UPDATE 2-Belarus court keeps Russian potash chief in detention
* Uralkali CEO held after sales cartel collapse
* Arrest escalates diplomatic row over cartel (Adds background)
By Andrei Makhovsky
MINSK, Sept 13 (Reuters) - A court in Belarus rejected a second appeal by the chief executive of Russian potash producer Uralkali, keeping him in detention pending investigation into alleged abuse of power despite calls from Russia for his release.
Friday's ruling kept the diplomatic row between Russia and its ex-Soviet ally ticking over in the wake of the collapse of their potash sales cartel as speculation mounted of a shake-up in Uralkali.
The chief executive of the world's top potash producer, Vladislav Baumgertner, was arrested at Minsk airport on Aug. 26 while the country's leadership was still infuriated at Uralkali's withdrawal from a potash cartel with state-owned Belaruskali.
That partnership made them major players in the $20 billion global market for the fertiliser ingredient and Uralkali's abrupt exit threatens to bring down potash prices and hurt Belarus's fragile economy.
A district court on Sept. 6 refused to release Baumgertner, 41, and a city court in Minsk on Friday rejected a second appeal for him to be freed on bail.
"They turned it (the appeal) down. We will appeal further," lawyer Dmitry Goryachko told journalists at the courthouse after the closed hearing.
Baumgertner faces up to 10 years in jail if convicted on charges of abuse of power. But some commentators see his arrest more as a political bargaining tool in a standoff between Russia and Belarus.
Belarus has been ruled by hardline President Alexander Lukashenko since 1994. While a strategic ally of Russia, Lukashenko has a history of bluff and manoeuvring in dealing with Moscow to extract financial loans and favourably priced energy to shore up his country's economy.
Reacting to Uralkali's withdrawal from the potash partnership, Lukashenko with characteristic bluntness has pinned the blame on "Russian scoundrels" and said sooner or later they would come to him to settle the dispute.
While some Russian officials have reacted indignantly to Baumgertner's arrest, President Vladimir Putin has remained low-key reaction, calling for a resolution of the dispute and saying he does not want to "kick up a fuss".
The row between the two allies has fuelled speculation that Uralkali main shareholder and billionaire Suleiman Kerimov, may have to sell his 21.75 percent stake with his place being taken by an investor more amenable to the Kremlin.
Igor Sechin, a powerful former Kremlin aide of Putin's and now head of Russian state oil major Rosneft, met Lukashenko in Minsk on Wednesday. He pledged that Rosneft would meet its oil supply obligations to Belarus.
(Writing by Richard Balmforth; editing by Jason Neely)
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