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Russia: Analysis From Washington--Bypassing The Baltics

Washington, 20 June 1997 (RFE/RL) - Moscow's plans to build three new ports near St. Petersburg on the Gulf of Finland have less to do with opening a new "window on Europe" than with putting pressure on Estonia, Latvia and Lithuania.

Today, Friday, Russia is scheduled to begin construction of an oil transshipment port at Bukhta Batyereinaya. And according to a June 6 decree issued by Russian President Boris Yeltsin, Moscow will subsequently build a dry cargo port at Ust-Luga and another oil terminal at Primorsk.

Following the recovery of independence by the three Baltic countries in 1991, many in Moscow and even more in St. Petersburg urged that the Russian government build some new ports on the Gulf of Finland in order to facilitate trade with Europe.

Some of the reasons for this were economic. New ports would allow the northwestern part of European Russia to expand its trade with the West and to do so for less than it could if forced to use either the ports of the now independent Baltic states or Finland.

But far more of the reasons for the construction of these ports were and remain political.

Beginning in 1991, foreign policy analysts close to Yeltsin and the Russian foreign ministry have argued that Moscow needs such ports in order to be able to bring pressure to bear on the Baltic governments.

Until Russia built ports of its own on the Baltic Sea, these Russian analysts said, Moscow would be in a relatively weak position in this region but could play one Baltic country off against another by shifting the flow of bulk cargo from one to another.

Such a policy, several Russian analysts suggested, would give Russia enormous influence over Baltic governments without generating what they called an "allergic reaction" by Western governments.

Moscow officials have consistently tried to implement this policy. But their success has been mixed because the privatization of Russian industry has limited Moscow's ability to manage trade this way and because private firms benefit from low costs in Baltic ports.

Partially for that reason, these same analysts have argued more recently that this policy could only be fully successful when Russia had the option of bypassing the Baltics altogether, either by using Finnish ports or by building its own.

During his March 1997 visit to Helsinki, Yeltsin told Finnish President Matti Ahtisaari that Russia did want to use one of Finland's ports to export oil.

Russia almost certainly will pursue that avenue while it is constructing its own ports. But the Finnish option has three important drawbacks from a Russian point of view. First, transshipment costs there are often higher than in the Baltic states.

Second, many in the Russian capital also want to be in a position to put pressure on Finland, a country that has shown ever greater interest in joining Western institutions.

And third, many in St. Petersburg have pressed for the development of ports there both to guarantee Russian control of trade there and to power economic development of the Russian northwest.

For all these reasons, Moscow has decided to build these new ports. But the Russian government is unlikely to gain either the economic or the political benefits it hopes for anytime soon.

Economically, the ports in the three Baltic states will be the transshipment routes of choice until these new Russian ports are completed, something that is likely to take some time.

Given the difficulties Russia has had on construction projects, the ports in the three Baltic countries may remain less expensive than the Russian ones are likely to be and hence continue to attract Russian business even after the Russian ports are built.

And politically, Moscow's increasing inability to direct Russian foreign trade and expanding cooperation between the Baltic countries and northwestern Russia may doom this plan for bypassing the Baltics to failure even before the first ship docks in the new ports.