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Nord Stream Pipeline Could Be A Game-Changer For Ukraine, Belarus

The Nord Stream construction site in Portovaya Bay near Vyborg in Russia
The Nord Stream construction site in Portovaya Bay near Vyborg in Russia
Not everyone was clapping and cheering on November 8 as Western European leaders and Russian President Dmitry Medvedev met in Lubmin, Germany, to mark the opening of the first part of the Nord Stream natural-gas pipeline.

When completed late next year, the 1,224-kilometer, $10 billion pipeline will carry 55 billion cubic meters of Russian gas directly to Western markets each year. It will bypass transit countries like Ukraine and Belarus that rely on the revenues from transit fees and also benefit from the political leverage that comes from being part of Europe's energy equation.

Now those revenues and that leverage could be sharply reduced. Speaking in September, Medvedev emphasized that Nord Stream would "reduce risk" by circumventing Belarus and Ukraine.

Belarusian energy analyst Stanislau Husak told RFE/RL's Belarus Service that the impact on his country and on Ukraine could be devastating.

"Russia needs Nord Stream to make both Belarus and Ukraine into colonies of the 18th-century type," he said. "The single customs area, Nord Stream, and the like are intended only to reduce the ability of Belarus and Ukraine to become truly independent. It is necessary to realize that all this is being pursued within the framework of a single policy -- the policy of colonizing this region."

The exact scope of Nord Stream's impact on Russia's neighbors remains to be seen. With Germany and other Western European countries turning away from nuclear power in the wake of Japan's Fukishima disaster, the volume of Europe's demand for Russian gas in the coming years is hard to forecast.

Before Nord Stream, about 80 percent of Russian gas heading to the EU passed through Ukraine and most of the rest went through Belarus.

New Leverage For Moscow

One consequence of the project could be to give Moscow new leverage over Minsk and Kyiv by shifting the burden of Nord Stream's impact back and forth between the two countries according to the Kremlin's political aims.

Russian state-controlled energy giant Gazprom, which provides the gas for Nord Stream, has said it intends to divert about 20 percent of the gas currently transiting Ukraine through the new pipeline. Kyiv stands to lose some $700 million annually in transit fees.

Nonetheless, Ukrainian energy analyst Valentyn Zemlyansky maintains that the Ukrainian transit route will remain essential despite the new pipeline.

The Nord Stream natural gas pipeline capacity
The Nord Stream natural gas pipeline capacity
"Ukraine will always remain the main route, for example because it has this advantage over all alternative routes even over the Belarus route: underground gas-storage facilities," he says. "Underground gas storage in the winter maintains the necessary pressure in the system in order to be able to provide further transit [to European countries]."

Analyst Volodymyr Saprykin agrees, telling RFE/RL's Ukrainian Service that since Nord Stream's supply is intended primarily for Germany, which is currently supplied through Belarus and Poland, the harm to Kyiv should be minimal.

'Not An Economic Issue But A Political One'

Belarusian energy expert Ales Mekh also thinks that the brunt of Nord Stream's impact will be felt in Minsk.

He fears that Moscow could use the threat of reduced gas transits through Belarus to ratchet up pressure on Minsk to sell key economic assets to Russian investors.

"It was a crazy idea on the part of the Belarusian government to sell even a 50 percent stake in [Belarus's natural-gas transit company] Beltranshaz," Mekh says. "Because gas distributed through the Beltranshaz network accounts for 85 percent of the energy supplied to Belarusian enterprises. In other words, those in control of Beltranshaz are in control of all the enterprises in our country. It is not just an economic issue -- it is a political issue. It is an issue of survival for the country, an issue of its independence."

Mekh adds that the loss of revenues is significant for Minsk, but that losing its status as a transit country is worse. "The country is losing some of its possibilities," he says.

But another Belarusian economist, Syarhey Chaly, believes Nord Stream was always "more political than economic." He argues the project is more dangerous to Ukraine than to Belarus.

"I think that Nord Stream will be a threat to Ukraine and not to Belarus because Russia can't find any shorter and cheaper transit [than through Belarus]," he said. "And the Russians now think that, having acquired a 50-percent stake in Beltranshaz, they have relatively guaranteed conditions. And they haven't been able to achieve this in Ukraine, so to a large extent this is a threat to Kyiv."

written in Prague by RFE/RL correspondent Robert Coalson on the basis of reporting by RFE/RL's Belarus and Ukrainian services
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