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'Gas War' Ends as Lukashenko Pledges Close Ties

Moscow and Minsk appeared to have made peace after their latest trade dispute, with Gazprom saying its "gas war" had ended and Belarussian President Alexander Lukashenko pledging that the spat would not harm their ties.

Russia's decision to cut gas supplies was "100 percent" political, but Belarus has little choice but to retain close ties with Moscow, Lukashenko said in an interview with the Euronews television channel.

"You cannot say there is a split in strategic relations," Lukashenko said, according to a transcript released by his office late Saturday, a day after extracts were broadcast. "Big politics does not tolerate such about-turns."

A dispute over gas payments and transit debts triggered a four-day standoff and resulted in Russia cutting gas supplies to Belarus on Monday, which in turn halted onward transit to European Union states including Lithuania.

Supplies resumed Thursday after Minsk paid the bill using a $200 million loan from Azeri President Ilham Aliyev. But Lukashenko then briefly raised the stakes on Friday by threatening to cut oil and gas transit unless Moscow paid more.

"I believe that the gas war with Belarus is over," Gazprom CEO Alexei Miller told reporters following the gas export monopoly's annual shareholders' meeting.

"We have reached an agreement in principal" on a new gas transit tariff, he said. "I do not see any problems or issues that could get in the way of the signing of this amendment."

Gazprom supplies one-quarter of Europe’s gas, sending about 20 percent via Belarus and the rest across Ukraine.

On Friday, Lukashenko had given Gazprom an ultimatum to pay a debt for transit within 24 hours or face a cut in both oil and gas transit to Europe. But his office later released comments by First Deputy Prime Minister Vladimir Semashko saying the sides had agreed to take two weeks to finalize their talks.

Gazprom officials will travel to Minsk on Monday, he said, and deputy CEO Valery Golubev will arrive Wednesday to sign documents recognizing money owed for transit shipments and set deadlines for clearing them.

Gazprom owes an additional $32 million for gas transit shipments, Semashko said.

Belarus and Gazprom are having a “constructive dialog,” Miller told reporters, and are likely to sign addenda that will allow Belarus to claim higher fees in the near future.

“No one argues with the referee,” Miller said, likening the current contract to a football official. “The referee can show a yellow or red card. The referee is the tsar and God. But in our concrete case, friendship has won.”

Gazprom will pay Belarus the remaining $32 million only after the addenda are signed, spokesman Sergei Kupriyanov said Friday. The company accepted a $187 million payment for past supplies to Belarus based on higher transit fees, rather than the $192 million it demanded under the base supply and transit contract. ? 

Russian oil-pipeline operator Transneft has not received any notification from Belarus that transit shipments may be halted, RIA-Novosti reported.

"It’s great the conflict is resolved," President Dmitry Medvedev said Friday in a video conference with Miller from Toronto. “It’s good that the Belarussian side paid, though it should have been done earlier without creating problems and without increasing their debts. I hope they will be more cautious and they will fulfill their obligations.”

Relations between the two historically close countries have soured over the past year over milk exports and loans, turning Minsk into one of the Kremlin's biggest headaches. But Lukashenko said the West, critical of his human rights record, did not offer Belarus an alternative to close ties with Moscow.

"Do you think Europe behaves any better toward us? Not at all," he said in the interview.

Lukashenko said Russia initiated the dispute to press Belarus to cede control of strategic state assets and to boost energy prices by reducing supplies. He said Moscow hoped to increase its leverage over him ahead of a presidential election in Belarus next year.

The spat proved "that it is absolutely impossible to rely on Russia" for energy supplies, Lukashenko said, hardening Minsk's resolve to look for alternatives to expensive Russian energy.

"We are looking. We have found oil in Venezuela, which really annoyed Russia," he said. "Today we are working, as Europe is working, to receive liquefied natural gas."

Lukashenko did not say where he hoped to buy the gas, or which third country might deliver the gas to landlocked Belarus. He said Norway and Qatar are selling gas to Western Europe for $174 to $176 per thousand cubic meters, while Russia is trying to charge Belarus $230 for pipeline supplies next year.

Lukashenko also said the dispute betrayed splits between Medvedev and Prime Minister Vladimir Putin. Medvedev has made tentative moves to leave Putin's shadow in recent months, but the pair remain close allies.

In economic issues, "what we agree with the president of Russia, [Putin's Cabinet] flatly rejects and does the opposite," he said. "It is a paradoxical situation."

(Reuters, Bloomberg)

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