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East/West: Analysis From Washington: Politics, Economics And National Security

Washington, 23 July 1999 (RFE/RL) -- Closer economic ties among the countries of Eastern Europe may promote both greater political cooperation among them and enhanced national security for each.

But such ties may also exacerbate political conflicts within each of the countries involved and increase the ability of one country to expand its influence on the other.

And because closer economic relations can have such different consequences, many countries in Eastern Europe have moved carefully either to reorient their trade toward new partners or to ensure that any trade with their former partners is balanced by trade with new ones.

Both these possibilities and these calculations were very much on public view yesterday (Thursday) when crude oil from the Russian Federation was loaded on a tanker at Lithuania's Butinge terminal for eventual sale to Western customers.

As any number of speakers at the ceremony marking this event pointed out, this new route west for Russian oil benefits both countries and thus encourages cooperation between them. Russia obviously gains needed cash from the sale of the oil.

And at the same time, Lithuania gains from both transit fees and the interest of the Russian firm involved - in this case, the Yukos oil company - in not allowing politics to disturb the flow of oil in one direction and dollars in the other.

Lithuania also gains because Yukos sales effectively reduce the dominance of the Russian oil firm Lukoil in the Baltic states. In the past, Lukoil has used its clout to promote Moscow's political interests there either by playing one Baltic country against another or by demonstrating the dependence of each on income from the sale of Russian oil.

But just below the surface at the Lithuanian celebrations were some serious concerns that this new flow of oil could have other, less positive consequences not only for the relations between these two states but also for the domestic politics of each.

While both sides benefit from this flow, they do not benefit in the same ways. Lithuania gains both income and Western interest in the flow of oil, something many in Vilnius hope to translate into greater national security. But at the same time, Russia potentially gains a new and more internationally acceptable means of political leverage on Lithuania.

On the one hand, many in Lithuania may become reluctant to upset a situation from which they are benefiting by taking steps which Russia disapproves. And on the other, Moscow may use its influence over Russian firms to demonstrate its ability to dominate its smaller neighbor.

These factors alone would have made calculations about the benefits of such oil flows difficult for both sides. But in this situation, as in so many others, the realities on the ground are even more complicated, a pattern that makes any decisions about what to do even more problematic.

For the past several years, Lithuania has sought both to export crude oil directly via Butinge and to refine Russian oil at its Mazheikai facility, a state-owned enterprise that many in Vilnius have sought to sell to a major U.S. firm.

As of this week, Russian crude is now flowing to Butinge. But Lukoil, which hopes to block the sale of Mazheikai to the Williams company, has alternatively turned on and off the supply of oil there, limiting the operation of the refinery and preventing the completion of a pipeline from there to Butinge.

Even more, Lukoil's actions, which appear to many Lithuanian observers to reflect Russian state policy, have slowed down Williams' effort to acquire the refinery by leading some to conclude that selling the firm to Williams might mean that no oil would flow.

The start of the flow of Yukos oil through Butinge this week could either weaken the resolve of Lukoil or it could lead that Russian company to redouble its efforts to expand its economic and political influence there by old methods or new.

And all this in turn suggests that yesterday's event was less a final resolution of the political, economic and security tensions between Lithuania and the Russian Federation than the creation of yet another, albeit potentially more friendly forum on which such tensions may play themselves out in the future.