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Russia: Gazprom Schemes To Squeeze Ukraine On Gas Debt

A meeting between Russia's Gazprom and its partners in Western Europe on a new pipeline through Poland appears to be part of an effort to bring international pressure on Ukraine. The country is struggling with a decision on its massive gas debt to Russia. Kyiv may now have to worry about whether it can depend on continued protection from Warsaw. Our correspondent Michael Lelyveld reports.

Boston, 2 September 2000 (RFE/RL) -- Russia's Gazprom appears to be applying subtle pressure on Ukraine through Germany and other European countries ahead of an expected meeting on Kyiv's gas debts today (Saturday).

Last Tuesday, Gazprom officials met with four leading European gas companies to discuss the possibility of building a pipeline through Poland and Slovakia that would bypass Ukraine. The talks in Paris brought together Gazprom's biggest European customers for gas -- Gaz de France, Ruhrgas and Wintershall of Germany, and Italy's Eni.

The meeting was not the first time that Gazprom has discussed a detour around Ukraine, which owes Russia at least $1.4 billion for gas supplies. Ukraine carries about 90 percent of Russia's gas exports to Europe, making it impossible for Moscow to stop deliveries without cutting off other countries as well. Disruptions of service are also a concern for Western Europe because of diversions of gas on Ukrainian territory.

In July, Gazprom broached the idea of building a pipeline connection through Poland to Slovakia, but Poland refused to join in a project that would isolate Ukraine. That decision could cost Poland dearly in lost transit fees and access to Russian gas.

By holding talks with European gas companies on a possible pipeline consortium, Gazprom appears to be showing confidence that Poland will eventually be persuaded to change its mind. Although there were no reported results from the meeting, the very fact that it was held may bring more pressure to bear on Warsaw than incentives from Moscow alone.

Polish officials have said they would like to see Russia complete its long-delayed Yamal Peninsula gas project that would pipe gas from the arctic region to Europe through Belarus and Poland. One line has been completed so far, carrying about half the planned capacity for Yamal gas.

But Poland does not want a logical link to be made between the second line of the project and the Russian strategy of bypassing Ukraine. By negotiating with the European gas companies, Russia seems to be broadening its appeal, playing on Poland's desire to be seen as a cooperative and essential partner with the West.

The European Union now accounts for two-thirds of Poland's foreign trade, at a time when the country is aspiring to membership in the EU. Last year, Poland sold more than 36 percent of its exports to Germany. By contrast, less than 4 percent went to Ukraine. Over one-quarter of Poland's imports came from Germany, while only about 6 percent were from Russia, according to figures from the Economist Intelligence Unit.

Germany's importance to Poland could make it harder for Warsaw to resist a pipeline plan that would assure German gas companies of dependable supplies, since Russia provides a major share of Germany's gas. Transit pipelines through Poland would tie the country tightly to the long-term interests of Germany and the EU.

This form of persuasion could erode Poland's resolve to fight the pipeline plan, particularly if it is portrayed as something other than a bypass. The timing of Gazprom's maneuver also suggests that it was meant to influence the outcome of the debt settlement meeting with Ukraine scheduled to take place in Kyiv today (Saturday). Ukraine has reportedly proposed a joint venture for its pipelines that would allow Gazprom to share in the control of the country's gas transit to Europe for the first time since the Soviet collapse, while using the profits to pay off Kyiv's debt. But some reports suggest it is uncertain that Ukraine will go through with the deal.

Reuters news agency reported this week that Ukraine is trying to borrow $300 million from the investment bank Credit Suisse First Boston, in part to pay for purchases of Russian gas. The government had hoped for loans from the International Monetary Fund by now, but renewal of Ukraine's suspended lending program has been delayed.

Kyiv's bid to raise cash for new gas supplies may be a sign of reluctance to agree to the settlement, which has otherwise been portrayed as an answer to Ukraine's fuel supply fears. Similarly, Gazprom's effort to pursue the bypass plan with European partners may be an indication that it is also unsure that an agreement will be reached.

But the publicity surrounding Gazprom's talks with France, Germany and Italy could convince Kyiv that it will eventually have to submit to one Russian plan or another. Either way, Ukraine's strategic position and its economy seem likely to change.