Belarus turns to Chavez to clear gas debt

By Isabel Gorst in Moscow and Richard Lapper in Sao Paulo

Belarus is turning to Venezuela to help pay back a $456m debt to Russia for gas supplies after Moscow threatened to halve its gas deliveries, Alexander Lukashenko, Belarusan president, said yesterday.

“I have instructed the government to reach into the reserve fund for $460m [€337m, £227m] to pay Russia for gas. Hugo Chávez [president of Venezuela] and our other friends can give us credits today. Even foreign commercial banks are prepared to lend to Belarus now,” Itar-Tass quoted Mr Lukashenko as saying.

Gazprom, Russia’s state-owned gas company, greeted the Belarusan leader’s words with scepticism.

Sergei Kuprianov, a Gazprom spokesman said: “They must explain what they mean. It’s one thing to say you are going to pay a debt and another thing to actually pay.”

Mr Kuprianov said Gaz-prom’s threat to begin reducing gas supplies to Belarus from 10am today “was still on the table”.

In Caracas last night, officials at the Venezuelan foreign ministry were unable to confirm or deny the loan agreement. However, a Venezuelan loan to Belarus would not be surprising. Relations between the two countries are close. Mr Chávez visited the country briefly in June, describing Mr Lukashenko as a “brother in arms”.

Subsequently, Belarusan ministers have been in Caracas and a number of “strategic” industrial agreements have been reached. These include joint ventures in energy, a plan to develop a gas pipeline for the domestic Venezuelan market and the establishment of a $500m joint investment fund.

Agencies have also reported that Mr Chávez is in talks to buy to $1bn in arms from Belarus, a deal that would include the purchase of military combat vehicles. Mr Chávez visited Belarus as part of a trip that also took in Russia and Iran.

Caracas already has purchased some $3bn worth of arms from Russia, including military helicopters, 100,000 Kalashnikov rifles, 24 SU-30 Sukhoi fighter jets and other weapons.

A supply cut to Belarus could threaten countries in northern Europe importing Russian gas through Belarusan transit pipelines, a charge Gazprom denies.

The EU said yesterday: “The Commission calls on both sides of the dispute to find a swift and amicable settlement, to respect contractual obligations, to react in a proportionate manner to disagreements and in any event not to disturb gas supplies to EU member states.

Industry and banking sources expressed doubts about the ability of Belarus, one of the poorest and most politically repressed states in the former Soviet Union, to raise finance to settle the gas debt. One European banker said: “I cannot imagine many western investors wanting to touch Belarus with a barge pole.”

Belarus’s relations with Moscow have soured since Russia doubled gas prices in January and imposed a tax on oil exports that undermined Belarus’s refining industry. Mr Lukashenko said talks about a possible $1.5bn Russian loan to Belarus to help pay the gas debt had broken down this week after Moscow demanded high interest rates.

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