Russia is continuing to exert pressure over its neighbors with natural gas prices as it tries to bolster its influence and power in the region. After halting all gas supplies to the Ukraine last year, Russia has been accussed by many in the international community as using energy as a political weapon. Russia insists the new prices simply reflect market rates, and that the former Soviet republics cannot continue to expect subsidized prices.

Gazprom, Russia’s state natural gas monopoly, threatened neighboring Belarus on Monday over its refusal to agree to tough conditions on a price increase, saying its supplies could be at risk on Jan. 1. In exchange for a smaller price increase, Gazprom has proposed taking a major stake in Beltransgaz, the Belarusan transport network whose pipelines handle a significant part of Russia’s exports of gas to the rest of Europe.

On Friday, an hour after Gazprom thereatened to cut off supplies entirely, Georgia agreed to pay $235 per 1,000 cubic meters, almost double the current price. Georgia has until then refused to accept the demands, saying it was being punished for political reasons, and had announced that Azerbaijan would be its main gas supplier for 2007. Russia and Georgia have been in a diplomatic row since Georgia arrested four Russians for espionage in September, to which Russia responded with a blockade on the country, among other measures.

Now, Georgia is in the final stages of negotiations with Azerbaijan for a substantial amount of natural gas as it seeks to hedge against Russia by diversifying its energy suppliers. Azerbaijan, which is rich in oil but still imports gas from Russia, has also threatened to stop importing Russian gas as it accused Moscow of ‘Commerical Blackmail.’
via Washington Post, BBC News, Bloomberg