It's really all about oil and money, wealth and power; much of the rest is pretext and excuse. And now the Russians want in; indeed their first tanker of oil reached American shores last month.
The U.S., Russia And Iraqi Oil
By Eugene Rumer
Monday, September 30, 2002; Page A19
Giants of the American and Russian oil industries will come together in Houston this week for the first U.S.-Russia Commercial
Energy Summit. The event will bring together Cabinet members, top corporate executives, legislators and financiers and could
lead to a breakthrough. It will be an opportunity for the United States and Russia to lay the foundation for a genuine global
As officials, executives and legislators discuss ways to bring more Russian oil to U.S. and global markets, they should not lose
sight of oil as a strategic commodity and of the truly historic opportunity before the United States and Russia to form a
partnership that could bring stability and security to the global oil market. That means they need to discuss the future of Iraq, the
nature of U.S. and Russian interests there and the opportunity a post-Saddam Hussein Iraq would present to the U.S. and
Russian oil industries.
The Russian oil executives attending the Houston summit, including some holding contracts with Hussein's government, have
been watching U.S. policy toward Iraq with a wary eye. They are concerned that the post-Hussein oil sweepstakes will be
rigged against them. They have used a variety of surrogates to let it be known that when Iraq's future leaders award new oil
contracts, Russian oilmen want a seat at the table.
With two U.S. Cabinet secretaries in attendance -- Commerce's Donald Evans and Energy's Spencer Abraham -- as well as
scores of other senior officials, Russia's oilmen will be looking for clues about the direction of U.S. Iraq policy. After all the talk
in the media recently about the need for the United States to forge an anti-Hussein coalition, about Russia's pivotal role in this
effort and about Russian stakes in Iraq, their interest in the Houston summit is understandable.
The summit will be an opportunity for U.S. policymakers to engage some of the most powerful people in Russia, a country in
which oil and gas account for 40 percent of the exports. When Russian oilmen speak, President Vladimir Putin listens.
But for all their wealth and influence at home, these oilmen have had to pursue recognition and respect abroad. Their
reputations suffered badly in the 1990s, first when insider privatization schemes landed them billion-dollar assets for pennies on
the dollar, then as a frenzy of asset-stripping in the aftermath of the financial collapse of 1998 left many of their creditors, both
at home and abroad, holding the bag.
In recent years, the performance of Russia's oil industry has improved; several privately controlled Russian companies have
made important steps toward greater transparency, better corporate governance and more efficient operations.
Yukos, Russia's second biggest oil company, has been especially active in an effort to spruce up the tarnished image of the
Russian business community by donating money to charities, reaching out to Wall Street and courting the political establishment
in Washington. The message of Yukos and its chairman, Mikhail Khodorkovsky, is that the bad old days of Russian capitalism
are over and that Russia's new business elite is ready for a long-term partnership with the United States.
Russian oil companies want better access to international capital markets and cutting-edge technology, both of which they need
to sustain and expand oil production vital to Russia's growth and financial stability. But that is not all. The best and brightest
among Russia's oilmen crave international acceptance because it is their best guarantee against the vagaries of the Russian
domestic political scene, where, despite a decade of capitalist reforms, the specter of re-nationalization still lurks. With this kind
of domestic uncertainty likely to be a fact of life in Russia for years to come, the oil tycoons' best insurance is in business and
political alliances outside their country. The latest Iraq crisis is an opportunity these Russian oilmen must have been praying for
-- a chance to sell out Hussein in exchange for a piece of Iraqi oil and a new partnership with Washington.
As tensions in the Persian Gulf escalated in recent months, Russian oil barons telegraphed -- repeatedly and with
unprecedented clarity -- the price of their acquiescence to regime change in Baghdad. All along they have made clear that they
are not asking for guarantees, merely reasonable assurances of Washington's goodwill and influence to back up their claims,
possibly in partnership with U.S. companies.
Regardless of whether war in Iraq can be avoided, these oil tycoons can be critical to American efforts to isolate Hussein and
undercut Moscow's residual support for him. And if war in Iraq is imminent, Russian oil companies -- in partnership with U.S.
companies -- could help lay the foundations for a true U.S.-Russian energy partnership. Russia's 5 million barrels of oil a day in
exports, combined with Iraq's projected capacity of 4 million barrels, could match Saudi Arabia's daily output of 8 million
barrels and become an unprecedented force for stability in the global oil market. That's why it is very much worth watching
what comes out of Houston this week.
The writer is a senior fellow at the National Defense University's Institute for National Strategic Studies. The views
expressed here are his own.