Russia severs power supplies to crisis-hit Belarus

29th June 2011, Comments 0 comments

Russia on Wednesday cut power supplies to cash-strapped Belarus after it failed to make a debt payment due to its mounting economic crisis, the latest energy spat between the two uneasy neighbours.

Russia had threatened to cut off supplies to Belarus last week before extending the deadline to help the ex-Soviet republic come up with the payment. The new deadline expired early Wednesday.

Russian power producer Inter RAO UES halted power supplies to Belarus at midnight Moscow time (2000 GMT Tuesday), promising to re-establish deliveries within 24 hours of when the payment is made.

As of 0500 GMT, the payment has not been made, said company spokesman Nikolai Gorelov. "There is no money," he told AFP.

Company officials, speaking on condition of anonymity, said the dispute centred around some 600 million rubles ($21.3 million), an April payment Belarus should have covered by June 20.

Belarus receives only about a tenth of its electricity from Russia and the power cutoff is not expected to significantly affect households.

But the spat undescores the severity of the current economic downturn plaguing Russia's neighbour. Belarus says it has enough local currency to make the payment but lacks enough Russian rubles in its state accounts to make the required conversion.

In recent years Russia and Belarus have often been at loggerheads over energy prices and customs duties. Last June, Russia significantly reduced gas flows to Belarus over a similar payment dispute, briefly interrupting European supplies.

Its economy has been stuck in the doldrums for years, with the country's strongman leader Alexander Lukashenko refusing to conduct market reforms.

Russia has been using a carrot and stick approach to urge Lukashenko to engage in state sell-offs that could see stakes in top Belarussian entreprises end up in Russia's hands.

A top World Bank official warned this month that the country's economic model had "run out of steam."

Just before the energy cutoff deadline, Russia's state-controlled NTV channel aired a documentary cuttingly named "A Belarussian miracle" in which it derided the country's economic model.

"The collapse of socialism in one particular country. Who is to blame and what happens next?" the television channel said in a teaser for its latest expose.

Led by the wayward Lukashenko for the last 17 years, the politically isolated state has retained elements of the Soviet command economy, dominated by state-owned companies.

A harsh crackdown by Minsk on opposition supporters after Lukashenko won disputed elections last December has prompted the European Union to impose economic sanctions and travel bans on people close to the president.

Moscow earlier this month signed off on a $3 billion three-year loan to Belarus that included involvement from other former Soviet republics.

© 2011 AFP

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