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Russia, Belarus Clash Over Aid, Economic Prospects

Russian Finance Minister Aleksey Kudrin's comments came ahead of a chilly meeting between Belarus President Alyaksandr Lukashenka (left) and Prime Minister Putin in Minsk on May 28.
MINSK -- Visiting Russian Finance Minister Aleksey Kudrin has announced the failure of Moscow and Minsk to agree on terms of a $500 million loan requested by Belarus and said Moscow will not extend the credit this year, RFE/RL's Belarus Service reported.

Kudrin's harsh assessment came in the runup to a reportedly frosty meeting later the same day between Russian Prime Minister Vladimir Putin and Belarus President Alyaksandr Lukashenka.

Talking to journalists just before the seating of the Council of Ministers of the Russian-Belarus Union State in Minsk on May 28, Kudrin also warned that Belarus's mounting external debt could threaten its credit-worthiness by the end of this year or early 2010.

Kudrin added that the possibility of Russia eventually providing a $500 million loan to Belarus will depend upon Minsk's economic policies. The credit was slated as part of a multibillion-dollar aid package to prop up Belarus.

Russian media reported that Kudrin said Moscow had offered the loan in Russian rubles and been rebuffed by Belarusian officials.

After his meeting with Lukashenka and other senior officials from both sides, Putin toned down Kudrin's message, according to Reuters, saying that "such extreme assessments are inappropriate" and adding, "If Belarus needs a shoulder, Russia is always ready to offer one."

L'etat C'est Russie

Russian-Belarusian relations have run hot and cold for the past decade or so, but have been particularly strained recently over Belarus's desire to join the European Union's Eastern Partnership program and generally improve communication with the West.

Moscow has also been annoyed by Minsk's refusal to recognize the independence claims of the Georgian breakaway republics of South Ossetia and Abkhazia.

The International Monetary Fund (IMF) is also said to be considering further aid to Belarus.

Meanwhile, Lukashenka has signed an order to simplify procedures for foreign companies who want to deposit funds in Belarusian banks in a move that appears aimed at boosting currency reserves, RFE/RL's Belarus Service reported.

Economist Syarhey Balykin told RFE/RL that such a "pseudo-liberalization" suggests hard-currency reserves are dangerously low.

The new procedures no longer require foreign firms with deposits in Belarus's banks to register with local tax authorities or file statements on their incomes.