Russia’s Ally Fears Kremlin Takeover as Oil Cash Shortfall Looms

(Bloomberg) -- Russia offered to resolve economic disputes with Belarus if it agreed to deeper political integration, stoking suspicions of a Kremlin takeover, Belarusian President Alexander Lukashenko said.

“I understand those hints: here’s your oil, but you must destroy your country and join Russia,” Lukashenko told a news conference with Russian journalists in Minsk on Friday, the Interfax news service reported. Some officials in Moscow “say directly” that they want to incorporate Belarus into Russia in return for financial assistance, he said.

Russia’s Ally Fears Kremlin Takeover as Oil Cash Shortfall Looms

Russian Prime Minister Dmitry Medvedev said on Thursday that Moscow’s ready to offer economic benefits if Belarus fulfils the terms of a 1999 agreement to form a union state that was signed by Lukashenko and the then President of Russia, Boris Yeltsin. The agreement envisions Belarus and Russia gradually forming a single state with a unified legal system, joint foreign and defense policy, and common currency.

Belarus, a landlocked former Soviet republic wedged between Russia and the European Union, is largely dependent on Russian supplies of oil and gas. New tax rules introduced in Russia may increase crude costs for Belarus and cause a decline in earnings from export duties. The losses may exceed $10 billion over the next six years, the state-owned Belta news agency cited Lukashenko as saying on Friday. That will be a key issue for discussion at talks with Russian President Vladimir Putin planned for Dec. 25 in Moscow, according to Lukashenko.

“Splitting us into separate regions and merging with Russia -- that will never happen,” Lukashenko said, according to Belta. “Sovereignty is a sacred thing for us.”

©2018 Bloomberg L.P.