Projects

2018 CUSUR CALENDAR
 
Upcoming Events
US-UA Security Dialogue IX
Washington, DC
March 8, 2018
 
US-UA BNS Special Event
Washington DC
May 10, 2018
 
US-UA WG Yearly Summit VI
Washington, DC
June 14, 2018

US-UA Energy Dialogue VI
Kyiv, Ukraine
August 31, 2018 
 
UA HES Special Event:
"Legacy of the UNR" 
New York City
September 22, 2018  
 
UA QUEST RT XIX
Washington, DC
October 12, 2018
 

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CUSUR 2016 - Project I
US-UA “Working Group” Initiative

The US-Ukraine “Working Group” Initiative was launched in 2007 in order to secure an array of experts in "areas of interest” for CUSUR and its various forums/proceedings; at the same time, it was hoped that the ‘experts’ might agree to write a series of ‘occasional papers’ to identify “major issues” impacting on US-Ukrainian relations.
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CUSUR 2017 - Project II
Publication Efforts

Recognizing the urgent need to set up proper channels for the maximum circulation of the information/analysis CUSUR possessed or had at its disposal, the Center long focused on having ‘a publication presence’ of some form or another.
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CUSUR 2018 - Project III
DC Occasional Briefings Series

CUSUR did not turn its attention to having a DC presence until summer 2012. Borrowing space when the need arose (particularly for various forum steering committees meetings) from the American Foreign Policy Council, its longest abiding partner, seemed to suffice; an Acela ride from the Center’s NY office did the rest. If there was a concern, it was to open an office in Kyiv.
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U.S.-UA Economic Security: The Issue of Odessa-Brody

U.S.-Ukraine Security Dialogue

U.S.-UA Economic Security: The Issue of Odessa-Brody

Ilan Berman

Remarks by Ilan Berman, Vice President for Policy American Foreign Policy Council, delivered during the U.S.-Ukraine Security Dialogue, Washington DC, June 23, 2005.

Let me begin on a cautionary note. All too often, official Washington tends to have a fairly short attention span. Despite major gains over the past year, there is the lingering thought that, now that Ukraine finally has a truly representative government, our work is done.

But the Orange Revolution is not the end of the story. It is only the beginning. There is little doubt that, with sufficient pressure from Moscow, and without adequate and sustained attention from Washington, the substantial gains made by Ukraine can still be rolled back.

And, in many ways, energy is the key. Ukraine today remains deeply dependent on Russia’s good graces. Ninety percent of Ukraine’s oil supplies come from Russia. So does 80% of its natural gas and 100% of its nuclear fuel. The detrimental effects of this dependence can be seen in the gas crisis that is now brewing between Moscow and Kyiv.

The Kuchma regime found this state of affairs acceptable. The Yuschenko government, to its credit, does not. Kyiv has declared repeatedly in recent weeks that energy independence from Russia is a national priority. The enduring question is how to achieve it.

Here, two realizations are important.

First, Ukraine’s strategic position between East and West makes it a key transit point for oil flowing into Europe. Ukraine, in other words, has the potential to be an energy powerhouse. Not in the same way as Saudi Arabia, of course. But Ukraine can play a more decisive role in dictating the geo-politics and geo-economics of the “post-Soviet space” and Eastern Europe than it currently does.

Second is the fact that, despite the Orange Revolution, a struggle is still underway over Ukraine’s ultimate energy direction. Whether Ukraine remains dependent on Moscow, or definitively turns toward the West, will go a long way toward determining not only its own political and economic future, but that of its neighborhood as well.

That’s where Odessa-Brody comes in. Odessa-Brody is the most important pipeline you have never heard of.

When it was begun back in 1993, Odessa-Brody was envisioned as a much-needed independent energy conduit for the Caspian region—one that was capable of linking Central Asian producers with European markets. The result, completed in the spring of 2002, was a 674-kilometer pipeline stretching northwest from the Black Sea port of Odessa to Brody in western Ukraine, with the capacity to carry up to 14.5 million tons of oil a year. The ultimate plan is to extend the pipeline by 500 kilometers, to the Polish port city of Gdansk, and use it to supply tankers bound for Western and Northern Europe with Caspian crude.

Odessa-Brody is a key component in Ukraine’s economic development, and an important asset for Kyiv in its evolving relationship with NATO and Europe. But, since its completion, Odessa-Brody has remained mostly idle.

This has allowed Russia to step in. Ever since the pipeline’s completion, Moscow has intensively lobbied Kyiv for a “reversal” of its flow – basically, to use it in the opposite direction of the one initially intended: instead of shipping oil northwest, to Poland, and from there to European markets, it would be used to ferry Russian oil south to the Black Sea.

Moscow’s interest has been consistent: it wants to prevent Ukraine from gaining energy independence. There are a number of reasons why:

Ukraine is essential to Russian energy plans.

An estimated 90 percent of Russian natural gas exports currently transit Ukraine on their way to European markets. Moreover, if Ukraine wanted to, it could exert substantial leverage over Russian energy supplies. This is a vulnerability that Russian officials are acutely aware of, and are actively trying to prevent. Their reasoning is that if Kyiv remains dependent on Russia economically and politically, it will be less likely to act assertively on the energy front.

Odessa-Brody will definitively determine Ukraine’s political orientation.

Kyiv’s major partner in the extension of Odessa-Brody is Warsaw, which has emerged as a key U.S. ally in “New Europe,” and in the Global War on Terror. Ukraine’s partnership with Poland can therefore nudge Kyiv much deeper into the American and NATO fold – and away from Russia.

Russia wants to retain its preferential status in the Caspian.

This requires derailing plans for independent energy routes capable of lessening Russia’s economic clout and political leverage among the Caspian states.

As proof positive of this fact, consider the following: During the course of its negotiations with the Ukrainian government over “reversal,” the Kremlin turned down a more logical, eastern route for Russian crude offered by Kyiv as a substitute to Odessa-Brody. That pipeline, dubbed “Kremenchuk-Sniherivka,” runs south to Odessa through eastern Ukraine, and is capable of carrying nearly double the capacity of Odessa-Brody at $3 less per ton than Odessa-Brody. The only logical explanation is that the Kremlin cared more about preventing Ukraine’s economic and political independence than about output.

So far, it has been successful. In September 2004, after much diplomatic back-and-forth, Ukraine acquiesced to “reversal.”

Fast forward almost two years, and not much has changed. Reversal is still a reality. Oil is still flowing from Brody to Odessa, rather than the other way around, despite the fact that Kyiv has made serious efforts to engage Caspian suppliers like Azerbaijan and Kazakhstan. For all practical purposes, however, the Kuchma government’s original Russia-friendly energy policy remains in force.

If the Yuschenko government is committed to changing this, and I believe it is, then there are a few factors to consider.

Russia still has substantial leverage over Ukraine’s energy trajectory.

Moscow has made no secret of the fact that it prefers that “reversal” continue, and that Odessa-Brody continue to pump north-south. To make sure it gets what it wants, the Kremlin has engaged in a number of strong-arm economic tactics, including substantially delaying the signing a 15-year agreement for transporting oil through Ukraine, linking it to the “reversal” issue. Given this vulnerability, diversification of Ukrainian oil and gas supplies – including through expanded energy cooperation agreements with Caspian producers – should be a serious and long-term priority.

Greater international economic attention is needed.

From the start, Odessa-Brody has struggled to stay solvent. In fact, the ultimate decision for reversal, to hear at least some Kuchma-era officials tell it, was predominantly an economic one.

The bottom line is that Ukraine needs oil to flow through Odessa-Brody. If there is no international attention, then Kyiv will have to look to Russia. In the first half of 2004, the Kuchma government held open the prospect of reversing “reversal,” but no international takers stepped forward to underwrite such a move. The rest is history.

Today, the question is the underwriting of a consortium to extend Odessa-Brody to Gdansk. If there is not enough funding for this, “reversal” will remain the logical economic choice.

Kazakhstan is key.

To paraphrase one analyst, “without Kazakh oil, Odessa-Brody becomes Brody-Odessa.” What this means is that, without Kazakh participation and a continued Kazakh commitment to ship oil to fill the pipeline, westward flow is not economical. Kyiv should keep close watch over diplomatic moves from Russia – and from China, for that matter – that would prevent Kazakhstan from shipping oil to Odessa.

Regional politics play a large role.

Increasingly, Odessa-Brody has become linked with other regional economic and strategic issues, such as the Single Economic Space (SES) now under development by Russia. In fact, Kazakhstan recently signaled that its participation in Odessa-Brody is contingent upon Ukraine’s participation in the SES, and in all sorts of side energy deals with Russia.

Pipeline politics are an issue as well. In the wake of the late-May launch of the Baku-Ceyhan pipeline, Ukrainian officials should only expect energy pressure from Russia to increase, as the Kremlin struggles to maintain control over Caspian resources.

New momentum needed.

The Polish government remains a willing partner in Odessa-Brody extension. The pace of the project, however, depends on political will in Kyiv, and on the ability of Ukraine to grab international political and economic attention for it. Ukraine should articulate that it is in its interest for Poland to become an independent energy hub.

Energy orientation is important to other security issues.

Odessa-Brody has enormous political significance. Its south-north operation would send a clear signal to the countries of the EU and NATO that Kyiv is fully committed to Westward integration. Conversely, continued acquiescence to “reversal,” and to Russian manipulation, could call that commitment into question among Ukraine’s new partners.

 

Past Highlight Events

RT XVII Items of Note
Highlights from Ukraine's Quest for Mature Nation Statehood RT XVII: Ukraine & Religious Freedom, held in Washington, DC on Oct. 27, 2016
 
UA HES SE: UA 25th B-Day
Highlights from UA HES Special Event: 'Commemorating the 25th Anniversary of the Modern Ukrainian State', held at the NY Princeton Club on Sept. 17, 2016
 
US-UA WG YS IV Highlights
Highlights from US-UA WG Yearly Summit IV: Providing Ukraine with an Annual Report Card, held at the University Club in Washington, DC on June 16, 2016
 
US-UA SD VII Items of Note
Highlights from US-Ukraine Security Dialogue VII held on February 25, 2016 in Washington DC
 
UA HES SE: WW2 Legacy
Highlights from the UA Historical Encounters Special Event: 'Contested Ground': The Legacy of WW2 in Eastern Europe, held in Edmonton on October 23-24, 2015
 
Holodomor SE Highlights
Highlights from the UA Historical Encounters Special Event: Taking Measure of the Holodomor, held at the Princeton Club of NY on November 5-6, 2013
 
US-UA SD III Items of Note
Highlights from US-Ukraine Security Dialogue III held on May 19, 2012 in Chicago, IL

  • Former UA Foreign Minister Volodymyr Ohryzko's keynote
 
UEAF Forum VI Highlights
Highlights from UEAF Forum VI, held in Ottawa, Canada on March 7-8, 2012
 
RT XII Items of Note
Highlights from Ukraine's Quest for Mature Nation Statehood RT XII: PL-UA & TR-UA, held in Washington, DC on Oct 19–20, 2011
 
US-UA ED III Items of Note
Highlights from US-Ukraine Energy Dialogue III, held in Washington DC
on April 15-16, 2008
 
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