It may be a coincidence and not proven causation or even correlation, but these big adventures to transform large, ancient countries are never undertaken by Americans with extensive experience in the regions they plan to reinvent, or even extensive experience abroad. Certainly JFK, Nixon and LBJ had no Asian or real foreign experience. Bush, Sr. was prudent enough not to open Pandora's box, perhaps because he spent time as DCI and Ambassador to China and saw some international complexities.
Good points. Truman certainly had the good sense to dismiss McArthur; Bush I had the good sense to stop before Baghdad; Clinton didn't try to reinvent, just tried to stop ethnic cleansing (something of a borderline adventure).
Interesting. Worth thinking about.
Very hard times ahead.
An interesting piece about Russian oil and natural gas in today's WSJ that suggests the Russians have learned, very definitely learned, how to use their natural resources to leverage their foreign policy.
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July 14, 2006
Russian Gas Proves Irresistible to Europe
Moscow's Clout Grows as Nations Compete
For Access to Energy Supplies
By GABRIEL KAHN in Rome, MARC CHAMPION in Brussels and GREGORY L. WHITE in Moscow
July 14, 2006; Page A4
Russia's brief cutoff of natural-gas supplies to Ukraine in January shocked European customers farther down the pipeline into rethinking their decades-long dependence on their giant neighbor. But for all the concern, economic, political and geological realities are driving Europe deeper into Russia's embrace.
That's the somber backdrop as leaders from the Group of Eight leading nations gather in St. Petersburg this weekend for a summit where energy security is a top agenda item.
Europe's dilemma reflects how dramatically the balance of power between the world's energy importing and exporting countries has changed as oil and gas prices have soared in the past few years, turning Russia from a supplicant for foreign aid to a cash-rich power courted for its energy resources.
"Competition for access to energy resources between the three largest gas markets -- Europe, Asia-Pacific and North America -- will grow," Alexei Miller, chief executive of Russia gas monopoly OAO Gazprom, proudly told shareholders last month. "The natural-gas market is now a seller's market."
As a result, the debate over whether to embrace or contain Gazprom is quickly being decided in Russia's favor.
Europe has grown increasingly dependent on gas to generate its electricity, and its share of global gas consumption is soaring. It already gets a quarter of its gas from Russia, a level that is expected to rise to a third by 2015.
[Seller's Market]
That means that, like the U.S.'s concerns about Middle Eastern oil, Russian gas is the continent's top energy security worry. Not only is there a risk that Russia might use its control of Europe's gas as a political tool, but the International Energy Agency says Russia may not even have enough gas to fulfill its promises to supply Europe.
How to respond to the dilemma has split the European Union, further increasing Russia's leverage. Instead of scrambling to find new sources of gas, countries such as Germany and Italy, both of which will be attending the G-8 summit in St. Petersburg, are racing to become Russia's preferred partners to lock in long-term supplies.
On Thursday, Germany's major utility, E.On AG, said it had reached a deal with Gazprom to take a stake of 25% in the giant Siberian Yuzhno-Russkoye gas field. Italian oil-and-gas giant Eni SpA is trying to negotiate a sweeping accord with Gazprom that would see the two countries cooperate on everything from recovering gas in remote areas in Russia to supplying the Italian domestic market.
"In terms of energy security, there is no doubt that Russia is very important for Italy," says Eni's chief executive, Paolo Scaroni.
But as individual countries seek the best deal with Gazprom, they end up competing with each other for privileged access to Russian gas and strengthening Gazprom's hand in the process.
"Not everyone can be Gazprom's privileged partner," says Paul Domjan, a former adviser on energy security to the U.S. military and now the director of a London-based consultancy.
This approach has infuriated some of the EU's ex-Soviet satellites, such as Poland and the Baltic states, which have recent memories of Russian domination. They are scrambling to diversify their energy supplies by building liquid-natural-gas terminals, alternative pipelines and nuclear-power stations.
Yet even in the old Eastern Europe, energy companies are making deals with Gazprom that are likely to solidify its hold. A project known as Nabucco -- to build a $5.8 billion, 3,000-kilometer gas pipeline from eastern Turkey to Eastern Europe that would be able to tap gas supplies direct from Central Asia, and perhaps Iran and Iraq -- has won strong EU backing.
But even as partners last month formally approved the project, due for completion in 2011, Gazprom raised questions about Nabucco's commercial feasibility by proposing a much cheaper alternative to deliver Russian gas. Hungary's MOL, one of the companies lined up to build Nabucco, has acknowledged it is exploring other possibilities with Gazprom.
For Russian President Vladimir Putin, the situation is a vindication of his drive over the past six years to use Russia's vast energy resources to carry his country back to the forefront of global affairs. This realization has strengthened the Kremlin's resolve to resist European and U.S. calls to open its energy sector to foreign and other private investors.
Russian officials reject as pure politics any attempts to question their reliability as a supplier. But that isn't how it looked to Europe's governments in January, when Russia cut supplies to Ukraine in a price dispute, reducing pressure in a key pipeline that stretches across the Ukraine all the way to Italy.
Immediately, politicians started talking about the need to find alternative energy sources while attempting to put pressure on Russia to end Gazprom's monopoly over its gas-distribution network, through which all Russian and Central Asian gas has to pass on its way to the countries of the EU.
EU officials also warned Gazprom that if it wanted to buy assets inside the EU, it would have to abide by the same competition rules as EU companies.
However, Europe has less bargaining power with Russia. A decade ago, convinced that gas was a plentiful, clean and efficient energy source, Europe began investing heavily in gas-fired electricity generation.
Western Europe's share of global gas consumption rose to 17.4% in 2004 from 14.9% a decade earlier. At the same time, however, Western Europe's own gas reserves began dwindling just as global demand, fueled in part by the rise of India and China, began to boom and prices skyrocketed.
Eni's Mr. Scaroni estimates Western Europe's rising demand for gas, coupled with a steady drop in internal production, means the continent will need to find up to an additional 220 billion cubic meters by 2012 -- or nearly 2½ times Italy's annual consumption. Addressing an industry conference in Amsterdam last month, he asked bluntly: "Where are we going to find all that gas?"
While Mr. Scaroni doesn't see Gazprom as the answer to Europe's problems, he sees few other solutions. Eni is investing in liquefied natural gas that will allow Italy to procure gas from different sources. But Mr. Scaroni's calculation is that the closer Eni can get to Gazprom, the more secure Italy will be in the long term.
"This gives them a responsibility to the Italian market...and it strengthens our relationship," he says.
Write to Gabriel Kahn at gabriel.kahn@wsj.com1, Marc Champion at marc.champion@wsj.com2 and Gregory L. White at greg.white@wsj.com3
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