By Ben Aris

23-01-02 Making peace with former enemies have been relatively easy for Russian President Vladimir Putin. Now, though, he has started the harder task of patching up relations with Russia's former brothers. Family rifts are always much more painful to mend than those with belligerent neighbours. Following the events of September 11, Putin has made a remarkable volte-face in his relations with the West. With developments ranging from Putin grilling steaks on US President George Bush's barbeque to talk of Russia joining NATO and now the EU, Moscow is on the best terms in living memory with the West.
But, Putin began the trickier task of making friends with formerly communist states in Central Europe with a state visit to Poland. Russia wants to build a huge gas pipeline from Yamal-Nenets to Western Europe through Poland. The Russian president met with Polish President Aleksander Kwasniewski and then travelled to the western city of Poznan to attend a Polish-Russian business forum. The Kremlin called the visit a success, saying that Putin's visit was a breakthrough in diplomatic relations between the two counties and that the previously "ruined relations" between the two states had been "recovering rapidly" in the last few months.

Yet the history of dialogue between Warsaw and Moscow suggests that more caution might be in order. There is an old Russian joke about two travellers, one leaving Moscow for Paris and the other leaving Paris for Moscow. Unknown to them, both their planes are re-routed and arrive in Warsaw by mistake. Stepping off the planes both are happy as to the Parisian Warsaw looks like Moscow, whereas to the Muscovite Warsaw looks like Paris.
In a confusing riff on this joke, Russian President Putin flew from Paris, where he met the French president, to Warsaw, which quite clearly is nothing like Moscow these days. Sausage may be as popular in Warsaw as it is in Moscow, but the two cities have much less common ground now that the Polish capital is no longer the home of the Warsaw Pact. What is more, like most of the inhabitants of Central Europe, the Poles don't like their former masters very much.
But in keeping with the new mood of détente, Putin is attempting to rebuild bridges. And thanks to a change in government, the Poles appear willing to meet him halfway. Poland elected a new left-leaning government that is more favourably disposed to Russia last month. The state-controlled Polish channel broadcast a special program on Putin showing the Russian president in a positive light, feeding horses, skiing and throwing pots instead of people.

Putin has already had a lot of success in rebuilding ties with Central Asia. The opening of the Caspian Pipeline Consortium (CPC) oil conduit, for example, seems to have convinced Kazakhstan to throw in its lot with Putin. Meanwhile, Russia's economic boom is doing more than anything else to convince Kazakhstan's rival neighbours of the benefits of seeking Russia's friendship.
Putin is hoping to use the same argument -- "we come not as imperialists, but as business partners" -- on the Poles. Indeed, the Russian president told: "We have so many common interests that we should first solve together our problems of today. If we start throwing up obstacles in front of each other and allow ourselves to rehash old problems of the past, we won't be able to think anymore of the future. It would be a mistake."
The cynics might argue that this is a more subtle form of the same aggression, except this time the subjugation will be by economic means rather than military. Cynicism aside, though, the Russian line is going to be a more difficult sell in Warsaw than in Astana. Poland is in much less need of Russia than Central Asia, which is geographically cut off from the rest of the world and still largely dependent on Russian oil and gas pipelines. By contrast, Poland is well along with its economic reforms, has attracted significant investment and, having already joined NATO in 1999, is now queuing up to join the EU.

At issue for Moscow is energy. Keen to expand gas exports to Europe, the Russians want to build a new pipe through Poland to the lucrative Western European markets. The Poles have been dragging their feet in order to support their friends in Ukraine, which already has one of these pipes. Warsaw doesn't want to undermine the Ukrainians, as it believes Russia's de facto dependence on this pipe fetters Moscow. An alternative pipeline through Poland would free Russia's hands and allow Moscow to be more aggressive both towards Warsaw and Kyiv.
But the Kremlin is on the offensive, and Putin's actions in Warsaw were matched by Gazprom's actions at home; it was a busy day for the Russian gas monopoly as well as the Russian president.
First, Gazprom staked its future on the Yamal-Europe pipeline in northern Siberia, sending the government a draft law that would make the Yamal peninsula, with its rich gas fields, a region of "strategic interest." Squeezed by falling gas export prices on one hand and an increasingly cost-conscious administration on the other, Gazprom wants to concentrate on the cheaper-to-transport Yamal reserves over the natural gas potential of Eastern Siberia.
Second, the Russian company reopened negotiations with Poland's national oil and gas concern PGNiG on the construction of a second leg of the Yamal pipeline to Europe. Gazprom suspended talks with the Polish company last summer because of a dispute with the Polish government. Now that the government has changed, talks have quickly restarted.

According to unconfirmed reports from a Gazprom source, the Poles have already agreed to let the second leg of the Yamal-Europe pipeline run across their territory. The existing first leg of the pipeline is capable of pumping 18 bn cm of gas per annum. If plans for the second pipeline go ahead, this number could rise to 60 bn cm, against Gazprom's exports of 120 bn cm to non-CIS countries over the first nine months of last year. (Poland consumes about 11 bn cm of mostly Russian gas a year and expects this to rise to between 14 bn cm and 16 bn cm by 2005.)
Gazprom has long been keen to expand exports to Western Europe, either by adding a parallel line to the Yamal-Europe system or building another pipeline along a different route. It has held discussions with Fortum, a Finnish energy company, on proposals for the North Transgas pipeline, which would be laid on the bed of the Baltic Sea.
But the combination of Putin's Poland trip and Gazprom's lobbying on behalf of Yamal suggest that the Kremlin is putting its money on the Polish pipeline.
"I believe that we can find the right kind of cooperation," Putin told on the eve of his two-day visit. "Above all, this means infrastructure projects. In this way, Poland can play the role it has traditionally played in history -- a bridge between the East and West, and I mean that in the best possible way."

There are still big problems to overcome and analysts remain sceptical about the pipeline's chances. As ever, the biggest unanswered question is: Where is the money to come from? In order to connect Yamal to existing pipeline corridors running from the Urengoi region, Gazprom has to build a link from the Yamal gas fields to the city of Ukhta at a cost running into the billions of dollars. The estimated cost of the section that would run across Belarussia and Poland comes to $ 700-800 mm.
Gazprom submitted its investment program to the cabinet recently, asking for permission to spend a total of $ 5.2 bn this year on development, exploration and upgrade work. This plan didn't include the Yamal pipeline, and the government slapped down it down anyway as the gas behemoth was already asking to spend more than it expected to make.

But with enough political will these problems can be solved. And the will seems to be there, following a string of reforms: The Kremlin has never been so interested in the gas company. It has ousted to the old guard, inspects the company's investment plans in detail and now has the president running about playing salesman for Gazprom's projects.
"Regardless of everything, Gazprom is still the world's largest gas producer and holds a third of the world's gas reserves. It has contracts for at least 20 years. And its potential is huge and growing, especially with shaking world oil markets," says one analyst. Putin's talks with Polish officials appear to have yielded quick results.

Officials in Warsaw said they hoped that the first stage of the Yamal-Europe gas pipeline could begin operating at full capacity as soon as 2003; the Polish Economic Ministry said that expansion of the first part of the pipeline on Polish territory would be completed by 2003. The pipeline will be able to carry 33 bn cm of gas a month after the upgrade work, they said. The two sides also said they would meet again in February to talk about how to put the second section of the pipe into operation.
Gazprom's CEO Aleksei Miller confirmed the Polish announcement. According to Miller, the new agreement will be built on the basis of the 1993 agreement, which lays out provisions for the two countries' cooperation regarding gas deliveries.