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. Last Updated: 07/27/2016

Lukashenko Warns of New Oil Duties

MINSK -- Belarussian President Alexander Lukashenko threatened Friday to slap fresh duties on Russian oil sent through the nation to Europe unless Moscow sells it oil at a cheaper price -- raising the specter of a repeat of this month's supply cutoff.

Lukashenko, who has been branded "Europe's last dictator" for his iron-fisted rule, has made a series of defiant statements in recent weeks, accusing Russia of trying to crush or absorb the former Soviet republic. He has also pledged to seek less strained ties with Europe.

The Belarussian leader said the country had not signed an oil delivery contract for February because Russian oil companies were demanding prices above world levels. Belarus will charge a transit fee on Russian oil exported to Europe via its territory by these companies, he promised.

"We have to compensate for these losses. We're not going to argue with them, it's their oil. But we will pump this oil without any losses for us," he said.

Earlier this month, Russia suspended oil supplies to Belarus, disrupting supplies through a Belarussian pipeline to eastern and central Europe. The dispute was sparked by Belarus' decision to impose transit fees on Russian oil in retaliation for hefty Russian duties levied on oil exports to Belarus.

Facing the threat of a full-scale trade war with its powerful neighbor, which its economy is closely tied to, Lukashenko ultimately backed down, agreeing to pay some duties on Russian oil and sharply reducing the profits it had made by refining duty-free Russian oil and exporting the products.

Together with a doubling of Russian natural gas prices, the state budget is losing $3.5 billion per year, according to Belarussian estimates.

The oil disruption left lasting doubts in European capitals about Russia's dependability as an energy supplier. Moscow's reputation had been previously damaged last year when a price dispute with Ukraine resulted in temporary shortages of Russian gas to European customers.

Officials at the representative offices of Russian oil companies in Belarus declined to comment.

"Lukashenko is on the verge of despair and the only way out he sees is to blackmail Russia with the threat of a new cutoff of supplies to Europe," independent economist Yaroslav Romanchuk said.

Russian state pipeline operator Transneft, meanwhile, is proposing to build a pipeline capable of carrying 50 million tons of oil per year that would bypass Belarus, Interfax reported Friday.

The agency cited an unidentified official at the Industry and Energy Ministry as saying that the proposed 1,000-kilometer pipeline would end at the Baltic port of Primorsk and help eliminate risks attached to delivering oil to Poland and Germany.