MINSK -- Russia on Thursday shelved a $500 million loan to Belarus, quoting doubts about solvency of its wayward ally caught in a struggle for influence between Moscow and the European Union.

Finance Minister Alexei Kudrin described Minsk's economic policy as "parasitical" in unusually harsh remarks ahead of talks between Belarussian President Alexander Lukashenko and Prime Minister Vladimir Putin.

"We can see non-solvency of the Belarussian government and of the economy as a whole due to insufficient reserves, possibly as early as at the end of this year," Kudrin told reporters.

Russia, which has accumulated hefty reserves in a decade of economic growth, has promised nearly $5 billion of rescue credits to its ex-Soviet allies.

Late last year Belarus, Moscow's key ally and partner in a so-called union state, received the first tranche of $1 billion followed by another $500 million earlier this year.

Kudrin said the further financing was halted because Moscow was unhappy with Lukashenko's economic policy.

"The Belarussian government is trying to artificially disguise the crisis by introducing limitations on conversion of national currency," he said. "Market mechanisms have been replaced by administrative mechanisms."

"Belarussian course today is, in fact, becoming parasitical," Kudrin added, referring to widespread opinion among Russian officials that only Moscow's cash keeps Belarus economy afloat. Lukashenko has rejected such suggestions.

Kudrin's remarks reflected strains in relations between Russia and Belarus, which have become especially acute after a brief war over gas prices in 2007.