Gazprom’s challenge to Belarus: internal reactions

On August 2, Belarusian president Alyaksandr Lukashenka declared that his country would dip into its reserves to pay its existing debt to Gazprom of $456 million (Itar-Tass, August 2). His decision brought a temporary halt to the current crisis raised by Belarus’s failure to meet its July 23 payment and Gazprom’s response that it would reduce supplies of gas by 45% starting August 3. Earlier Prime Minister Syarhey Sidorsky had failed in an attempt to obtain up to $2 billion in credit in talks with his Russian counterpart, Mikhail Fradkov (Kommersant, August 2).
Belarus agreed at the beginning of the year to raise its payment for Russian gas from $47 per thousand cubic meters to $100, with prices rising to world levels by 2011 (www.gazprom.com, January 1). In turn Russia paid $625 million for its initial 12.5% share of Beltransgaz, of which it will have 50% ownership by 2010. In theory therefore, Belarus had funds in place to meet its current debt but used them for other purposes. The new dispute has raised questions in Belarus both regarding the political and economic intentions of the Russians toward their country, and the likely result of Belarus’s rising debts on social programs and the popularity of the president.

In his July 10 interview with the French newspaper Le Monde, Lukashenka claimed that both Belarusians and Ukrainians had taken part in the creation of Gazprom and construction of gas lines in Siberia in the Soviet period and merited some benefits from the company’s wealth and expansion. Russia thus took an unprecedented step when it raised prices. He also described Russian plans to build an alternative Northern European pipeline as