UKRAINE CHANGES ESSENCE OF CIS AGREEMENT ON OIL TRANSIT.

The Ukrainian parliament on June 11 ratified — but with crippling conditions — the 1996 agreement, signed by 11 CIS countries, on the transit of oil and oil products through pipelines on their territories. The Ukrainian parliament’s decision, in the form of a law, eliminates the agreement’s provisions on setting transit fees by mutual agreement and on exempting the products in transit from taxes or customs duties. The law thus renders inapplicable on Ukrainian territory what was the centerpiece of the 1996 CIS agreement. (Ukrainian agencies, June 11)

In practice, the law gives Kyiv an opportunity to increase transit fees for Russian oil piped via Ukraine and to levy taxes or duties proportionate to the amounts transited. The westward transit of Russian oil and gas represents a valuable source of income to Ukraine, which seeks normal state-to-state negotiations with Russia on the matter, rather than accepting disadvantageous intra-CIS arrangements.

THE SOUTH CAUCASUS