Belarus's unpaid gas bill

Russian gas giant Gazprom may enforce its spigot supremacy this week.

Moscow announced last week that from August 3 it would reduce supplies to Belarus, which has not paid its gas bill.  When Gazprom raised its prices in January, it allowed Belarus to pay just 55% of the increase for the first six months, provided it settled the arrears (456 million dollars) by July 23.  Minsk has missed that deadline, and Gazprom is reducing its supplies accordingly, by 45%.  Gazprom has warned Minsk it must allow western-bound gas to continue flowing across its territory.  During their last dispute, Belarus siphoned off gas in transit to compensate for reduced supplies. 

There will not be widespread panic in Europe.  It is summer, demand is low and gas storage high.  Europe imports only 20% of its Russian gas via Belarus.  A Russian state loan of 1.5 billion dollars would cover the debt -- this seemed all but finalised, until the two countries' prime ministers failed to agree on the precise terms on July 30.  Belarus is not hard up:  its budget is in surplus, foreign exchange reserves are high and Gazprom has just paid 625 million dollars in cash for a 12.5% stake in pipeline operator Beltransgaz.  Yet for Gazprom, muscle is more important than money: it wants to force Minsk into into a last-minute accommodation, just as it did in December 2006.