Putin favours Russia, Belarus unification

"This is possible and very desirable," said Putin, when asked at a pro-Kremlin youth camp on Russia's Lake Seliger if Russia and Belarus could merge into one entity.

"It depends completely on the will of the Belarussian people," he added.

Putin's surprise remarks come as Belarus battles a massive economic crisis which has seen Russia extend a bailout loan to its western neighbour and eye some of its most prized economic assets.

Economists have blamed Belarus President Alexander Lukashenko for doing little to reform an outdated economic model which has seen the country develop one of the biggest current account deficits in the world.

But Putin lavished praise on the man who has ruled for the last 17 years and was once dubbed Europe's last dictator by the United States.

"Despite the problems that spring up from time to time -- like the economy, energy, the rows with gas -- you need to give respect to the leadership of the country and Alexander Grigoryevich Lukashenko, who has consistently followed a path of integration with Russia," Putin said.

Russia and Belarus are members of a customs union and also a so-called "unified state" that brings their cabinets together for joint meetings.

But until now, the two states have maintained separate systems with attempts at further unity ending in failure.

In the 1990s Lukashenko was an impassioned proponent of a full union of Belarus and Russia, with some observers believing he had his eye on occupying the Kremlin as president of such a country.

But his pro-Russian rhetoric cooled once Putin entered the Kremlin in 2000, and he has since sought to portray himself as the defender of the ordinary Belarussian.

Lukashenko spokesman Pavel Legki told AFP that he (Legki) was on holiday and did not intend to comment on Putin's remarks.

Foreign ministry spokesman Andrei Savinykh did not respond either Monday, saying he was "not up to date" with the comments.

Putin also indicated he would not be against the breakaway Georgian region of South Ossetia becoming part of Russia, if its people were in favour.

Russia recognised South Ossetia as independent following Moscow's 2008 war with Tbilisi over Georgian rebel regions.

Russian troops entered the region to push back Tbilisi forces who were attempting to retake control of the area.

"The future will depend on the Ossetian people," Putin said. "You know Russia's position -- when Georgia engaged in military action, Russia supported South Ossetia."

Vice president of the Georgian parliament Mikhail Matchavariani told Russian radio station Echo of Moscow that Putin's remarks "showed once again...that Russia's aim is to annexe the Georgian territories."