Most of Eastern Europe's socialist nations are unlikely to benefit from the recent fall in oil prices and some may suffer painful economic disruptions, according to government officials and western energy experts.
With little petroleum production of their own, five of the six Soviet Bloc countries in Eastern Europe depend on Moscow for 90 percent of their oil imports. Because of a special pricing arrangement with the Soviets, these nations will not save significantly on energy costs for at least a year, and then will reduce the amounts they pay for oil only gradually.
It also is possible that continued low oil prices may cause Soviet cutbacks in oil deliveries to Eastern Europe, western experts said.
Even as Western European countries look forward to a strong economic boost from cheaper oil, government officials here and in other East Bloc capitals are apprehensive. "We haven't solved this problem," a Hungarian government spokesman said. "But we may have to take steps to avoid big losses."
Perhaps the only communist-ruled country that clearly could gain from the price drop is nonaligned Yugoslavia, which obtains much of its oil from the Soviet This is one in a series of occasional articles exploring the consequences of falling oil prices for producers and consumers. Union through complicated three-way trade arrangements with Iraq, Libya and Algeria. If Yugoslavia is able to renegotiate its long-term contracts with Moscow, the country could save up to $1 billion on oil imports, according to an estimate by the Washington-based firm Planecon.
The savings would be a boon to a nation that is struggling to meet payments on a $20 billion debt to western creditors. By renegotiating its Soviet oil contracts, Yugoslavia could sell goods marked for export to the Soviets in the West instead, significantly increasing its hard-currency earnings.
Yugoslavia, however, is the only Eastern European country with the prospect of obtaining a reduction in Soviet oil prices. The six other countries formally allied with Moscow in the Warsaw military and Comecon economic pacts pay for oil according to a weighted average of market prices over the past five years. The five-year average shielded Eastern European countries from the rapid oil price increases of the 1970s by phasing them in over a period of years. Now, however, the price arrangement will have the opposite effect of delaying for several years the huge savings realized by western oil importers during the last four months.
Some Eastern European officials reportedly have raised the possibility of changing the oil-pricing formula, only to be rebuffed, diplomats said. "We have to study the issue very carefully and very quietly and not just go to Moscow and say we want to change the whole system," a Hungarian government official said. "After all, no one complained about the formula when we benefited from it."
Several Eastern European countries have earned hard currency in the West in recent years by refining or directly reselling petroleum obtained from such countries as Iraq, Iran and Libya in exchange for both currency and goods. Some experts believe that Romania and Bulgaria, the countries most involved in such exports, could benefit from increased profits on their refining operations as a result of the price fall.
However, several sources pointed out that the new earnings would depend on the ability of Eastern European governments to renegotiate contracts with Middle East suppliers. If the governments are unable to reduce the amount of goods exchanged for oil, the resale and refining operations could be seriously damaged.
Hungarian officials, for example, indicated that their sales to the West of oil and refined products could suffer serious losses because of a refusal by Libya to renegotiate a long-term supply contract. About 7 percent of Hungary's western export earnings came through sales of petroleum and petroleum products in 1984. Although the sales have decreased since then, "The net effect is going to be detrimental," a leading Hungarian energy expert said. "Import prices will decline far less than our export prices."
Hungarian officials also are concerned that the failure to win price savings on oil may damage the ability of energy-intensive industries such as steel and petrochemicals to compete abroad. Until now, the Hungarian government has generated substantial tax revenues by forcing industries to pay world market prices for oil even when imported Soviet supplies were cheaper.
Now Hungary may have to use scarce resources to subsidize industries' energy costs, a ranking government official said. Other Eastern European countries are likely to face similar problems. Poland, for example, depends on coal exports for a large part of its foreign earnings, but the fall in oil prices is expected to reduce both the volume and price of the coal it sells in the West while having little impact on import costs.
Some experts believe that the most serious disruptions for Eastern European countries could result from the Soviet Union's reaction to the threat of losing the hard currency it earns through oil sales to the West. If the Soviets wish to maintain hard-currency earnings -- and thus western imports -- through increased sales of oil in the West, petroleum deliveries to the East Bloc allies could be cut, these experts say.
"The Soviets could point out that they bailed out Eastern Europe in 1973 and 1974, and tell those countries they now have to buy more oil on the world market," said Jan Vanous of Planecon, who believes Moscow could reduce oil shipments to its allies by up to 25 percent.
Eastern European countries, already short of hard currency, would have to scramble to export more goods to the West to pay for the oil, Vanous said. East Germany, for example, would have to spend up to $400 million to replace Soviet petroleum supplies, a sum equal to 5 percent of its current western export earnings.
Eastern European officials said they believe it unlikely that oil deliveries from the Soviet Union will be reduced. However, they said that a permanent fall in oil prices would necessarily lead to significant changes in their trade relations with Moscow and hard bargaining as some countries sought to reduce the amounts of industrial and consumer goods they ship to the Soviet Union in exchange for oil.