Agency WPS
What the Papers Say Part A (Russia)
January 25, 2007 Thursday

WILL THE U.S.S.R. BE REBORN IN 2008?;
It could happen if oil prices reach $150 a barrel

by: Artem Aniskin

Western analysts issue another warning about Russia’s imperial
ambitions; The annual World Economic Forum opens today in Davos,
Switzerland. In the lead-up to the forum, some experts have released
a sensational new report. According to their forecasts, the USSR
might reappear on the world map as soon as a year from now – and all
because of high oil prices.

The annual World Economic Forum (WEF) opens today in Davos,
Switzerland. In the lead-up to the forum, some experts have released
a sensational new report. According to their forecasts, the USSR
might reappear on the world map as soon as a year from now – and all
because of high oil prices.

In the report, WEF specialists warn the world that oil prices could
triple in 2008 – reaching $150 a barrel. This price hike would raise
gasoline and natural gas prices as well, leading to more serious
consequences. These experts say that in many parts of the world,
political alliances are likely to be formed between oil exporter
countries and consumer countries, based on the principle of cheaper
oil within the alliance.

Russia is allocated a leading role in this script. We are the world’s
second-largest oil producer, and among the leading oil exporters;
consequently, we have every chance of becoming a unification center –
within the former Soviet Union, at least – and forming the very kind
of alliance (a second USSR, for example) which the WEF specialists
fear. They predict that our initial allies will be Armenia,
Uzbekistan, and (oddly enough) Georgia – although Georgia seems most
disinclined to form an alliance with Russia at present. The experts
maintain that these three countries are already experiencing energy
shortages – so what would happen if energy prices rise?

In that event, one solution would be to make a political marriage
with an exporter country in return for lower energy prices "within
the family." In the former Soviet Union, the range of potential
"spouses" isn’t very large. Apart from Russia, only Azerbaijan and
Turkmenistan are major exporters. But the WEF specialists are
convinced that the choice will be Russia – or Russia will "help"
other countries to make that choice.

Would former Soviet republics accept unification voluntarily? In our
view, there are three possible scenarios for what Russia might do if
oil prices rise drastically.

First scenario: Revolution

Alexander Dugin, leader of the International Eurasian Movement: "Cut
off oil supplies, and wait until the people in the consumer country
overthrow their head of state. Then, after the coup, install a
pro-Russian president. And just let the West dare to say that such
methods aren’t humane. The United States stops at nothing to achieve
its geopolitical and other purposes – even invading other countries,
such as Iraq."

Second scenario: Pressure

Mikhail Delyagin, director of the Globalization Studies Institute:
"First, organize a strong pro-Russian lobby in a neighboring country.
Second, increase economic pressure. Look at the amount of goods from
CIS countries in the Russian domestic market, and the number of
migrant workers. Look at the amount of money sent from Russia to
those countries. Most of their budget revenues come from us."

Third scenario: Voluntary Union

Russia is forced to raise prices for the oil and gas it supplies to
CIS countries. Those countries ask for lower prices, since their
economies can’t cope with the price rises. We refuse. As a result,
those countries have no choice but to accept a political alliance in
exchange for lower energy prices. The poorest countries – Kyrgyzstan,
for example – are the first to accept. The rest follow.

Outcome:

This would be "a milder form of the Soviet Union," according to
Alexander Dugin: "It could be the Eurasian Union, as proposed since
1996 by President Nursultan Nazarbayev of Kazakhstan. A
confederation, with each component retaining maximal independence.
But decisions on major political issues would be made by a single
center: Moscow."

Or if the dollar falls

Now let’s look at why such a drastic rise in oil prices might happen.
The WEF experts have a somewhat unexpected theory of their own. They
predict some major terrorist attacks at sea in early 2008 – along
busy oil transport routes (the Persian Gulf or the Straits of
Malacca). If terrorists blow up a few supertankers, this would cause
panic in the oil market, a shortage of oil, and a price rise to $150
a barrel.

Mikhail Leontiev, prominent economist and television host, is
skeptical about such arguments. He has little faith in WEF reports.
Leontiev: "It’s foolish to say that oil prices would skyrocket as a
result of terrorist attacks. Even if it does happen, it wouldn’t last
long, and certainly wouldn’t lead to any new union. Besides,
Uzbekistan and Armenia are already pro-Russian, with no union
required – in contrast to Georgia."

Another economist – Mikhail Delyagin, director of the Globalization
Studies Institute – notes that at last year’s WEF the experts were
also discussing the possibility of oil prices rising. They spoke of
$120 a barrel, resulting from a possible attack on Iran by the United
States. Thus far, however, the United States has cautiously refrained
from a fire-and-sword assault on the nuclear and petroleum
infrastructure of that Islamic country. America is bogged down in
Afghanistan and Iraq; it has to sort out those situations.

Mikhail Khazin, president of Neocon Consulting: "The only way that
oil prices could rise to $150 would be as a result of hyperinflation
in the United States. But there’s little chance of that happening in
the next year, at least."

Whether it’s a terrorist attack or the collapse of the dollar, the
end result would be the same: higher oil prices and the resurgence of
something similar to the USSR.

Below the belt

Russia makes no secret of the fact that yes, indeed it could become
the center of a new Union. It’s even prepared to offer certain
economic preferences to the new members – as it demonstrated until
the very last moment in relations with Belarus – but only if our
allies back up their words with deeds, of course. We’ve been through
this before, in the Soviet era, when even remote African countries
received vast amounts from us in exchange for promises to build
socialism. What use is such a Union to us? If we threw open our doors
we would be flooded with requests from petty allies, and we’d end up
subsidizing half the world.

But the WEF report is a different matter. We can only be glad for
those experts whose imaginations and educations permit them to
predict terrorists blowing up oil tankers. For all the implausibility
and even absurdity of such a scenario, its main purpose has been
achieved: once again, the whole world has been reminded of Russia’s
imperial ambitions and its energy weapon – which our country
brandishes indiscriminately, according to Western analysts.

That point will certainly catch the attention of Western officials
and business leaders gathered at Davos. It will linger in their
memories. Meanwhile, a month from now no one will even remember the
probability of a terrorist attack or the competence of this
analytical scenario.

Marshall Goldman, associate director of the Davis Center for Russian
and Eurasian Studies at Harvard University:

Of course, if such a price hike does happen, Russia – as an oil
producer country – would find itself in a favorable position. Could a
second USSR arise? It’s hard to say. Russia is already influential –
very influential, even. To my knowledge, its oil and gas production
volumes are growing, and your country will gain weight in energy
terms in the immediate future. With all this influence, it wouldn’t
really need another Soviet Union, right? And Russia is unlikely to
unite with Ukraine as long as Yushchenko is in power there, or with
Belarus as long as Lukashenko is in power.

Source: Komsomolskaya Pravda, January 24, 2007, p. 9

Translated by Elena Leonova