The Kremlin told gas monopoly Gazprom to start cutting off supplies to transit country Belarus, citing $192 million (154 million euros) in unpaid debt.

Gazprom CEO Alexei Miller said supplies would be cut gradually, according to news agency RIA Novosti. The supplies will be cut "proportionally to the debt's volume," Miller was quoted as saying.

Long-brewing dispute

On Monday, Russian President Dmitry Medvedev sent directions to Miller to start cutting the deliveries, Interfax news agency reported. The move was a response to a dispute that has been brewing since last week.

"Belarus recognises its gas debts, but is proposing to pay them with machinery, equipment and other goods," Miller said. But Medvedev is insistent that Minsk must pay the bills in "hard currency."

On Sunday, Belarus sent an emergency delegation to Moscow to try and resolve the payment dispute, but those talks ended without resolution.

European concern

Russia's gas price disputes with its neighbors are a frequent cause for worry for Europe. The Kremlin halted supplies for almost two weeks in January, 2009, while Moscow and Ukraine argued over prices and transit terms.

This time, however, Gazprom has said it has the capacity to reroute the European gas supplies away from Belarus, and it says the cuts are likely to be less severe due to lower summertime needs.

Gazprom said earlier this month that Belarus has been paying $150 per 1,000 cubic meters, instead of the $169.20 that Gazprom charged in the first quarter and $184.80 in the second.

Author: Jennifer Abramsohn (Reuters/dpa)
Editor: Andreas Illmer