Bushido—The Way of Oil

America Goes Into the Energy Business With the Former Evil Empire

Russia is, by Western standards, an underdeveloped country, with a GNP about the same size as Holland's. And it is very unlikely that the West will ever stop buying Persian Gulf oil—there are no known sources as cheap or as plentiful. But factoring in ever rising output from both Russian and Caspian fields, the amount of oil Russia can bring to market exceeds Saudi numbers (although the quality of Russian oil is inferior to Saudi, and it costs three or four times as much to extract). Add in Iraqi potential, and it's roughly double Saudi Arabia's current production level of 8 million barrels a day.

The Petroleum Finance Company, an influential consulting and analysis firm, has devoted much study to this, and some of it recently found an echo in The Washington Post. In a December 23 column called "Russia Wins the War," David Ignatius cited a PFC report and found it "obvious that Moscow is on its way to becoming the next Houston—the global capital of energy."

On November 26—the same day Secretary Abraham took off for Moscow—President Bush issued his famous "he'll find out" threat to Saddam Hussein. Although the topic at the time was the admission of weapons inspectors, it was not widely noted that four days later, the UN Security Council was again to put the issue of "smart sanctions" to a vote.

illustration: Lloyd Miller

It never happened. The decision was tabled for six months, because a deal had been worked out, it was reported, between the U.S. and Russia. Both countries would come to agreement on a list of prohibited dual-use items, to be presented to the Security Council on June 1, 2002, at which time the whole issue of sanctions against Iraq would be reviewed. In the meantime, Putin has been calling on Iraq to readmit UN weapons inspectors, in the hope that sanctions be lifted.

But whatever happens—air strikes, a new spirit of cooperation from Iraq, nothing at all—one thing is certain. For the foreseeable future, a resurgent Russia, America's new best friend, will be Iraq's main partner in the oil business—Saddam or no Saddam.

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