Axis of Oil?

THE NEW RUSSIAN-AMERICAN RELATIONSHIP

Ever since the Iron Curtain came crashing down, American and Russian diplomats have been searching for a special relationship between their countries to replace Cold War animosity. Security matters have not yielded much. On issues such as the expansion of NATO, stabilizing Yugoslavia, and the war in Chechnya, Washington and Moscow have sought each other's tolerance more than cooperation. Nor have the two nations developed much economic interaction, as a result of Russia's weak institutions and faltering economy. Thus, by default, "energy" has become the new special topic in Russian-American relations.

At a Kremlin summit in May 2002, Presidents George W. Bush and Vladimir Putin pledged to work together to reduce volatility in global energy markets and promote investment in Russia's oil industry. Soon after, at the first-ever summit of U.S. and Russian oil executives in Houston, Russia's energy minister, Igor Yusufov, reiterated this goal. The two governments have created a special working group on energy cooperation, and Russia will host the next commercial energy summit in 2003. In Moscow, especially, the potential of new oil ties has attracted extensive media coverage and political speculation. For instance, Grigory Yavlinsky, head of Yabloko, one of Russia's leading opposition parties, has suggested that the United States and Russia could sideline the Organization of Petroleum Exporting Countries (OPEC) as the arbiter of world oil prices.

This enthusiasm is misplaced, however. A collapse of oil prices in the aftermath of an invasion of Iraq may soon lay bare Washington's and Moscow's divergent interests. Russia needs high oil prices to keep its economy afloat, whereas U.S. policy would be largely unaffected by falling energy costs. Moreover, cheerleaders of a new Russian-American oil partnership fail to understand that there is not much that the two governments can do to influence the global energy market or even investment in Russia's oil sector.