Angry Merkel attacks Putin over latest pipeline closure

Posted in Europe | 10-Jan-07 | Author: Ian Traynor and Luke Harding| Source: The Guardian (UK)

'It is not acceptable when there is no consultation about such actions. That always destroys trust.' Angela Merkel.

· Russian pricing row with Belarus alarms EU
· Dispute hastens effort to safeguard energy supplies

Chancellor Angela Merkel of Germany yesterday accused Vladimir Putin's Russia of unacceptable conduct by closing the oil pipeline crucial to Europe's energy consumption. In the toughest language she has used about the Kremlin in her 14 months in office, Mrs Merkel said Russia was destroying international confidence in itself by forcing energy clients to suffer from Russia's bilateral disputes with other post-Soviet states.

A year after Russia cut off supplies to Ukraine in a dispute over pricing that many called an act of political blackmail, Russia on Monday closed the Druzhba oil pipeline that supplies eastern and western Europe via Belarus and Ukraine because of a row over pricing and taxes with the authoritarian Lukashenko regime.

The Russians said they had no choice but to close the pipeline because Belarus was illegally siphoning off tens of thousands of tonnes of oil in payment of transit fees it has slapped on Russian exports.

President Putin tried to play down the threat to Europe's energy supplies, insisting everything would be done to protect "western consumers". Russia wanted to resolve the crisis as swiftly as possible and "guarantee" oil deliveries.

But if Mr Putin sounded conciliatory, the leader of Germany, Russia's most important energy client, sounded angry.

Launching Germany's six-month presidency of the EU in Berlin alongside Jose Manuel Barroso, the European commission chief, Mrs Merkel said the least she expected from the Kremlin was to be consulted in advance.

"It is not acceptable when there are no consultations about such actions," she said. "That always destroys trust and no trusting, undisturbed cooperation can be built on that."

Mrs Merkel is to see President Putin in Moscow next week. Some analysts believed the row would be promptly settled.

"My guess is that it will be over fairly quickly," said Chris Weafer, an energy analyst with Alfa-Bank in Moscow. Russia was keen on a bilateral trade deal with the EU this year, while Belarus's isolation meant its position was "precarious".

But Mr Putin also reportedly asked ministers yesterday to examine the possibility of reducing Russian oil extraction, since a fall in exports would over-burden Russia's refining and processing capacity. That suggested the Kremlin leader was expecting a more lengthy dispute, and keeping the pipeline shut.

Talks were taking place last night in the Russian capital between Belarussian and Russian officials. A meeting earlier in the day failed to start. Belarus's deputy foreign minister earlier accused Moscow of making "unreasonable demands".

Mrs Merkel's unusual criticism was in stark contrast to her predecessor, Gerhard Schröder, who struck large and controversial energy deals with Russia and now heads a Russo-German consortium building a pipeline under the Baltic Sea.

Europe's largest economy gets more than a third of its oil from Russia and half of that arrives via the Druzhba pipeline. The closure sent shivers through Germany, although the country has legally required strategic oil reserves to last three months.

By 2027, the EU is expected to rely on Russia for 70% of its energy. Polish and German refineries said yesterday that nothing was coming through the pipeline.

Europe's vulnerability means Mr Putin holds all the trump cards in the short term at least and shows little sign of bowing to European concerns. But while Europe is relatively weak and divided over how to deal with Russia, the Kremlin's strong-arm tactics are also backfiring, injecting urgency into European attempts to wean itself off its dependency on Russian energy.

Mr Barroso is to unveil in Brussels today a long-term strategy to diversify, cut Russian purchases, and improve energy supply security. Mrs Merkel is making supply security a focus of her EU presidency.

Moscow and Minsk have been locked in a row over oil pricing and duties since Belarus grudgingly accepted a last-minute deal more than doubling the price of its natural gas from Russia. The Kremlin is keen to stop Belarus re-exporting petrol products made from processing cheap Russian oil. It recently imposed an export duty of $180 a tonne on oil sold to Belarus.

Belarus then imposed a new import duty tax of $45 a tonne on Russian oil shipped to western Europe across its territory. Russia, declaring the tax illegal, refused to pay up, and on Monday cut off all supplies through Belarus.