World Business

Russia cuts gas supplies to Belarus over debt

(Agencies)
Updated: 2010-06-21 15:59

MOSCOW – Russia's President Dmitry Medvedev ordered the State-controlled gas monopoly Monday to cut gas supplies to ex-Soviet neighbor Belarus over its debt for Russian natural gas supplies.

Medvedev's order follows his warning to Belarus last week to start paying off the $200 million debt to Gazprom or face cuts. Belarus has challenged the Russian claim and refused to pay.

Gazprom has said it would channel gas supplies to Europe via Ukraine to compensate for the shutdown in supplies normally coming through Belarus.

Russia has cut gas supplies to Ukraine and Belarus many times in recent years due to payment disputes, and many European consumers have suffered.

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Medvedev met early Monday with Gazprom chief Alexei Miller and ordered him to implement cuts "to protect the interests of the Russian State."

Russia is Belarus' main ally and sponsor, but relations between the two former Soviet countries have been strained by financial arguments.

Belarus' economy has been struggling to cope with rising Russian natural gas prices and excise hikes on Russian oil imports. Belarusian President Alexander Lukashenko has insisted that Russia provide it with cheap oil and gas as part of the customs union deal to come into force July 1, but Moscow has rejected the demand.

Lukashenko said last week that Belarus owes nothing to Gazprom and warned Moscow that it could lose its ally. "It's unacceptable to treat an allied state like that," he said.

Belarusian officials have contended that Russia owes an equally large sum for the transit of natural gas via Belarus to European consumers — a charge Gazprom has rejected.