Germany's Merkel Assails Russia Over Cutoff of Oil

MOSCOW, Jan. 9 -- German Chancellor Angela Merkel forcefully condemned Russia on Tuesday for failing to consult the European Union before it cut off part of its oil exports to Europe because of a deepening dispute between Russia and Belarus over subsidized energy.

"Even during the Cold War, Russia was a stable energy supplier," said Merkel, whose country holds the rotating presidency of the European Union. Speaking at a news conference in Berlin, she said Russia's failure to warn the bloc that it planned to shut down a pipeline that crosses Belarus and supplies Germany, Poland and other E.U. countries was "not acceptable."

Russian officials say they feel deeply aggrieved by the tactics of Belarus, which they accuse of stealing crude oil destined for Western Europe, but the Kremlin is nonetheless getting another black eye over its reliability as an energy supplier.

Just over a year ago, the E.U. was in an uproar after Russia cut natural gas supplies to Ukraine, a decision that affected supplies across the Continent. And while there is no great sympathy in Western Europe for Belarus, often called the Continent's last dictatorship, there is increasing concern about Russia's willingness to shut off energy supplies as a first resort in disputes with its neighbors.

The message "to our Russian partners, and to Belarus as well, is that consultations are the least thing to do," said Merkel, whose comments were echoed by other European leaders. "It is not acceptable if there is no consultation on such issues. That destroys confidence, and this is no basis for smoothly building up a constructive relationship."

The E.U., which is heavily dependent on Russian natural gas and oil, has almost no short-term alternatives for energy. Russia supplies about 25 percent of the union's oil and 40 percent of its natural gas.

Besides Germany and Poland, Russian oil supplies were also cut to the Czech Republic, Hungary and Slovakia. All the affected countries have enough strategic reserves to ride out any shutdown for several months.

The dispute began when Belarus imposed a transit fee on Russian oil in retaliation for new Russian duties on exports of Russian oil to Belarus. Russia's western neighbor has long benefited from subsidized Russian energy, but the Kremlin appears to have tired of underwriting its putative ally, which is led by the authoritarian President Alexander Lukashenko.

Belarus, isolated and poor, earned billions of dollars from processing Russian crude and selling it to Western Europe. The new duties will cut into its profits, much of which ended up in government coffers.

On Jan. 1, Russia doubled the price of the natural gas it sells to Belarus, but at $100 per 1,309 cubic yards, it is still cheaper than the price paid by any other country. As part of that deal, the state-controlled Russian energy company Gazprom also took a 50 percent stake in the Belarusan gas pipeline network. "Belarus won't be blackmailed by Russia," Lukashenko said on state television.

At a government meeting Tuesday, Putin expressed frustration with Belarus, noting that Gazprom paid the highest of multiple independent valuations for its stake in the pipeline network and that Belarus continues to be subsidized despite the price increases.

"The Russian Federation has agreed to sell gas not at a market price," Putin said in televised remarks. "Moreover, Russia is not levying an export duty on its gas exports to Belarus, costing it $3.33 billion annually."

A Belarusan delegation flew to Moscow to try to resolve the dispute.

"Everything should be placed on the negotiation table without any preliminary conditions or preliminary demands," Belarusan Deputy Prime Minister Andrei Kobyakov said at a news conference at the Belarusan Embassy. "We are ready for dialogue."

The Russian economic development and trade minister, German Gref, met with Kobyakov on Tuesday evening but said Russia would enter into full negotiations with Belarus only when the oil transit fee is dropped. "These are our unconditional demands, and we will not enter into talks until these conditions are satisfied," Gref told reporters after meeting with Kobyakov.

One sign that Russia may be preparing for a drawn-out affair was an instruction from Putin to ministers that they "discuss with Russian companies the possibility of reducing oil output in connection to problems linked to the transit of oil through Belarus." That would prevent Russia from extracting more oil than it can pump to customers.

Putin also said that "everything must be done to guarantee the interests of Western consumers." Russian officials said they were exploring ways of rerouting oil to Europe.