Early in the morning of January 11, the Belarusian government announced it was canceling the transit tax on Russian oil it had imposed earlier in the month. The price war between Russia and Belarus, which had raged for over a week, is now expected to conclude. However, the standoff has worried several European countries. The reliability of oil imports from Russia has been called into question prompting a rethink of energy policies and the use of new energy sources. What are the implications of the dispute between Russia and Belarus? The editor of People's Daily spoke with correspondents in the region for an answer.

Editor: Russia and Belarus are currently trying to resolve the oil dispute. How are these negotiations proceeding?

Ma Jian (People's Daily correspondent in Russia): The gas price dispute between Russia and Belarus arose at the end of last year, when Russia negotiated a higher price for its oil with various former republics of the Soviet Union, frequently through the use of threats. The storm really began though when Russia announced that as of January 1, 2007, it would be slapping an export duty of US$180 dollars per ton on crude oil. In response, Belarus last Thursday announced it would levy a tax of $45 dollars per ton on crude oil from Russia, retroactive to January 1. Russia refused to pay to tax, declaring it illegal, so Belarus began siphoning off oil from the pipeline by way of payment. Transneft, Russia's oil pipeline monopoly, responded to this by shutting off the pipeline altogether.

On January 8, to resolve the dispute, a Belarusian delegation led by the first Deputy Minister of Economy went to Russia. Belarusian Deputy Prime Minister, Andrei Kobyakov, arrived in Moscow the following day to assist.

At the critical moment, the countries' leaders negotiated by telephone. The Belarusian government announced the cancellation of transit tariffs on Russian oil on January 10. The country's Prime Minister, Sergey Sidorsky, told waiting media that the decision was based on an agreement reached with his Russian counterpart via telephone, adding that he would travel to Moscow to discuss the situation in detail with Russian Prime Minister Mikhail Fradkov on January 11. Russia has not yet made any official announcements, but the Belarusian Presidential Press Service has confirmed a compromise. A final solution will be reached by January 12.

Editor: What is the impact of the suspension of oil supplies to Western Europe?

Zhang Niansheng (People's Daily's correspondent in Belgium): The EU suffered badly in the Russia-Belarus oil row. It recently announced that the interruption of the Druzhba pipeline has severely affected the refining industry in Germany, Poland, Hungary, Slovakia and the Czech Republic, all of which have begun to drawing on emergency reserves to ensure the normal operation of smelting and distribution systems. EU internal reserves of crude oil and refined oil can last approximately 120 days.

The EU issued a statement on January 9, saying that the "image and credibility" of Russia and Belarus, energy partners of the EU, had been damaged by recent events. EU Energy Commissioner Andris Piebalgson said on Tuesday that it was not acceptable for any country to interrupt or alter the supply of oil without warning when doing so affected a third party. "We call on both sides to find a mutually acceptable solution and immediate resume the oil supply to the EU," he said. "Equally important, they should find ways to prevent similar incidents from happening again."

Lv Hong (People's Daily correspondent in Germany): The Russia-Belarus energy war has many repercussions for Germany and has touched an "energy nerve". German Chancellor Angela Merkel was interviewed on the evening of the first day of Russia-Belarus row. She said then that although the dispute had not yet affected Germany's oil supply, the fact that similar problems had occurred in the last few years is disturbing. She said that Germany "needs a promise guaranteed by laws and treaties". Moreover, such a guarantee should be binding for both Russia and Belarus.

Jin Zhao (People's Daily correspondent in Poland): The countries of Central and Eastern Europe are the biggest victims in the Russia-Belarus oil dispute. Countries located at the end of the Druzhba "Friendship" pipeline, including Poland, Czech, Slovakia and Hungary, have had to temporarily close their oil refineries because they rely on oil transported from Russia. Estonia and Lithuania are both 100 percent dependent on Russian crude oil and Poland, Slovenia and Latvia import 95 percent of their crude oil from Russia. The Czech Republic and Hungary are the least dependent on Russian oil, but it still accounts for 90 and 80 percent of their imports.

Editor: What has Russia done to settle anxiety and discontent in the European countries it exports oil to?

Ma Jian: President of Transneft, Semyon Vainshtok, announced on Monday that Belarus had illegally withheld 79,000 tons of oil exported from Russia to Western Europe, which led to a suspension of oil supplies. His statement had an immediate effect. Russian Deputy Trade and Economic Development Minister Andrei Sharonov said that Russia would not hesitate to fight Belarus in a trade war. Russian President Vladimir Putin asked the government to "take all necessary measures to protect the interests of Western oil-consuming countries." He also asked the government to formulate measures to protect the national economy. Consideration should be given to all aspects of Russia's external relationships, including its relationship with Belarus, said Putin.

Editor: The oil dispute sounded an alarm for the EU with regard to their current energy policy. What long-term approach will Europe take to ensure a steady supply of energy and to deal with similar disputes?

Zhang Niansheng: As far as the EU is concerned, there should be no delay in resolving this issue. An oil supply group meeting is scheduled for January 11 and will be convened by Andris Piebalgson. The group will analyze the impact of the dispute and look for a solution that deals with the oil shortage. The EU says that the current situation has once again proved that Europe needs to take action so as not to be dependent on foreign energy and to upgrade energy security.

In fact, since the second half of 2005, the EU has attempted to unite on energy issues. The Russian-Uzbekistani gas incident in early 2006 accelerated this process. On January 10, the President of the European Commission, Jose Manuel Barroso, announced a new EU energy policy. It will try to reduce its dependence on Russia and other energy suppliers, so as to avoid overdependence on a single source. Energy must be factored into the EU's overall external relations. The EU will establish a connection with Norway, Algeria and Qatar and cooperate closely with Central Asian countries to guarantee the uninterrupted flow of oil and gas from the Caspian Sea region to the EU. Secondly, it will increase the proportion of renewable energy in the energy it uses. The EU will reduce its energy consumption by 20 percent by 2020 and make greater use of renewable energy and bio-fuels. Thirdly, it will encourage the use of nuclear energy to reduce greenhouse gas emissions. An EU official in charge of energy affairs told our reporter that Europe will inevitably favor nuclear energy. Germany plays a key role in this. If Germany changed its attitude, it would have an exemplary effect in Europe. Countries that traditionally criticized the use of nuclear power, such as Belgium, will follow suit.

Lv Hong: German Chancellor Angela Merkel believes the Russia-Belarus oil dispute has once again proved that Germany needs a diversified and extensive energy policy. Germany should not rely on a unilateral supply of energy; it must expand its energy reserves, such as natural gas reserves; it must continue to increase the proportion of renewable energy in its energy mix; and it needs to conserve energy. Merkel questioned the nation's plan to begin closing down nuclear power plants. The energy issue has become politicized and is no longer a purely economic issue.

Jin Zhao: There have not yet been any major fluctuations in the energy markets of Central and Eastern Europe as a result of the dispute. Leaders quickly stepped in to say there was no need to panic. Most countries are able to cope with a temporary shortage by using their oil reserves. Analysts believe that most Central and Eastern European nations have enough oil in reserve to survive a two to three month supply suspension, and that recent events will not seriously affect their energy security. Nearly all countries are now considering importing oil by road and rail. Poland intends to import oil from the North Sea. However, the price of refined oil is likely to increase in the next month as the impact of the dispute filters down to the market.

Last year, Russia suspended gas exports to the Ukraine for the same reason. Central and Eastern European countries generally agree that Russia's foreign policy is intrinsically tied to its energy export. From the perspective of energy security, European countries should diversify energy import channels and expand imports from the North Sea, the Middle East and Central Asian countries to lessen their dependence on Russian energy. Central and Eastern Europe are hoping to develop a common energy policy with Western Europe and to explore alternative energy resources, such as biological resources and nuclear energy.

By the People's Daily Online