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Analysis: Ukraine's pipeline dream

By ILAN BERMAN

WASHINGTON, April 1 (UPI) -- In Eastern Europe, a new chapter has opened in the quiet battle over a pivotal pipeline. That route is Odessa-Brody, and its fate will help shape the political and economic future of much of the "post-Soviet space."

When initiated by Ukraine back in 1993, Odessa-Brody was envisioned as a much-needed independent energy conduit for the Caspian region, one capable of linking Central Asian producers with European markets. The resulting 418-mile pipeline, stretching northwest from the Black Sea port of Odessa to Brody in western Ukraine, has the capacity to carry up to 14.5 million tons of oil a year. But since its completion in 2001 it has remained mostly idle, a casualty of the region's post-Cold War energy politics.

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All that has begun to change, however. In mid-January, Warsaw and Kiev came to terms on a pivotal deal to extend Odessa-Brody into Poland. Under the agreement, a new Polish-Ukrainian conglomerate will extend the pipeline 310 miles to the Polish port city of Gdansk during the next 2 to 3 years. Once operational, the route would be used to supply tankers bound for Western and Northern Europe with Caspian crude.

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The deal represents a substantial blow to Russian plans. For years, Moscow has intensively lobbied Kiev for a "reversal" of the pipeline. Under the scheme proposed by the Kremlin, the currently dormant Odessa-Brody -- intended for westward flows -- would instead be used to ferry Russian oil south to the Black Sea, from where it would be shipped via tanker to world markets.

The reason for this intention is clear. Kremlin officials understand full well that Odessa-Brody has the potential to deal a fatal blow to Russia's now near monopoly on Caspian energy. Extended to Gdansk, the pipeline would be an important alternative to the Bosphorus Straits (already suffering from chronic tanker congestion) for bringing Central Asian oil westward. Worse still, from Russia's perspective, the resulting European and U.S. economic attention would all but cement Kiev's westward trajectory.

Poland is also an important factor in the Kremlin's thinking. Over the past year, ties between Warsaw and Washington have seen an unprecedented political and military expansion, a result of plans now under way at the Pentagon to redeploy U.S. troops now in Europe to new bases further east. Now the Odessa-Brody extension deal has positioned Poland to be a major energy hub for new, non-OPEC and non-Russian crude from Central Asia as well.

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Russian officials similarly understand that an Odessa-Brody reversal would eliminate many of these worries. Such a move would do more than simply tighten Moscow's grip over Ukraine's energy infrastructure, which would be dedicated in large part to the transportation of Urals crude to the Black Sea. It would also profoundly affect Kiev's political future, dampening Western investment and making the Ukrainian government increasingly dependent on Moscow's tender mercies. Not least, it would effectively isolate Poland from the emerging Caspian energy scene.

The Kremlin has, therefore, refused a more logical, eastern route for Russian crude through Russified eastern Ukraine. That pipeline, dubbed "Kremenchuk-Sniherivka," boasts nearly double the capacity of Odessa-Brody. And at $3 less per ton than its western counterpart, shipment of oil through Kremenchuk-Sniherivka makes sound fiscal sense for Moscow. But since the Odessa-Brody issue has less to do with output than with controlling Ukraine's economic and political independence, Russia has continued to press for reversal.

Now the signing of the Odessa-Gdansk extension agreement has breathed new life into Ukraine's dreams of energy independence. Working with international investors and its neighbor to the northwest, Kiev now has the opportunity to reverse its accelerating slide of the last several years into the Kremlin's orbit -- the result of costly energy, political and economic concessions made to Russia.

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Furthermore, Ukrainian officials appear to be seizing this opportunity. In consultations with Washington, they have made clear their intention to press forward with Odessa-Brody's European direction. And the Ukrainian Cabinet has officially given its blessing to such a plan, formally voting in early February to reject reversal.

Odessa-Brody, however, can still be derailed by power politics. With Ukrainian President Leonid Kuchma again under fire politically -- this time as a result of a series of controversial constitutional amendments aimed at manipulating the electoral process -- the current administration in Kiev may find it tempting to turn once again to the Kremlin to broker its continued legitimacy. And with the Gdansk extension as yet unbuilt, Moscow still has reason to hope that Kiev could be coaxed into adopting reversal, ostensibly as an interim measure.

Nevertheless, Ukraine has taken a major step toward cementing its Westward orientation. The United States and its allies in Europe should do everything in their power to ensure that it stays the course.


Ilya Berman is a writer for Insight magazine.

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