Lukashenko's Hands Are Tied

BMI View: In the recent oil stand-off with Russia, Belarus has few bargaining chips, and is likely to be the party making one-sided concessions when the situation is finally resolved (our expected timeframe is over the next 10 days). Gas price hikes will contribute to an economic slowdown in Belarus to 6.9% this year, and 5.9% in 2008, from an estimated 9.5% out-turn in 2006. Moreover, political risk has risen as Russia progressively withdraws its economic support for the country.

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