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Russia's oil and gas power Putin's ambitions

Plans by the Moscow-based company Gazprom to provide 10% of Britain's natural gas requirements by 2010 underline Russia's growing international importance as an energy supplier. Oil and gas bring political and economic clout. And they are fuelling a revival in Russia's great-power ambitions.

Governments in western Europe inclined to criticise President Vladimir Putin's interference in neighbours such as Ukraine or abuses in Chechnya may have second thoughts in future as their energy dependency grows.

American qualms about the Kremlin's authoritarianism or its support for Iran may be more readily suppressed when Russia's position as the world's largest gas exporter and second largest oil exporter is factored in.

At the launch of the UK's international energy strategy last month, the foreign secretary, Jack Straw, made no bones about Britain's vulnerability in this field.

"As North Sea reserves are run down, we are likely to become net importers of gas by 2006 and of oil by 2010," Mr Straw said. "By 2020 we will probably be importing three-quarters of our primary energy needs." Britain's economy, public services and security relied on "secure and affordable energy supplies", he said.

What holds true for Britain holds true for its main allies. While Russia is 12th in the list of US oil suppliers, its output and proven reserves of 60bn barrels give it enormous leverage in the international marketplace.

Any serious reduction of Russian exports in the fore seeable future would send benchmark prices, already at record levels this year, to fresh highs, with damaging results for US and global growth.

Ironically, the unreliability of oil supplies from Iraq, caused by the US occupation, has increased American reliance on alternative sources such as Russia. The same applies to other big economies dependent on imported energy such as Japan and India.

Russia is not the only energy exporter whose political fortunes have improved as a result of high demand and rising prices. Iran is currently building an alliance with China, having become Beijing's second-largest oil supplier. Tehran said this week that China has promised to block any punitive UN action over its nuclear programmes.

After recent political upheavals, Venezuela, America's fourth biggest supplier of crude oil in 2003, is undergoing an economic boom. Its left-leaning president, Hugo Chávez, has raised public spending by 50% this year. This is taking the political heat away from him at home and in Washington.

But if energy is synonymous with confidence, then Russia is the prime example. Mr Putin is benefiting from soaring receipts which have boosted Russia's foreign reserves this year to a record $112bn and produced a fifth consecutive budget surplus.

This windfall places Mr Putin's moves to centralise power and expand state control over the industrial sector, including the oil giant Yukos, in a different context. From this confidence comes a growing expectation that Mr Putin will change the consti tution to allow him to stay in power, although not necessarily as president.

After what he saw as the national humiliations of the Yeltsin era, Mr Putin's aim, since his election in 2000, has been to restore Russia's great power status.

His claim earlier this month to be developing a world-beating nuclear missile system fits the bill. So, too, do Moscow's attempts to direct events in Ukraine, which depends largely on Russia for its energy supplies. Mr Putin is also using discounted sales of oil and gas to former Soviet republics in central Asia as a means of maintaining Russia's sway over its "near abroad".

A petition signed by more than 100 international VIPs in September, including the former Czech president Vaclav Havel and US senator John McCain, accused Mr Putin of undermining Russian democracy.

His foreign policy, it said, was characterised by "a threatening attitude towards Russia's neighbours" backed by "the rhetoric of militarism and imperialism". But empires do not run on air.

If the petitioners' fears are justified, it may be that black gold, converted to red gold, is to blame.

What do you think? Leave a comment below.

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