President Vladimir Putin came out of talks with his Belarussian counterpart Alexander Lukashenko on Monday saying the two sides had reached an understanding on differences over the pricing of Russian gas supplies and over their planned monetary union. "We reached the conclusion that we need to move to market-based relations in this sphere and not stop the negotiation process on creating a joint company for a single pipeline system," Putin said in televised remarks after the meeting at his Sochi residence. "We should keep in mind that Russia can in all ways consider the possibility of Belarussian companies taking part in extracting gas in Russia."

Relations between Russia and Belarus took a blow last week when Russia accused Belarus of stalling on the introduction of a single currency and said its smaller neighbor will no longer pay discount prices for natural gas. Belarussian officials responded by saying price increases could scuttle the scheduled introduction of the Russian ruble as the common currency from 2005, and Lukashenko accused Moscow of blackmail.

On Monday, Moscow cancelled an agreement that forced Gazprom to sell gas to Minsk at the same price it sells domestically, about $24 per thousand cubic meters. Gazprom spokesman Igor Plotnikov was quoted by Interfax as saying that the gas giant would try to boost the price to $40 to $45. Independent producers sell gas to Belarus for $46.

As a result of the standoff, the summit, originally scheduled for Friday, was put off. When the two leaders finally met, Lukashenko began with a warning that certain forces were working to damage relations between the two Slavic neighbors.

"Very bad events are going on behind our backs," Lukashenko told Putin in televised remarks. "Moves toward a union between our peoples have been exposed to very serious blows."

Putin's relations with Lukashenko have been rocky since last summer when Putin suggested an integration scenario under which Belarus would essentially be absorbed by Russia and its leader's power cast into doubt.

But after Monday's talks, Lukashenko stressed that he has never been against integration. "I want to once again say ... that Belarussians and Belarus, including Lukashenko, have never spoken against and will never speak against the unity of our peoples. For Lukashenko, this is political death," Lukashenko told reporters at a post meeting press conference.

Putin also glossed over differences, saying both sides had to continue to work on monetary union. He compared the introduction of the ruble in Belarus to the introduction of the euro in the European Union and said it would have no impact on Belarus' sovereignty.

(The Moscow Times 16.ix.03)