January 6, 2009
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Home / Issue Archive / 2007 / June #6 / Indignant Belarus Settle Gazprom Debt (With a Little Help From Their Friends)

№ 6 (June 2007)

Indignant Belarus Settle Gazprom Debt (With a Little Help From Their Friends)

Belarusian President Alexander Lukashenko has ordered the $460 million Belarus owes Gazprom to be taken out of the country’s reserves.  Before making the first payment, Lukashenko accused Moscow of wanting to “privatize enterprises… for free” and said he would not permit his Prime Minister to visit Moscow again after his recent “humiliation”.

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After failing to secure a $1.5 billion loan from Moscow, Belarusian President Alexander Lukashenko declared he would still pay the $456 million gas bill to forestall another gas crisis. The funds are expected to come from the country’s reserves in the next few days, which Lukashenko said he would shortly replenish with the help of his Venezuelan ally Hugo Chavez.

“Today I ordered to take $460 million from the reserves and pay the bill,” said Lukashenko, according to Gazeta.ru. “This means stretching our reserves thin, however our good friends, particularly Hugo Chavez, have stated they’re ready to give us loans on favorable terms,” he added.

According to Russian newspaper Izvestia, First Deputy General Director for Beltransgaz Tsvitomir Sorokhan said the first $190 million was sent to Gazprom this morning.

Belarus’ debt stems from the hike in gas prices which Moscow imposed in January 2007, lifting the price to $100 for 1,000 cubic meters of gas, more than double of the previous price of $46.68 per 1000 cu. Under the terms of the agreement, Belarus had the right to pay just 55% of the price for the first half of the year under conditions that the full amount is paid by July 23rd and the full price is paid over the second half of the year to give Belarus a better chance to adjust its economy to increased energy prices. However, Belarus missed the deadline which resulted in Gazprom’s decision to cut gas supplies to Belarus by 45% at 10 AM on Friday.

Minsk openly accused Moscow of thinly veiled attempts to take over the country’s economy.

“For the first time I’ll say it out loud: Russia wants not just to privatize enterprises, but to privatize them for free; they would like to privatize the entire economy,” Lukashenko was quoted saying by The Moscow Times in a new series of astringent comments towards Moscow.

“The last visit of Belarusian Prime Minister to Moscow was a humiliation; I told them not to go there anymore” said Lukashenko, according to Vremya Novostei. “I got hints I should also go to the Kremlin and kneel down. I will not do that,” he added.

Huge Chavez is reportedly offering a loan for 15 years at a 3% interest rate, which is more favorable than Moscow’s offer of a $1.5 billion loan at an 8.5% interest rate which Lukashenko was in Forbes as deriding as “unacceptable.”

According to The Moscow Times, Gazprom spokesman Sergei Kupriyanov said Belarus should satisfy the debt until the deadline of 10 AM on Friday adding that Lukashenko’s pledge to pay was “encouraging.”

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