Russian Prime Minister Vladimir Putin is in Minsk for a visit that could result in a bailout loan deal for Belarus, which is battling a crippling economic crisis.
Putin was due to attend a meeting of leaders of former Soviet states before sitting down with Belarusian leader Alyaksandr Lukashenka to discuss a potential loan.
The two sides have been in talks for weeks, and Lukashenka has high hopes of clinching the badly needed loan deal during Putin's visit.
"Judging by all our negotiations, they [the Russians] are ready to react urgently if necessary," he said shortly after a telephone conversation with Russian President Dmitry Medvedev on May 18. "This represents about $3.1 billion, provided we sign the relevant agreements with them."
Russian Finance Minister Aleksei Kudrin echoed his remarks, saying an agreement was close and could be reached today.
Cash Won't Come Directly From Russia
But Kudrin denied the cash would come directly from Russia, which appears intent on weakening Lukashenka after years of subsidizing Belarus's Soviet-style economy in return for political loyalty and the delivery of Russian oil to Europe.
Instead, Kudrin said the $3 billion loan would be issued by the Eurasian Economic Community (Eurasec), a Russia-dominated regional grouping that includes Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan.
He added that the funds would be paid out over a three-year period and not right away, as Lukashenka had hoped.
The crisis stems largely from lavish public spending before a controversial presidential election in December that led to a brutal crackdown on the opposition and further soured relations with the West.
Belarus's Central Bank has responded by lifting exchange-rate controls, which has sent the local currency plummeting.
Officially, the Belarusian ruble's exchange rate remains at roughly 3,000 to the U.S. dollar. On the black market, however, the Belarusian ruble reached a record low today, trading at a reported 8,000 to 9,000 rubles to the dollar at some exchange booths.
That means the currency has lost a stunning two-thirds of its value over the past 10 days.
Aid Could Prompt Sale of Assets
A Russian loan could help stem the ruble's devastating losses. But over the long term, it could also cost Belarus some of its most valuable assets.
The country's economic woes represent an opportunity for Russia to seize control of strategic Belarusian state firms. Analysts say Moscow has long been eyeing Belarus's two big oil refineries, its gas-pipeline system, its main mobile-phone provider and Belaruskali, a top potash producer.
Kudrin and other Russian officials have clearly stated that Belarus would have to sell assets worth $3 billion this year to lift itself out of the crisis.
But Lukashenka does not have the luxury of choice. By jailing political opponents after the peaceful protests over his reelection, the authoritarian leader has perhaps wrecked his chances of receiving further aid from the International Monetary Fund, which had previously provided Belarus with a $2.5 billion loan package to help it weather the financial crisis.