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Russia, Belarus standoff heats up

Stephen Beard Dec 29, 2006

BOB MOON: Wedged between Poland and Russia is the country of Belarus.It can get very cold this time of year in that former Soviet state.Which explains why Russia’s threat to cut off natural gas supplies starting on New Year’s Day is being taken very seriously.The Kremlin-controlled company Gazprom is demanding double the price. Belarus says, “no way.” And it’s threatened, in turn, to choke off the flow of natural gas over its territory into to Western Europe. As Stephen Beard reports from our European Desk, each side is accusing the other of blackmail.

STEPHEN BEARD: Gazprom says it is simply responding to market forces. It has a point, says Karl Mortished of the London Times.

KARL MORTISHED: Gazprom wants to get a decent price for its gas and at the moment it’s being paid by Belarus a fraction of what it could sell the gas for in Western Europe.

But this isn’t only about price. It’s also about power. Gazprom is offering Belarus a sweeter deal if the country hands over a half share in the pipeline network that carries the company’s gas across Belarus’ territory. Cliff Kupchan of the Eurasia Group.

CLIFF KUPCHAN: What this is essentially about is Russia consolidating its grip over a part of its region.

And gaining more control over the gas that it pipes from Siberia across Belarus and into Poland and Germany. But this could backfire. Analyst Nick Redman says if Gazprom cuts if off next Monday, Belarus will just tap into the pipeline.

NICK REDMAN: If the Belarussians are denied supplies, there is no way they’re going to let all that gas go through their country and let their own people shiver.

This looks like a replay of last year’s standoff with Ukraine. Then Gazprom cut supplies, the Ukrainians helped themselves to a transiting pipeline, and West Europeans suffered shortages. The Russians are playing a dangerous game. They could further damage confidence in their most profitable market. Europeans could turn increasingly to other more reliable suppliers.

In London this is Stephen Beard for Marketplace.

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