Posted by: russiaoilandgas | August 3, 2007

Chavez Bails Out Belarus

Chavez Lukashenko Belarus Gazprom Gas Debt Loan Venezuela BeltransgazBelarus is set to settle its gas debt to Gazprom today after Belarusian president, Alexander Lukashenko ordered his country to take $460 million dollars from the countries reserves to pay the debt.

However, in an interesting twist, it seems that Belarus may be saved not by negotiating a large loan with Gazprom, but instead with Venezuela.  Lukashenko, quoted in Interfax, said, “Today I ordered money taken from our reserves and the payment of $460 million. Of course, we are draining our resources, but our good friends, in particular [Venezuelan President] Hugo Chavez, said they are ready to extend a loan at advantageous terms,” adding, according to Interfax, that Western banks were also willing to provide funds.

Despite reassurances from both Gazprom and Beltransgaz that gas supplies to Western Europe, which travel through Belarus, would not be affected as they were during last winter’s crisis between Gazprom and Belarus, the EU was quoted by various news agencies last week as viewing the situation as critical and had urged both Gazprom and Belarus to seek a swift conclusion to the latest dispute.

It seems, however, that Hugo Chavez will be the EU’s unlikely saviour.  It is doubtful that Western banks would offer Belarus a loan at more favourable terms than Gazprom’s offer, if at all.  According to Forbes, Lukashenko said Gazprom offered Belarus a loan at 8.5 percent interest, terms which Lukashenko described as “unfavourable”.

It appears, therefore, that when Lukashenko was quoted in Interfax as saying “Today we pay from our reserves but loans will replenish them within a month. Let them take it and live in peace,” he was referring directly to a loan from Venezuela.

According to Forbes, the Venezuelan Finance Ministry touched on the loan but could not give further details because the loan was “being handled by the Foreign Ministry now”, and the Foreign Ministry would not comment.

What’s for sure is that Belarus and the EU can breath a sigh of relief thanks to Hugo Chavez, a man with, at best, fractius relations with Western democracies.

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