The Times (London) April 27, 1999
Nato shuns the chance to turn back tankers
FROM CHARLES BREMNER IN LUXEMBOURG
EUROPE tightened sanctions on President Milosevic and his circle yesterday, but the Nato alliance conceded that it could not use force to police a European Union oil embargo and turn back tankers that were taking fuel to Yugoslavia.
EU foreign ministers extended a range of sanctions with the aim of hitting Mr Milosevic and his immediate entourage of businessmen and politicians. European sports federations were urged to refuse further contact with Yugoslavia.
The ministers gave orders for the EU oil embargo on Serbia and Montenegro to enter force by Friday. However, differences among the EU governments over the legality of the embargo led Nato to opt yesterday for a gentle enforcement regime. General Klaus Naumann, chairman of the alliance's Military Committee, said Nato warships would stop tankers in the Adriatic, visit them and search them, but they did not have the legal right to force them to turn round. This cautious approach reflected objections from France, Italy, Greece, Ireland and other states to the enforcement of a naval blockade against Montenegro, whose port at Bar is the main route for petroleum products reaching Serbia.
General Naumann said that the prospect of a Nato search would still have a deterrent effect. "I think we will see a certain impact . . . third nations' ships will get very, very cautious - they will think twice whether they will take this route, because no one likes to be stopped at sea by a warship," he said.
Nato ambassadors were meeting in Brussels last night to draw up "search and visit" orders for Nato ships patrolling the region. Confrontation with Russia is still possible, however, since Russian vessels may be unwilling to submit to being stopped and searched by Nato warships. The absence of any international mandate to enforce a blockade means that Nato warships effectively will be powerless even to insist on boarding a tanker if the captain of the vessel refuses. In a sign of its differences with the EU majority, France did not even send a minister to yesterday's session.
Among other new sanctions are a freeze on EU-held financial assets of Mr Milosevic and individuals associated with him and their companies.
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New York Times April 27, 1999
THE BLOCKADE
Proposal for Cutoff Inflates Oil Prices
By YOUSSEF M. IBRAHIM
<Picture: N>ATO's planned oil embargo of Yugoslavia has already created a black market in which Serb-backed buyers pay up to a 50 percent premium for gasoline and other refined products, European petroleum traders and other sources said on Monday.
Although the embargo is not expected to stop the flow of petroleum to Yugoslavia, it has greatly aggravated what already was a grave supply crisis. China, one of Yugoslavia's main providers of fuel and an opponent of NATO's campaign, recently terminated its oil contract with Yugoslavia because of $195 million in delinquent bills. And since practically all of Yugoslavia's refineries have been bombed, it has no use for crude oil and must now import all fuel in refined condition.
Russia, which last year supplied 40 percent of Yugoslavia's oil needs, is its only major remaining source of petroleum, said Chris Kushlis, an analyst with PlanEcon Inc., a Washington-based energy consulting firm that monitors Eastern European countries.
Unlike the Chinese, Kushlis said, the Russians are willing to sell Yugoslavia oil even though the country hasn't paid $170 million in overdue Russian bills. Traders reached in Europe Monday said Lukoil, one of the biggest Russian suppliers, has extended new lines of credit to Yugoslavia.
How much fuel the Russians will be able or willing to sell to Yugoslavia remains unclear.
But the embargo, which is expected to be enforced starting this week, means that deliveries by sea could stop.
"I think the biggest volume of smuggled oil will come over land," said Milan Vego, a former Yugoslav naval officer who is a professor in the operations department of the Naval War College in Newport, R.I. "Air power is good for some things, but surveillance of smugglers operating at night is not one of them," he said in a telephone interview.
A Geneva-based banker who extends credits to oil traders said he and other bankers had been contacted in recent days by wealthy Serbs, whom he declined to identify, who are opening letters of credit to finance purchases of petroleum products.
Traders in Europe said that smuggled petroleum cargo can change hands many times during the course of shipment so it would be difficult to tell where the cargo originated. But they said some of it could easily come from refineries in countries that have pledged to honor the embargo, including the United States.
Some traders said they already had seen evidence that buyers acting on behalf of Yugoslavia are purchasing refined petroleum at prices 20 percent to 50 percent higher than the market price.
"Anytime you have an embargo, you have a lucrative business," said the president of a middle-sized oil trading firm in London which until last week was involved in selling to Yugoslavia. "All you can do is make it expensive to get the stuff."
This executive, who did not want to be identified because of the subject's sensitivity, said "There are a lot of Yugoslavs among traders who have been doing this for a long time and they are everywhere in Europe. They are very good at it, particularly now that their mission is to get the oil at any cost."
Besides Russia, Yugoslavia has purchased oil from Croatia, Bulgaria, Libya, and Romania. Yugoslavia had produced 20,000 barrels of oil a day at home, equivalent to a third of its daily consumption in normal times.
The NATO embargo was not a surprise to Yugoslavia, which had already taken measures to squirrel away supplies of refined petroleum for its tanks, armored vehicles and transportation system.
"Remember, the Serbs were among those who built many of Saddam Hussein's deepest underground bunkers and storage facilities," said another London-based oil-trading industry executive who has done extensive business with Yugoslavia.
By all accounts, Greece remains the weakest link in the NATO alliance. There is great sympathy for the Serb cause in Greece, which has one of the biggest tanker fleets in the world. Although the embargo could stop them from supplying Yugoslavia by sea, traders said, it was likely that at least some Greek vessels could be the conduits for smuggled oil that eventually makes it into Yugoslavia.
"I think it would very difficult to supply them with enough oil to run the economy," said Andrew Avramides, an independent London-based oil consultant with extensive experience in the Balkan region. "But a small tanker here and a few trucks there will keep the army going if the will to fight can be maintained, which is a big if."