Belarussian President Alexander Lukashenko has cut export duty on potash to zero, his office said on Thursday, in a move clearly aimed at boosting exports of the fertilizer ingredient after the break-up of a sales cartel with Russia's Uralkali.
Uralkali pulled out of its potash trading alliance with Belarussian producer, Belaruskali, late last month, ending a partnership which controlled two-fifths of the $20 billion global potash market and sparking a fierce dispute with its small ex-Soviet neighbour.
The announcement was the first indication of direct intervention by the authoritarian Lukashenko in the dispute that has brought new strain to bear on the often tense relationship between the ex-Soviet states.
Since the turn of the year, export duty on potash in Belarus has been at 75 to 85 euros ($99 to $110) per tonne, but Lukashenko's office said in a statement this would be reduced to zero until the end of 2013.
"For the stable working of Belaruskali, the export duty rate will be reduced to zero from Sept. 1 to Dec. 31," the statement said, adding that Lukashenko had signed a decree to this effect.
At the same time, a new company had been set up coordinate exports of all the country's fertilizers, it said.
Uralkali triggered the row when it withdrew from the trade alliance with Belaruskali in a move that could push potash prices down 20 percent - an economic headache for Belarus.
Potash, an ingredient in mineral fertisilers, accounts for 12 percent of Belarus's state revenue.
Belarussian police subsequently detained Uralkali's chief executive Vladislav Baumgertner in Minsk on Aug 26 to the anger of Moscow which has hit back by imposing curbs on imports of hogs and pork products from Belarus.
On Thursday, Russian Deputy Prime Minister Arkady Dvorkovich hinted at the possibility of oil deliveries being reduced to Belarus and said Moscow was not satisfied with the safety of some products from its western neighbor.
Belarus relies on Moscow for energy supplies and financial help for its unstable economy, much of which is state-controlled along classic Soviet lines.
Lukashenko is a pariah in the West because of his harsh treatment of political opponents at home and, despite zig-zags in relations with Moscow, he remains important to the Kremlin as a military and economic ally. ($1 = 0.7577 euros)