Russia is preparing to cut off natural gas supplies to neighbouring Belarus and Georgia unless the two former Soviet republics agree by the end of the year to pay much higher prices in 2007.
Coming a year after Gazprom, the Russian gas giant, briefly cut gas to Ukraine in a similar pricing dispute, such a move could provoke further international criticism that Moscow is using energy as a political tool. It might also intensify pressure on Russia to ratify the European Energy Charter treaty, which would require such disagreements to be resolved through arbitration.
Action against Belarus could affect supplies to Poland and Germany ,since a transit pipeline runs across the republic, though it carries only a third of the volumes running through a bigger export pipeline across Ukraine. Last January, pressure in the trans-Ukrainian pipeline to western Europe dropped as a result of what Gazprom said was Ukraine "stealing" gas for its own use.
Gazprom has made clear it is prepared to reduce price increases in exchange for stakes in the republics' gas distribution networks. It is pushing hard for 50 per cent of Beltransgaz, the Belarusian company that also controls the export pipeline across the country, although Russia and Belarus differ sharply over its value.
Dmitry Medvedev, Gazprom chairman and Russia's first deputy prime minister, declined to comment directly this week on whether the company was prepared to cut off supplies. But he admitted negotiations were "not easy".
Russian officials say the increases are a move away from subsidised supplies for former Soviet republics towards transparent market pricing for all, which Gazprom hopes to achieve by 2008.
While Belarus has been happy to remain in Moscow's orbit, western-leaning Georgia sees the threat as politically motivated. Georgian officials say that since Georgia's gas is sourced from central Asia, it should pay less than more distant European customers. Georgia says it can replace Russian gas with supplies from Azerbaijan and Iran.
The proposed price increase to Belarus is striking since the republic has been a close Russian ally.
