Belarus to pay $460m Russian gas bill

Belarus's president pledged yesterday to pay his country's huge gas bill to Russian energy giant Gazprom with help from Venezuelan president Hugo Chavez, amid EU concern about possible disruption to gas supplies.

"I gave the order for the money to be taken from our reserves and for the payment of $460 million [ €337 million] to be made," said president Alexander Lukashenko. "Now let them leave us in peace."

Mr Lukashenko, whose authoritarian style has seen him dubbed the "last dictator in Europe" by US officials, has frequent bitter rows over energy with Russia, which is ostensibly one of his only allies.

Gazprom had threatened to almost halve gas supplies to Belarus today because of its outstanding debt from the first half of the year. The country is a transit point for more than 20 per cent of Russia's gas exports to Europe, particularly to Germany, Poland and Lithuania.

The threat prompted the European Commission to call a meeting next week of its so-called Gas Co-ordination Group.

"The commission calls on both sides of the dispute to find swiftly an amicable settlement, to respect contractual obligations, to react in proportionate manner to disagreements and in any event not to disturb, neither directly nor indirectly, the gas supply to EU member states," the commission said in a statement.

A similar dispute over gas prices with Ukraine last year caused shortages in western Europe and sparked debate about Russia's reliability as an energy supplier to the EU.

Belarus averted a gas shut-off this January only by agreeing to pay double for its gas and to let Gazprom take a 50 per cent stake in national pipeline operator Beltransgaz.

Analysts say Russia is frustrated by having to deal with transit countries for its energy supplies, and is seeking to control the pipelines through which it pumps gas and oil.

"Russia doesn't just want to privatise a few enterprises; it wants to take them for free," Mr Lukashenko complained yesterday.

"They want to privatise the whole country."

He said Belarus would be helped out of its predicament by Mr Chavez, a fellow critic of the US, who visited the former Soviet republic in June.

"We will return the money. We will be left without reserves, but our good friends, including Hugo Chavez, have promised to provide credit on favourable terms," Mr Lukashenko said, adding that western commercial banks may also "chip in".