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23 Dec, 2008 07:16

Lukashenko and Medvedev meet on gas and economic support

Belarussian President Aleksander Lukashenko met with Dmitry Medvedev in Moscow on Monday to discuss gas deals and a possible prop for the economy.

Just minutes before discussing a $4 Billion loan, Belarusian President Lukashenko said he is not asking Moscow for anything.

“I want to reject all the insinuations in the press that Belarus is begging on its knees to get some concessions from the Kremlin. I just want to say straight away that we are not planning to ask for anything today.”

According to Lukashenko, Belarus is ready to conduct bilateral trade in rubles – if it gets the much-needed cash from Russia.

But what Minsk needs most is a lower price for Russia’s natural gas next year. Russia could ask for at least $200 per 1,000 cubic meters – too high a price for cash-strapped Belarus.

In return, Minsk could offer the recognition of Abkhazia and South Ossetia as independent states. But Alfa-Bank’s Ron Smith says politics play a marginal role when it comes to gas prices.“The politics sometimes plays a role in the margin, but in reality Russia has needed to get market prices for its gas for years. Its basically been heavily subsidizing the former Soviet Union countries since 1991. The main factor is Gazprom has a right to get a ful market price for its gas.”

Under an agreement Belarus and Russia signed two years ago, Minsk is to pay the same price as Europe starting in 2011.

That same year, the much-anticipated Nord Stream pipeline should come online, allowing Russia to by-pass both Ukraine and Belarus as transit countries. That will greatly reduce their bargaining power.