This past week, Putin took a gigantic step in the opposite direction to the one Cohen and O’Driscoll advocated for Iraq before the 2003 war. He presided over a colossal legal shell game whereby three quarters of the shares of Yuganskneftegaz, also known as Yugansk, the core production unit of the Yukos oil corporation, was sold to a hitherto unheard of holding company called Baikal Finans Group for the bargain basement price of $9.35 billion. And Baikal Finans Group then in its turn sold its new holding to the state-backed Rosneft oil company for an undisclosed sum. Putin had already approved the coming merger of Rosneft with Gazprom, the largest natural gas producing company in the world, to create a colossal state-controlled energy monolith.

The failure of oil industry privatization to even begin to get off the ground in Iraq coupled with the colossal reversal of the energy industry privatizations in Russia following the collapse of communism only 13 years ago together mean that an enormous reversal of global economic-political trends of the greatest significance has already taken place. The global oil industry is not going to be dominated in the coming decades by privately-owned international corporations largely based in and influenced by the United States, as Perle, the Heritage analysts, and Murdoch all assumed a couple of years ago. Instead, the old nationalized, left-wing model pioneered by President Lazaro Cardenas of Mexico in the 1930s and globally triumphant in the era of soaring oil prices and embargoes in the 1970s has become the dominant model again.

But like it or not, the old left-nationalization model is back. The failure of the Bush administration to create the stable, peaceful and secure conditions for privatization that it expected in Iraq opened the way for it, and Putin this week completed the job. Far from spitting in the face of history, the president of Russia is now surfing its wave. Welcome back to the 1970s, 21st century style.~ Martin Sieff, UPI

Russia’s current strength in the oil market ought to instruct Washington that antagonism with such an important oil exporter, especially in a period of high prices, is unwise in the extreme. The uncertainty and instability created by the invasion of Iraq, combined with open anti-Russian policies in eastern Europe and the Caucasus, all of which are tied to control of the production and shipment of oil, have brought us into a collision with the inconvenient fact that several of the major oil-exporting nations have become progressively more alienated from the United States under Mr. Bush on account of his reckless policies.

This ought to underscore that invading Iraq, just like installing puppets in Georgia and the Ukraine or setting up bases in Azerbaijian and central Asia, was only indirectly aimed at ready access to oil, and even these plans, as far as Iraq is concerned, have blown up in the administration’s face.

The purpose of controlling these territories and their pipelines is the geopolitical leverage that they provide over other major powers. Nothing would be more absurd than imagining that the political and foreign policy classes care about cheap oil for the sake of consumer prices back home or even for anything so purely mercenary as supposedly greater profits for corporate friends. However, as with so many other things imagined by Perle, the Heritage Foundation and the other usual suspects of neoconservative delusion, things have not gone according to the unrealistic plans set forth by our world-conquerors. The irony is that pursuing hegemony and encircling Russia have pushed Moscow to take steps to exploit the advantages of its natural resources. As Mr. Yushchenko and his Western patrons enjoy their stolen victory, that may be some consolation to the Kremlin, as well as to all opponents of the hegemonists.