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ROMANIAN FOREIGN MINISTER BLAMES RUSSIA FOR MAASTRICHT FAILURE... Romanian Foreign Minister Mircea Geoana told journalists on 2 December that Russia's refusal to accept any mention of a deadline for the withdrawal of its troops from Georgia and Moldova has caused a deadlock that made impossible the signing of any agreement at the end of the 1-2 December Organization for Security and Cooperation in Europe (OSCE) Ministerial Council gathering, AP reported, citing Rompres. Geoana said the United States, the EU countries, and Romania considered the absence of such a mention would be unacceptable and that an impasse would be preferable. Geoana said the Russian plan for Moldova's federalization has lost its viability and can be considered "a thing of the past." He also said the OSCE must now examine whether to leave in place the five-pronged negotiations framework -- including Moldova, Transdniester, the OSCE, Russia, and Ukraine -- or to replace it with a new political instrument that would give the negotiations a new impetus. "We believe it is evident that without the explicit involvement of the EU and the U.S.," the current framework is "not balanced and fails to take into account the region's realities, including the role Romania should be playing in this political equation," Geoana said. MS

On 26 November, the Ukrainian cabinet somewhat unexpectedly approved an agreement on "integrating" the Odesa-Brody oil pipeline with the Polish pipeline network. Two days later, in Brussels, Polish Deputy Prime Minister Marek Pol and Ukrainian Deputy Prime Minister Vitaliy Hayduk signed an agreement on a linkup of the Polish and Ukrainian oil-transport systems.

Yet Ukraine's commitment to the linkup is not unequivocal. When announcing the cabinet's decision to the media, Ukrainian Foreign Minister Kostyantyn Hryshchenko called the agreement "an intergovernmental document...of principal importance for integrating the Ukrainian system with that of Europe." He added, however, that a separate agreement will be needed on whether the pipeline will actually be used to pump oil to Poland or whether it will be engineered in the reverse direction, to shift Russian oil (received via Belarus) to Odesa, and then onward by sea.

When the pipeline plan was first conceived in the 1990s, there was no doubt about how it would be used. Oil from the Caspian basin and Central Asia would be shipped across the Black Sea to the new Odesa oil terminal, and then go by pipeline to Brody, and then on via Poland (with links to the Plock refinery and Gdansk) to Western and Northern Europe. The route would not only earn transit fees for Ukraine, but would also comply with Turkey's desire to limit tanker transit through the Dardanelles. However, although the pipeline was duly built, plans for its use ran into difficulties. Poland was unable to raise the cash to construct the necessary linkups, and no Western oil company came forward with a firm offer to purchase oil conveyed by this route. In the meantime, the Russians came up with their own plan to reverse the direction of flow.

Both in Ukraine and abroad, the choice was seen as far more than a purely economic one: it became a symbol of Ukraine's choice of future -- with "Europe" or with Russia.

"The [Odesa-Brody] scenario is like plagiarism of the drama of the [Single Economic Space] SES," wrote the "Ukrayinska pravda" website (http://www2.pravda.com.ua/en) on 3 October. "There are the pro-European 'goodies' who advocate using the pipeline to transport Caspian oil to the West, although there is not a single contract to guarantee this direction. And there are the pro-Russian 'baddies' who advocate using the pipeline for the needs of the northern neighbor [i.e., Russia] that promises Ukraine immediate economic benefits. The value for Ukraine is either rubles today, or the unique role of an alternative to Russia tomorrow or the day after."

Likewise, on 8 October, during the visit of Ukrainian Prime Minister Viktor Yanukovych to Washington, U.S. Vice President Dick Cheney pressed him on what Ukraine intends to do with the Odesa-Brody pipeline. The U.S. government has always supported the idea of the westward pipeline, as a way of preventing a Russian stranglehold on Central Asian and Caspian oil. But at the time of the Yanukovych-Cheney meeting, the issue was particularly topical: that same day was Ukraine's deadline on an offer from the Russian oil company TNK-BP (formed by Russia's Tyumen Oil Company and British Petroleum), which had offered a deal of 9 million tons of oil to be transported annually for a fee variously reported as $60 million and $90 million. Yanukovych's reply was somewhat unequivocal: He "as a state official" had "never doubted the western direction of the pipeline," but it was now up to the Western oil companies to go "from statements to actions" with a specific offer.

At the same time, a power struggle had developed within the Ukrtransnafta oil-transport company, between its "pro-Russian" Executive Director Stanislav Vasylenko and its "pro-European" President Oleksandr Todiychuk. Over the late summer and early autumn, the latter had been canvassing support for the original western direction of flow, and after negotiations in Brussels in September, he told a BBC interviewer that he had found "potential" European buyers for 6 million tons of oil. He also outlined strategies to use the pipeline in advance of the Polish linkup, to supply oil to Slovakia, the Czech Republic, and Germany, using rail transport onward from Brody.

A few days before the 8 October deadline, Vasylenko appeared to have won: the Ukrainian media had reported that Ukrtransnafta accepted the Russians' offer. But Fuel and Energy Minister Serhiy Yermilov denied this: The decision, he said, is one of "strategic importance" that only the government can make. Vasylenko countered by threatening that Ukraine stands to lose $200 million if the Russian offer is rejected, adding that Ukrtransnafta needs the money to refurbish its existing obsolescent pipes, which now pose an environmental danger.

However, any Ukrainian government decision now appeared to be on hold until the results of a feasibility study on the reverse use of the pipe: Various news agencies quoted Yermilov as saying that a decision could be expected "in late December or early January" (ITAR-TASS) or "by 15 January" (UNIAN). Shortly after this statement, Loyola de Palacio, the European Community vice president with responsibility for transport and energy, postponed a scheduled visit to Kyiv that was expected to focus on prospects for extending the pipeline to Plock. Although the official reason for the postponement was de Palacio's "busy schedule," Todiychuk attributed it to de Palacio's "disappointment at recent events in Ukraine" and to the "ongoing active discussion...of the possibility of reversing the direction of flow."

A "feasibility study" is often a means of buying time. It did not, however, stop debate and speculation in and outside Ukraine. An interview by the new U.S. ambassador to Ukraine, John Herbst, (carried by the "Zerkalo nedeli" website [www.zerkalo-nedeli.com]) and some "off-the-record" remarks by a U.S. Embassy official were interpreted by the media as a commitment by Chevron to purchase oil delivered to Brody via the pipeline. (The U.S. Embassy subsequently put out a denial, but belief in the commitment continued to circulate in Ukraine.) In Kazakhstan, which is keen to use the pipeline to transport its oil to Europe, Foreign Minister Qasymzhomart Toqaev and President Nursultan Nazarbaev stressed that the Odesa-Brody pipeline and its extension to the Polish port of Gdansk is a top priority in Kazakh-Ukrainian relations. And at the EU-Ukraine summit in late October, the issue of the pipeline was raised again, with the EU delegates warning against "reverse flow."

Then, in the last days of November, several weeks before the expected announcement on the feasibility study, the Ukrainian government acted. The timing may have been fortuitous (international agreements, even ones that have long been discussed, cannot be drawn up overnight). However, recent events must have strengthened the hand of those favoring the "Western" option. The current investigation into Russia's Yukos oil company has put a question mark to the future of all other Russian oil companies (see "RFE/RL Organized Crime and Terrorism Watch," 3 November 2003). The nationwide commemoration on 22 November of the Ukrainian victims of the "artificial famine" of 1933 (deliberately created by Stalin to subdue Ukrainian resistance to the Soviet system) inevitably stirred old fears of Russia. And the "Rose Revolution" in Georgia evoked pointed suggestions from Ukrainian opposition activists that President Leonid Kuchma should follow the example of Eduard Shevardnadze and resign his presidency early. All factors that made the decision on the pipeline enhance the "Western-looking" image of the Ukrainian government, while still leaving their ultimate option open.