JP/7/RIA2

OIL AND GEOPOLITICS - WHY DOES AMERICA NEED RUSSIA?

Alexander Astafyev RIA Novosti Moscow

A Russian tanker moored at Galveston port, Texas, on July 3, bringing 240,000 tons of oil from the Russian Yukos company. This is only the beginning. The talks on direct oil deliveries had been going on between Russian and U.S. top officials for almost half a year. The promise made by Russia's Prime Minister Mikhail Kasyanov to guarantee energy security for the U.S. has thus been confirmed.

Friends of Russia have indeed received a long expected present, which will allow them to feel safe before another military sally to the Middle East. The purpose of the attack is to liquidate the regime of Saddam Hussein.

And the chief goal is to finally gain control over the oil flows going from there all over the world.

Early in 2002 the U.S. strategic reserve was about 550 million barrels of oil, estimated to be sufficient for 30 to 40 days in the event of a military conflict.

But it is clearly not enough -- the European Union, for instance, estimates the amount of its strategic reserve for 90 days.

Washington's concern over its energy security is understandable -- in case a big U.S.-Arab conflict erupts, the OPEC countries may stop all oil supplies to the United States. In this case Russia can become an indispensable fuel supplier. But it is expedient to buy Russian oil in a relatively stable situation as well, because it is cheaper.

The commercial secret of the deal is not disclosed, but some experts say the sale of oil at a price of about $20 a barrel is quite acceptable.

If this matter is viewed in the context of a long-term strategy, Russia with its 5% of world oil reserves does not suit well enough for a role of a U.S. donor of oil. Russia's economic and political tying-up with U.S. maneuvering in the Middle East and Central Asia are tactical.

The biggest oil exporters are Saudi Arabia, Iran, Venezuela, the United Arab Emirates, Kuwait and Libya. Among them the Saudis and Kuwaiti demonstrate relative loyalty to Washington.

The former do this because of the U.S. military presence and the latter, because of the need for U.S. military support. As for all the others (Iraq, Iran, Libya and Venezuela), they are direct or potential U.S. adversaries.

The refusal of their governments to follow in the wake of U.S. economic and political interests has been punished for more than once. And the attempts to topple the legitimate leaders of those countries by military actions, or military coups or with the help of a fifth column are well known.

All these actions by the Pentagon and the CIA were usually disguised by human rights rhetoric or the struggle against elusive terrorists. Among above mentioned countries Iraq is doubtlessly a key element in the Middle East.

And a military action against it in the near future is practically inevitable.

Experts believe that by 2015 the cost of one barrel of oil, taking into account the inflation rate, will reach $50.

The annual oil consumption growth will be 2.2 percent. As a result, quite obvious geopolitical consequences may be seen -- the role of the OPEC countries and the Third World in world politics and economy will grow. It means a gradual loss of dominating positions in the world by the U.S. and its partners and slowed down economic growth in advanced countries.

Clearly enough, it will then be difficult or even impossible to agree with OPEC on a common price policy. Perhaps Moscow has taken a political decision and determined its geopolitical allies, that is, decided to join the strong side -- the U.S. As is known, such an alliance suggests definite reciprocal moves on the part of an ally. So far, only declarations of intentions have been heard from Washington.

The last say is probably to be made by our "equidistant" oligarchs. In the conditions of limited oil production (following an understanding reached with OPEC) Yukos announced at the start of this year its plans to step up oil output by 20.5 percent in 2002, and another Russian oil company, Sibneft, announced a 27 percent increase.

It is clear that all this was designed not for the home market. All the more so, since in early 2002 the market was overstocked with some oil products.

Now the oligarchs say they are promoting their products on the U.S. oil market. The right moment was chosen perfectly well. The growing oil quotation in July holds a prospect of good profit. Perhaps part of it will be spent on improving the political climate in Russia. Elections, it will be recalled, are not far off.