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From the Soviet Union to Putin's Russia

By Alan Caruba
web posted April 28, 2008

When the government of the Soviet Union collapsed in 1991, the fall was attributed to all kinds of reasons. There was the failed invasion of Afghanistan, the symbolic fall of the Berlin Wall in 1989, and, after some desperate efforts by Mikhail Gorbechev, Communism as a guiding principle and economic system simply imploded. That's the thumbnail version that passes for history, but Michael J. Economides and Donna Marie D'Aleo have another answer and it's one you may not want to hear.

"In the second half of the 1980s the Soviet leadership came face to face with the problems that arose as a result of the dramatic drop in oil prices, and the necessity of increasing the volume of capital investments in western Siberia's oil industry. They failed to provide adequate solutions to these problems. The consequences were a rapid decrease in oil production, a collapse of the consumer market, a growing deficit of the most basic consumer goods, and the bankruptcy of the Soviet Union." 

From Soviet to Putin and Back: The Dominance of Energy in Today's Russia by the two authors cited above is not likely to leap on the bestseller lists, but for anyone who takes a serious interest in America's future and in current world affairs, it is the book to read, not only for its excellent history of the rise and fall of the Soviet Union, and what replaced it, but for its unique insights regarding the role of energy.

Economides is Editor-in-Chief of Energy Tribune, a magazine for those who understand that (1) energy is the master resource, (2) is the primary force behind the rise of human civilization, and (3) is the grand determinant in geopolitical affairs. From our earliest times when muscle power was the only source to the modern era, energy in its many forms has ruled the affairs of man.

Donna D'Aleo's expertise is world affairs with an emphasis on Russia. When seeking the most fundamental cause for the collapse of the former Soviet Union, we need look no further than "the fall in international oil prices and miscalculations in the strategy for developing the deposits in western Siberia."

Oil has been critical to the comeback the Russian Federation has made and one must pause at this point and ask if anyone in the United States Congress or the White House has a really good reason for restricting access to our nation's known reserves of oil in Alaska, as well as the unexplored and untapped reserves in 85% of our vast coastal shelf. This question applies as well to natural gas whose cost is rising too.

Being stupid or incompetent or both when it comes to having a national energy policy can bring a nation to its knees. When you add in profligate spending, a needless war in the Middle East, and a currency whose value is in free fall, you are essentially looking at the conditions eerily similar to those that faced the Soviet Union in the 1980s.

Our current national energy policy focuses on alternative means of providing electricity such as highly subsidized solar and wind power; ways to reduce gasoline use by mandating that ethanol be added or a formulation called biodiesel be used; demanding that autos and trucks get more mileage from a gallon of gas while ethanol actually reduces mileage, among other astonishingly insane notions that include a ban on the purchase of incandescent light bulbs.

All this has occurred at the same time that several states have opposed the building of coal-fired electricity generation plants and while the federal government regulates the building of nuclear plants down to a snail's pace. Coal, cheap and abundant, powers over 50% of America's electricity. Add to this the difficulties imposed on building any new refineries (none since the 1970s) or pipelines for oil and natural gas, the United States is essentially committing energy suicide.

By the time the Soviet Union collapsed "oil was the country's only major source of hard-currency revenue" and its management from Moscow was so deficient that the entire political and economic system literary self-destructed. "By proceeding without concern for conservation and efficiency, the Soviets fell behind technologically and economically."

When OPEC decided to rebuke the United States in the 1970s by reducing its oil exports, the gas lines at service stations shocked Americans, but by then the nation was no longer an exporter of oil as in the heady days of Texas and Oklahoma oil fields. There was a major power shift to the Middle Eastern nations sitting atop some of the world's greatest known oil reserves. The loss of our ally, Iran, in 1979 further exacerbated our reliance on foreign oil.

Since the United States imports a great deal of its current oil needs from Canada, you would think that Congress would not want to impede oil retrieved from that nation's tar sands, but you would be wrong. It has passed legislation against its purchase by our military because it is deemed to be environmentally improper.

While Russia waited for its president, Boris Yeltzin, to sober up, from 1986 to 1989 the Soviet economy stagnated "and then it experienced negative growth, a situation that lasted for the next ten years." As 2000 dawned Yeltzin resigned and put Vladimir Putin, a longtime member of the Soviet security and intelligence apparatus, in charge of the nation.

The story of the rise of the Russian oil oligarchs who privatized and revived the industry is a fascinating one, but the way Putin and his former KGB colleagues forced out those who opposed them and stole the assets of Western oil companies who had been induced to invest millions, if not billions, in the development of the vast Siberian reserves, is dramatic and told in detail by Economides' and D'Aleo's book.

Facing imprisonment and even death, some of the initial billionaires who choose to oppose Putin and friends either fled or, indeed, found themselves in prison on trumped up charges. Several murders of others, like crusading journalist Anna Politkovskya, appalled the international community, but by then former intelligence operatives had seized the Russian oil and natural gas industry. "Fully 80% of Russia's leading politicians were former intelligence agents."

Russia's dominance in oil and natural gas is now being used "to project hegemony over its neighbors, from the Far East (energy-starved China and Japan) to Europe in the west, and attempting to control transit (pipeline) countries such as Ukraine and Belarus." Communism, Soviet-style, is back in power in Russia under Putin while America "has been helplessly watching Russia's re-emergence."

At the heart of this new threat to America's role in the world is oil and natural gas. Unless Americans begin to understand the geopolitics of energy—and soon—a lifestyle we have taken for granted is going to be severely impacted.

This explains why we have 160,000 troops in Iraq in a vain attempt to have some sway over its oil industry, why we have carrier groups parked just off the Persian Gulf fearing a nuclear-armed Iran, and why we will sell Saudi Arabia any military hardware it wants while continuing to guarantee the sovereignty of oil sheikdoms like Kuwait and the UAE.

What it does not explain is why our government has done everything in its power to thwart the exploration, discovery, and extraction of our own energy assets. ESR

Alan Caruba writes a weekly column posted on the website of The National Anxiety Center, www.anxietycenter.com. He blogs at http://factsnotfantasy.blogspot.com. © Alan Caruba, April 2008


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