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. Last Updated: 07/27/2016

Moscow, Minsk in Merger

MINSK, Belarus -- Russia and Belarus moved to merge their economies Tuesday by agreeing to harmonize tax and customs laws, remove all trade barriers and unify energy prices by next month.

Prime Minister Mikhail Kasyanov said the agreement brought union between Russia and neighboring Belarus a step closer, a goal first agreed in 1996 by then-President Boris Yeltsin and Belarussian President Alexander Lukashenko.

"We have agreed to adopt a set of agreements that will result in the creation of a single economic space," Kasyanov told a news conference after meeting Belarussian officials.

"We want these documents to be worked out by April 1 and to take effect from April 1, or soon after."

The union state is a pet project for Lukashenko, who hopes to lean on Russia after becoming isolated by the West over Belarus's poor record on human rights and freedoms.

Russia, under President Vladimir Putin, is more reticent about the proposed merger, saying more must be done to integrate the two countries' economies, and liberal Russian economists have urged Belarus to implement market reforms.

Kasyanov said the planned measures would help improve the business climate in Belarus, where the economy is still run along Soviet-era command lines with the state keeping rigid controls over prices for major products.

"Business-driven initiative can improve the situation [in Belarus] for the better," Kasyanov said.

He said Belarus would cancel all privileges for domestic producers while Russia would set single prices for oil, gas, electricity and railroad shipments for the two countries.

Moscow and Minsk would also unify their customs duties and tax systems, he said.

Belarussian Prime Minister Gennady Novitsky said Belarus would bring its tax rates for companies closer to Russian ones.

Novistky pledged to speed up privatization in Belarus but stressed the state would keep controlling stakes in all major companies.