Russia still wants union with Belarus - Putin

MOSCOW, Feb 1 (Reuters) President Vladimir Putin insisted today that Russia still wanted to develop a union with neighbouring Belarus despite a bitter row at the start of the year between the two countries.

Russia briefly halted oil supplies through a key Belarussian pipeline last month after an argument over Russian energy subsidies to Belarus escalated. Belarus depends heavily on cheap Russian oil and gas for its Soviet-style command economy.

The two sides did reach an agreement but authoritarian Belarussian president, Alexander Lukashenko, who has based 12 years in power on close links with Moscow, has since made several pro-Western speeches and bitterly criticised Russia.

''I don't think we have surrounded ourselves with enemies,'' Putin told his annual news conference. ''With Belarus we intend to continue building a united state ... and I don't think the united currency idea is completely lost.'' Belarus and Russia have been pursuing political union since the 1990s but most commentators concluded after January's bitter row that the idea was now off the agenda.

Earlier this week, Lukashenko accused Russia of trying to ''choke and crush Belarus'' in a Kremlin-inspired campaign and pledged to improve relations with the West.

Putin, however, insisted today that the union project with Minsk was still alive and even raised the possibility of giving up the rouble to achieve it.

''It is possible that Russia and Belarus will have a common currency and it may not be either the Russian rouble or the Belarussian rouble,'' Putin said. ''It is also possible that we will agree on the initial use of the Russian rouble as a common currency. Everything is possible.'' REUTERS AKJ PM1706