trenches [during World War II]," Lukashenko said.

"This moment is indeed historical, but with a bitter, gassy taste. ... And Russian-Belarussian relations are going to be gassed for a long time now."

The Foreign Ministry in Moscow was quick to fire back, saying responsibility for a price dispute that led to the switch-off rested squarely on Lukashenko's shoulders.

"The Belarussian president bears full responsibility for systematic mistakes in internal and foreign policies that have interfered with social and economic development and has led to Belarus' isolation in the international arena," the ministry said in a statement.

Despite the exchange of harsh words, Gazprom and its Belarussian partner, Beltransgaz, agreed to complete negotiations and sign the necessary agreements within a few days, Gazprom said. In the meantime, Beltransgaz on Thursday signed a 10-day contract with independent gas trader Trans Nafta.

Gazprom cut supplies through the Yamal-Europe pipeline route after accusing Belarus of illegally siphoning off gas destined for European clients.

Gazprom stopped selling gas to Belarus on Jan. 1, and since then has been locked in fruitless negotiations over gas prices, gas transit costs and the terms of a planned joint venture with Beltransgaz.

Gazprom insisted that Belarus either pay $50 per 1,000 cubic meters of gas or offer it a stake of at least 50 percent in Beltransgaz for no more than $300 million. Belarus had been paying about $32 per 1,000 cubic meters of gas.

Belarus refused to pay more or sell, saying half of Beltransgaz was worth at least $2.5 billion.

As the talks stretched from days into weeks, Belarus got by on short-term contracts with independent traders such as Trans Nafta. The previous Trans Nafta contract expired Wednesday morning, and that was when Gazprom said Belarus started siphoning off gas.

The decision to completely cut off gas was unprecedented, as it also affected supplies to Poland, Germany and Russia's westernmost region, Kaliningrad -- which gets most of its gas from the pipeline.

"Most of our boilers and other industrial consumers immediately switched to other fuels like coal or fuel oil. There is also a smaller alternative gas pipeline that leads to the region via Latvia," Kaliningrad regional government spokesman Alexander Koretsky said by telephone Thursday.

"We would have been fine for a week or two. After that there would have been problems," he said.

While Kaliningrad seemed to have taken the gas interruption stoically, Poland was infuriated.

Polish Prime Minister Leszek Miller lambasted Gazprom and said the cutoff undermined Russia's credibility as a supplier.

"This situation will have consequences because it undermines confidence in Russian suppliers, not only in Poland but also across Western Europe," Miller told reporters during a parliamentary session, according to wire reports.

Poland was short 5 million cubic meters of gas Thursday, even though it turned to alternative sources, including supplies from Ukraine, The Associated Press reported. The country's largest chemical plant at Pulawy had to dip into its reserves.

Poland in recent years has sought to break away from Russia, which fulfills almost 80 percent of its gas needs, in favor of other suppliers such as Norway. Last year Miller, however, tore up an agreement that his predecessor had reached with Norway's Statoi, saying it was too expensive.

Still, Poland signed a previously planned memorandum of understanding with the company Thursday.

In Brussels, Belgium, the European Commission expressed alarm Thursday that the cutoff might lead to supply interruptions.

But Gazprom's decision was welcomed at home.

Mikhail Margelov, the head of the Federation Council's International Affairs Committee, said the incident should serve as a lesson to Minsk as it works with Moscow to build the elusive Russia-Belarus Union.

"A union of economies cannot be built on a model in which one economy gives everything and the other doesn't give anything in return," he was quoted by Interfax as saying.

"The Belarussian side is constantly asking for preferential treatment and handouts. But I suggest that they conduct negotiations based on economics, not politics."

Despite Lukashenko's threat that relations with Russia would be damaged, it was unclear Thursday how the conflict might affect the countries' nine-year-old plans to unite.

"This incident, even if it does not have an immediate impact, could set a new trend in which Russia no longer wants to give away natural gas in exchange for idle talk about the union. What it wants are real steps toward the union," said Vladimir Zharikhin, deputy director of the Commonwealth of Independent States Institute think tank.

He said the dispute arose because Lukashenko failed to recognize that times have changed. "Back in the mid-1990s, Russia was indeed ready to give things away just for idle talk of someone being an ally. Now other countries, particularly those within the former Soviet Union, have to earn the right to call themselves Russia's friends and allies," he said.

(The Moscow Times 23.ii.04)

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