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RFE/RL Poland, Belarus, and Ukraine Report Vol. 5, No. 28, 29 July 2003

A Survey of Developments in Poland, Belarus, and Ukraine by the Regional Specialists of RFE/RL's Newsline Team

NOTE TO READERS: The next issue of "RFE/RL Poland, Belarus, and Ukraine Report" will appear on 12 August 2003.


RUSSIA WANTS TO PUMP THROUGH ODESA-BRODY PIPELINE 'IN REVERSE.' Russian Premier Mikhail Kasyanov spent four days in Crimea on 17-20 July, where he hold meetings with his Ukrainian counterpart Viktor Yanukovych at a sitting of a Russian-Ukrainian commission on cooperation and in more informal circumstances. It was expected that the main result of the meetings will be the signing of an agreement on the transit of Russian oil through Ukraine in 2004-18, in the amount of 79.5 tons annually. However, this did not take place.

Kasyanov explained to journalists that the delay was due to uncertainty about the use of the Odesa-Brody oil pipeline. "Russia is expecting that the [oil-transit] agreement will encompass all Ukrainian oil pipelines, including the Brody-Odesa. When we solve this issue, we will sign the agreement," Kasyanov said. He expressed hope that this issue will be solved in a month.

Moscow expects that the Odesa-Brody pipeline, which was constructed to transport Caspian (Kazakh and Azerbaijani) oil to Europe, can be used in a "reverse mode," to pump Russian oil to Odesa in order to ship it further across the Black Sea. Thus, according to Ukrainian commentators, the Kremlin wants to prevent Ukraine from opening a new, independent oil-transportation route as well as to tie Ukraine's oil-transportation system to Russia even further. According to this line of argument, by delaying the signing of the prepared oil-transit agreement Moscow intends to force Kyiv into agreeing to the use of the Odesa-Brody pipeline "in reverse."

Russia's Tyumen Oil Company (TNK) proposed to the Ukrainian government in June the creation of a working group to study the possible use of the Odesa-Brody oil pipeline in the "reverse mode." President Leonid Kuchma seems to be pondering the idea of pumping Russian oil from Brody to Odesa until it becomes possible to pump Caspian oil to Europe. He said on 24 June that Ukraine will not use the Odesa-Brody pipeline in the reverse direction if the European Commission takes "specific steps" to use the oil pipeline in its planned direction. He did not elaborate but observed that the problem with the Odesa-Brody pipeline "perfectly characterizes the Ukrainian mentality." "First we did it, and then we asked ourselves -- why have we done this?" he said. The use of the Odesa-Brody pipeline for pumping oil in the "reverse mode" reportedly could bring Ukraine an estimated $60 million in annual revenues.

Meanwhile, Ukrainian Fuel and Energy Minister Serhiy Yermilov said in Gdansk on 14 July, at a meeting of Ukrainian and Polish officials and corporate representatives, that the Odesa-Brody oil pipeline will be used exclusively in accordance with its original purpose. Poland's Pern and Ukraine's Ukrtransnafta signed a protocol at the meeting on creating a joint venture to complete the Polish stretch of the Odesa-Brody-Gdansk pipeline. "The European direction is the most profitable.... It means 40 million tons of oil to be pumped annually,...while the reverse use could transit only up to 9 million tons," Yermilov reportedly said in Gdansk.

It is also noteworthy that outgoing U.S. Ambassador to Ukraine Carlos Pascual in his farewell speech in Kyiv on 21 July touched upon the Odesa-Brody pipeline, stressing that Ukraine has a "phenomenal opportunity" with the development of this oil-transportation route according to it original design. "Today there are interested buyers in Germany and in the Czech Republic, there is a mechanism to get that oil there through the pipeline route of Odesa-Brody linking into the Druzhba system, there are suppliers from the Caspian who are interested in providing the oil," Pascual said. "Indeed, some of the European refineries are already buying the very same oil, bringing it through the Bosporus, up through the Mediterranean to Trieste and to a pipeline. Ukraine has been able to demonstrate in its market analyses that it can do this more cheaply, through Odesa-Brody."

Our Ukraine said in a statement on 24 June that the use of the Odesa-Brody oil pipeline to pump Russian oil from Brody to Odesa would run counter to Ukraine's national interests. The statement called on Kuchma to take a clear stand on using the pipeline exclusively in accordance with its original design. However, Ukrainian commentators point that there is no unanimity of views regarding the pipeline even within Our Ukraine. For instance, Taras Stetskiv and Viktor Pynzenyk, prominent members of the Our Ukraine parliamentary caucus, think that the primary thing is revenue, therefore the Odesa-Brody pipeline may well be used for pumping Russian oil in the reverse direction (Jan Maksymiuk).

"[Premier Viktor Yanukovych] has already begun speaking Ukrainian. For many Galicia residents this is important. I know many intellectuals in Lviv who [tried to] Ukrainianize [former Premier Pavlo] Lazarenko and claimed that...despite his being a resident of Dnipropetrovsk and a gangster, he might fall for the national idea and work for Ukraine. Many of our intellectuals are now doing the same with Yanukovych. If they tell Lviv that [Ukraine] needs a strong manager from the east [for the president], [one] who introduced order in Donetsk, I will advise [Our Ukraine leader Viktor] Yushchenko to take Lviv residents free of charge in busses to the places I will specify, to show them what order has been introduced in the Donetsk region." -- Our Ukraine lawmaker and political scientist Mykola Tomenko in an interview with "Lvivska hazeta" on 22 July.

"In a democratic state, to extend an incumbent president's term, or to add a third term, constitutes a change of the rules in mid-stream. This is not consistent with the spirit of the rule of law or the spirit of democracy. We are extremely pleased, and we congratulate President Kuchma, for the strong way in which he has consistently stated over the past weeks that the elections will take place in October of 2004. Our hope is that the pro-presidential camp will listen to his words and act on them." -- U.S. Ambassador to Ukraine Carlos Pascual in his farewell speech in Kyiv on 21 July; quoted by "Ukraine Report 2003" on 25 July. ("Ukraine Report 2003" is produced by the Ukraine Market Reform Group, the Global Jobs Initiative, and the Build Ukraine Initiative and distributed three times per week by the Information Service,

"RFE/RL Poland, Belarus, and Ukraine Report" is prepared by Jan Maksymiuk on the basis of a variety of sources including reporting by "RFE/RL Newsline" and RFE/RL's broadcast services. It is distributed every Tuesday.

EUROPE GIVES THE GO-AHEAD TO BP-TNK MERGER. The European Commission has approved a $6.15 billion merger plan concluded in February between British Petroleum, Alfa Group and Access/Renova (see "RFE/RL Newsline" 12 February 2003), RIA-Novosti and reported on 29 July, citing the European Commission's Moscow office. The new holding will combine the companies' energy-sector assets in Russia and Ukraine -- including, most notably, the Tyumen Oil Company (TNK). The new company will control oil reserves estimated at 5 billion barrels and will have a daily production capacity of 1 million barrels, making it the world's eighth-largest producer, reported on 29 July. The deal is yet to be approved by the Antimonopoly Ministry or the Ukrainian government. RC

WIESENTHAL CENTER RANKS STATES' PROSECUTION EFFORTS. The Simon Wiesenthal Center on 23 July released its third annual "Worldwide Investigation and Prosecution of Nazi War Criminals" report, which ranks 39 countries based on their efforts from 1 April 2002 to 31 March 2003 in dealing with Holocaust perpetrators. Only the United States and Germany received the highest grades of "A" and "B," respectively. Among the seven countries in category "C" (minimal success that could have been greater; additional steps urgently required) are Latvia, Lithuania, and Poland. Estonia is among the 14 countries in category "D" (insufficient and/or unsuccessful efforts), along with Croatia, Hungary, Romania, and Slovakia. Norway and Sweden are the only European states to receive an "F" for total failure. The former Soviet republics of Belarus, Russia, Ukraine, as well as Bosnia-Herzegovina, the Czech Republic, and Yugoslavia, were placed in category "X," which is made up of the 13 states that failed to respond to the center's questionnaire and "show no activities to prosecute." SG