Oil spat may lead Russia to cut flow

MOSCOW -- A Russian-Belarusian oil dispute that has shut down a key pipeline carrying crude oil to European customers might drag on long enough to force Russia to cut production, Russian President Vladimir V. Putin said yesterday.

The bitter spat between the longtime allies led to a cutoff Monday in the flow of oil across Belarus, prompting complaints from European officials.


A warm winter has left Europe with abundant oil supplies, triggering falling prices and keeping a lid on the severity of the continent's short-term worries about the cutoff. But the dispute, which concerns oil taxes and transit fees, has revived fears in the European Union of over-reliance on Russian energy and has focused attention on efforts to come up with a comprehensive European energy policy.

The tough Russian stance also threatens to undermine Belarusian President Alexander G. Lukashenko. His authoritarian government, often called "the last dictatorship in Europe," has been propped up by energy subsidies from Moscow, which are being eliminated.


"The Kremlin has dumped Lukashenko," Belarusian opposition leader Alexander Milinkevich said in a telephone interview from Minsk, the capital.

The oil dispute was triggered by a new Russian customs duty of $180 per metric ton on crude oil exports to Belarus, a tax that took effect Jan. 1. Belarus retaliated by imposing a transit fee of $45 per ton for oil shipped through the pipeline to the European Union.

Moscow had previously shipped oil to Belarus duty free under agreements reached in a bid to unite Belarus and Russia into a single state.

That effort has lost steam in recent years, however. It appears that the Kremlin has decided to maximize its oil and natural gas export profits despite the political impact on Lukashenko.

"Since this united economic space is not working out, it was decided in Moscow to make a transition to market relations," said Vyacheslav A. Nikonov, president of the Politika Foundation, a Moscow think tank. "Lukashenko naturally doesn't like it. Of all the foreign partners Putin ever had, Lukashenko has always been the most difficult."

Last month, Belarus was forced to agree to pay slightly more than twice as much for Russian natural gas this year compared with last year, although the cost remains less than half the amount charged to European Union customers. That deal calls for further price increases in the next few years.

Milinkevich, the opposition leader, charged that Lukashenko had overreacted to Moscow's decision to raise energy prices toward market levels.

David Holley writes for the Los Angeles Times.