Belarus threatens to pull out of Russia integration deal over subsidy row

Belarusian President Alexander Lukashenko addresses the media after casting his vote during the parliamentary election in Minsk, Belarus November 17, 2019. REUTERS/Vasily Fedosenko

MINSK (Reuters) - Belarus President Alexander Lukashenko on Sunday threatened to pull out of signing an integration deal with Russia next month if Moscow failed to resolve their dispute over energy subsidies.

Russia has propped up its traditional ally with loans and subsidies to keep Belarus in its political orbit but now plans to phase these out to lessen the burden on its economy.

That has strained ties at the same time as Lukashenko has sought to improve relations with the West.

Belarus previously said that it stands to lose hundreds of millions of dollars a year from changes to Russian tax policy and has tried to negotiate compensation. Russia says the subsidies cost its exchequer billions of dollars.

The two countries are due to sign a roadmap in December to bring their economies closer together.

That includes a unified tax code, closely aligned banking supervision, and a single regulator of oil, gas and electricity markets, according to details of the plan revealed by Russia’s Kommersant newspaper in September.

“If our fundamental issues are not resolved: on the supply of hydrocarbons, on the opening of markets, no roadmaps can be signed,” Lukashenko told reporters on the same day as Belarus held parliamentary elections.

Lukashenko previously accused Russia of trying to strong-arm his country into fully merging with its neighbor and has accused Moscow of falling into “hysterics” over his moves to balance ties between east and west.

Reporting by Andrei Makhovsky; Writing by Andrey Kuzmin; editing by Matthias Williams and Louise Heavens