* Engdahl: Emerging Russian Giant Plays its Cards Strategically *

2006-10-11

Richard Moore

Original source URL:
http://globalresearch.ca/index.php?context=viewArticle&code=WIL20061007&articleId=3408

The Emerging Russian Giant Plays its Cards Strategically

By F. William Engdahl

October 7, 2006

The September 2006 summit in Paris between Russia¹s Vladimir Putin, French 
President Jacques Chirac and German Chancellor Angela Merkel, underscored the 
re-emerging of Russia as a major global power. The new Russia is gaining in 
influence through a series of strategic moves revolving around its geopolitical 
assets in energy‹most notably its oil and natural gas. It¹s doing so by shrewdly
taking advantage of the strategic follies and major political blunders of 
Washington. The new Russia also realizes that if it does not act decisively, it 
soon will be encircled and trumped by a military rival, USA, for which it has 
little defenses left. The battle, largely unspoken, is the highest stakes battle
in world politics today. Iran and Syria are seen by Washington strategists as 
mere steps to this great Russian End Game.

The formal Paris summit agenda included French investment in Russia and the 
issue of Iran¹s (Russian-built) nuclear program. Notably, however, it also 
included the question of future Russian energy supplies to the European Union, 
notably, Germany. It was an indication of the new strength of Putin¹s Russia. 
Putin told the German Chancellor that Russia would Œpossibly¹ redirect some of 
the future natural gas from its giant Shtokman field in the Barents Sea. The $20
billion project is due to come online 2010 and had been slated to provide 
liquified natural gas to United States terminals.

Since the devastating setbacks two years ago from the US-sponsored Œcolor 
revolutions¹ in Georgia, and then Ukraine, Russia has begun to play its 
strategic energy cards extremely carefully, from nuclear reactors in Iran to 
military sales to Venezuela and other Latin American states, to strategic market
cooperation deals in natural gas with Algeria.

At the same time, the Bush Administration has dug itself deeper into a 
geopolitical morass, through a foreign policy agenda which has reckless 
disregard for its allies as well as its foes. That reckless policy has been 
associated with former Halliburton CEO, Dick Cheney, more than any other figure 
in Washington.

The ŒCheney Presidency,¹ which is what historians will no doubt dub the George 
W. Bush years, has been based on a clear strategy. It has often been 
misunderstood by critics who had overly focussed on its most visible component, 
namely, Iraq, the Middle East and the strident war-hawks around the Vice 
President and his old crony, Defense Secretary Don Rumsfeld.

The ŒCheney strategy¹ has been a US foreign policy based on securing direct 
global energy control, control by the Big Four US or US-tied private oil 
giants-- ChevronTexaco or ExxonMobil, BP or Royal Dutch Shell. Above all, it has
aimed at control of all the world¹s major oil regions, along with the major 
natural gas fields. That control has moved in tandem with a growing bid by the 
United States for total military primacy over the one potential threat to its 
global ambitions‹Russia. Cheney is perhaps the ideal person to weave the US 
military and energy policies together into a coherent strategy of dominance. 
During the early 1990¹s under father Bush, Cheney was also Secretary of Defense.

The Cheney-Bush administration has been dominated by a coalition of interests 
between Big Oil and the top industries of the American military-industrial 
complex. These private corporate interests exercise their power through control 
of the government policy of the United States. An aggressive militaristic agenda
has been essential to it. It is epitomized by Cheney¹s former company, 
Halliburton Inc., at one and the same time the world¹s largest energy and 
geophysical services company, and the world¹s largest constructor of military 
bases.

To comprehend the policy it¹s important to look at how Cheney, as Halliburton 
CEO, viewed the problem of future oil supply on the eve of his becoming Vice 
President.

ŒWhere the Prize Ultimately Lies¹: Cheney¹s 1999 London speech

Back in September 1999, a full year before the US elections which made him the 
most powerful Vice President in history, Cheney gave a revealing speech before 
his oil industry peers at the London Institute of Petroleum.. In a global review
of the outlook for Big Oil, Cheney made the following comment:

"By some estimates there will be an average of two per cent annual growth in 
global oil demand over the years ahead along with conservatively a three per 
cent natural decline in production from existing reserves. That means by 2010 we
will need on the order of an additional fifty million barrels a day. So where is
the oil going to come from? Governments and the national oil companies are 
obviously controlling about ninety per cent of the assets. Oil remains 
fundamentally a government business. While many regions of the world offer great
oil opportunities, the Middle East with two thirds of the worldŒs oil and the 
lowest cost, is still where the prize ultimately lies. Even though companies are
anxious for greater access there, progress continues to be slow. It is true that
technology, privatisation and the opening up of a number of countries have 
created many new opportunities in areas around the world for various oil 
companies, but looking back to the early 1990Œs, expectations were that 
significant amounts of the worldŒs new resources would come from such areas as 
the former Soviet Union and from China. Of course that didnŒt turn out quite as 
expected. Instead it turned out to be deep water successes that yielded the 
bonanza of the 1990Œs."

The Cheney remarks are worth a careful reading. He posits a conservative rise in
global demand for oil by the end of the present decade, i.e. in about 4 years. 
He estimates the world will need to find an added 50 million barrels of daily 
output. Total daily oil production at present hovers around the level of some 83
million barrels oil equivalent. This means that to avert catastrophic shortages 
and the resultant devastating impact on global economic growth, by Cheney¹s 1999
estimate, the world must find new oil production equal to more than 50% of the 
1999 daily global output, and that, by about 2010. That is the equivalent of 
five new oil regions equal to today¹s Saudi Arabian size. That is a whopping 
amount of new oil.

Given that it can take up to seven years or more to bring a new major oilfield 
into full production, that¹s also not much time if a horrendous energy crunch 
and sky-high oil and gas prices are to be averted. Cheney¹s estimate was also 
based on an overly conservative estimate of future oil import demand in China 
and India, today the two fastest growing oil consumers on the planet.

A second notable point of Cheney¹s 1999 London comments was his remark that, 
Œthe Middle East with two thirds of the worldŒs oil and the lowest cost, is 
still where the prize ultimately lies.¹ However, as he revealingly remarked, the
oil Œprize¹ of the Middle East was in national or government hands, not open to 
exploitation by the private market, and thus, hard for Cheney¹s Halliburton and 
his friends in ExxonMobil or Chevron or Shell or BP to get their hands on.

At that time, Iraq, with the second largest oil reserves after Saudi Arabia in 
the Middle East, was under the rule of Saddam Hussein. Iran, which has the 
world¹s second largest reserves of natural gas, in addition to its huge oil 
reserves, was ruled by a nationalist theocracy which was not open to US private 
company oil tenders. The Caspian Sea oil reserves were a subject of bitter 
geopolitical battle between Washington and Russia.

Cheney¹s remark that ŒOil remains fundamentally a government business,¹ and not 
private, takes on a new significance when we do a fast forward to September 
2000, in the heat of the 2000 Bush-Cheney election campaign. That month Cheney, 
along with Don Rumsfeld, Paul Wolfowitz, and many others who went on to join the
new Bush Administration, issued a policy report titled, ŒRe-building America¹s 
Defenses.¹ The paper was issued by an entity named Project for the New American 
Century (PNAC).

Cheney¹s PNAC group called on the new US President-to-be to find a suitable 
pretext to declare war on Iraq, in order to occupy it and take direct control 
over the second largest oil reserves in the Middle East. Their report stated 
bluntly, ŒWhile the unresolved conflict with Iraq provides the immediate 
justification (sic), the need for a substantial American force presence in the 
Gulf transcends the issue of the regime of Saddam Hussein ...¹

Cheney signed on to a policy document in September 2000 which declared that the 
key issue was ŒAmerican force presence in the Gulf,¹ and regime change in Iraq, 
regardless whether Saddam Hussein was good, bad or ugly. It was the first step 
in moving the US military to Œwhere the prize ultimately lies.¹

No coincidence that Cheney immediately got the task of heading a Presidential 
Energy Task Force review in early 2001, where he worked closely with his friends
in Big Oil, including the late Ken Lay of Enron, with whom Cheney earlier had 
been involved in an Afghan gas pipeline project, as well as with James Baker 
III.

Buried in the debate leading to the US bombing and occupation of Iraq in March 
2003 was a lawsuit under the US Freedom of Information Act brought by Sierra 
Club and Judicial Watch., initially to find data on Cheney¹s role in the 
California energy crisis. The suit demanded that Vice President Cheney make 
public all documents and records of meetings related to his 2001 Energy Task 
Force project.

The US Commerce Department in summer 2003 ultimately released part of the 
documents, over ferocious Cheney and White House opposition. Amid the files of 
the domestic US energy review was, curiously enough, a detailed map of Iraqi 
oilfields, pipelines, refineries and terminals, as well as two charts detailing 
Iraqi oil and gas projects, and ŒForeign Suitors for Iraqi Oilfield Contracts.¹ 
The Œforeign suitors¹ included Russia, China and France, three UN Security 
Council members who openly opposed granting the US UN approval for invading 
Iraq.

The first act of post-war occupation by Washington was to declare null and void 
any contracts between the Iraqi government and Russia, China and France. Iraqi 
oil was to be an American affair, handled by American companies or their close 
cronies in Britain, the first victory in the high-stakes quest, Œwhere the prize
ultimately lies.¹

This was precisely what Cheney had alluded to in his 1999 London speech. Get the
Middle East oil resources out of independent national hands and into 
US-controlled hands. The military occupation of Iraq was the first major step in
this US strategy. Control of Russian energy reserves, however, was Washington¹s 
ultimate Œprize.¹

De-construction of Russia: The Œultimate prize¹

For obvious military and political reasons, Washington could not admit openly 
that its strategic focus, since the fall of the Soviet Union in 1991, had been 
the dismemberment or de-construction of Russia, and gaining effective control of
its huge oil and gas resources, the Œultimate prize.¹ The Russian Bear still had
formidable military means, however dilapidated, and she still had nuclear teeth.

In the mid-1990¹s Washington began a deliberate process of bringing one after 
the other former satellite Soviet state into not just the European Union, but 
into the Washington-dominated NATO. By 2004 Poland, the Czech Republic, Hungary,
Estonia, Latvia, Lithuania, Bulgaria, Romania, Slovakia and Slovenia all had 
been admitted into NATO, and the Republic of Georgia was being groomed to join.

This surprising spread of NATO, to the alarm of some in western Europe, as well 
as to Russia, had been part of the strategy advocated by Cheney¹s friends at the
Project for the New American Century, in their ŒRebuilding America¹s Defenses¹ 
report and even before.

Already in 1996, PNAC member and Cheney crony, Bruce Jackson, then a top 
executive with US defense giant, LockheedMartin, was head of the US Committee to
Expand NATO, later renamed the US Committee on Nato, a very powerful Washington 
lobby group.

The US Committee to Expand NATO also included PNAC members Paul Wolfowitz, 
Richard Perle, Stephen Hadley and Robert Kagan. Kagan¹s wife is Victoria Nuland,
now the US Ambassador to NATO. From 2000 - 2003, she was a foreign policy 
advisor to Cheney. Hadley, a hardline hawk close to Vice President Cheney, was 
named by President Bush to replace Condoleezza Rice as his National Security 
Adviser.

The warhawk Cheney network moved from the PNAC into key posts within the Bush 
Administration to run NATO and Pentagon policy. Bruce Jackson and others, after 
successfully lobbying Congress to expand NATO to Poland, the Czech Republic and 
Hungary in 1999, moved to organize the so-called Vilnius Group that lobbied to 
bring ten more former Warsaw Pact countries on Russia¹s periphery into NATO. 
Jackson called this the ŒBig Bang.¹

President Bush repeatedly used the term ŒNew Europe¹ in statements about NATO 
enlargement. In a July 5, 2002 speech hailing the leaders of the Vilnius group, 
Bush declared, ŒOur nations share a common vision of a new Europe, where free 
European states are united with each other, and with the United States through 
cooperation, partnership, and alliance.¹

Lockheed Martin¹s former executive, Bruce Jackson, took credit for bringing the 
Baltic and other members of the Vilnius Group into NATO. Testifying before the 
Senate Foreign Relations Committee on April 1, 2003, Jackson claimed he 
originated the ŒBig Bang¹ concept of NATO enlargement, later adopted by the 
Vilnius Group of Baltic and Eastern European nations. As Jackson noted, his ŒBig
Bang¹ briefing Œproposed the inclusion of these seven countries in NATO and 
claimed for this enlargement strategic advantages for NATO and moral (sic) 
benefits for the democratic community of nations.¹ On May 19, 2000 in Vilnius, 
Lithuania, these propositions were adopted by nine of Europe's new democracies 
as their own. It became the objectives of the Vilnius Group.¹ Jackson could also
have noted the benefits to US military defense industry, including his old 
cronies at Lockheed Martin, with the creation of a vast new NATO arms market on 
the borders to Russia.

Once that NATO goal was reached, Bruce Jackson and other members of the NATO 
eastern expansion lobby, closed the US Committee on Nato in 2003, and, 
seamlessly, in the very same office, re-opened as a new lobby organization, the 
Project on Transitional Democracies, which according to their own statement was 
Œorganized to exploit the opportunities to accelerate democratic reform and 
integration which we believe will exist in the broader Euro-Atlantic region over
the next decade.¹ In other words, to foster the series of Color Revolutions and 
regime change across Russian Eurasia. All three principals of the Project on 
Transitional Democracies worked for the Republican Party, and Jackson and 
Scheunemann have close ties with major military contractors, notably Lockheed 
Martin and Boeing.

Jackson and other PNAC and U.S. Committee on NATO members also created a 
powerful lobby organization, the Committee for the Liberation of Iraq (CLI). 
CLI's advisory panel included hardline Democrats such as Rep. Stephen Solarz and
Sen. Robert Kerrey. It was dominated by neo-conservatives and Republican Party 
stalwarts like Jeane Kirkpatrick, Robert Kagan, Richard Perle, William Kristol, 
and former CIA Director, James Woolsey. Serving as honorary co-chairs were 
Senators Joe Lieberman (D-CT) and John McCain (R-AZ). Jackson related that 
friends in the White House had asked him to create the CRI in 2002 to replicate 
the success he had had pushing for NATO expansion through his US. Committee on 
NATO by establishing an outfit aimed at supporting the administration's campaign
to convince Congress and the public to support a war. ³ŒPeople in the White 
House said, ŒWe need you to do for Iraq what you did for NATO',² Jackson told 
American Prospect magazine in a January 1, 2003 interview.

In brief, NATO encirclement of Russia, Color Revolutions across Eurasia, and the
war in Iraq, were all one and the same American geopolitical strategy, part of a
grand strategy to ultimately de-construct Russia once and for all as a potential
rival to a sole US Superpower hegemony. Russia-- not Iraq and not Iran-- was the
primary target of that strategy.

During a White House welcoming ceremony to greet the ten new NATO members in 
2004, President Bush noted that NATO¹s mission now extended far beyond the 
perimeter of the alliance. ŒNATO members are reaching out to the nations of the 
Middle East, to strengthen our ability to fight terror, and to provide for our 
common security,¹ he said. But NATO¹s mission now would extend beyond even 
global security. Bush added, ŒWe¹re discussing how we can support and increase 
the momentum of freedom in the greater Middle East.¹ Freedom, that is, to come 
into the orbit of a Washington-controlled NATO alliance.

The end of the Yeltsin era put a slight crimp in the US plans. Putin began 
slowly and cautiously to emerge as a dynamic national force, committed to 
rebuilding Russia, following the IMF-guided looting of the country by a 
combination of Western banks and corrupt Russian oligarchs.

Russian oil output had risen since the collapse of the Soviet Union to the point
that, by the time of the 2003 US war on Iraq, Russia was the world¹s second 
largest oil producer behind Saudi Arabia.

The real significance of the Yukos Affair

The defining event in the new Russian energy geopolitics under Vladimir Putin 
took place in 2003. It was just as Washington was making it brutally clear it 
was going to militarize Iraq and the Middle East, regardless of world protest or
UN niceties.

A brief review of the spectacular October 2003 arrest of Russia¹s billionaire 
Œoligarch¹ Mikhail Khodorkovsky, and state seizure of his giant Yukos oil group,
is essential to understand Russian energy geopolitics.

Khodorkovsky was arrested at Novosibirsk airport on October 25, 2003, by the 
Russian Prosecutor General's office on charges of tax evasion. The Putin 
government froze shares of Yukos Oil because of tax charges. They then took 
further actions against Yukos, leading to a collapse in the share price.

What was little mentioned in Western media accounts, which typically portrayed 
the Putin government actions as a reversion to Soviet-era methods, was what had 
triggered Putin¹s dramatic action in the first place.

Khodorkovsky had been arrested just four weeks before a decisive Russian Duma or
lower house election, in which Khodorkovsky had managed to buy the votes of a 
majority in the Duma using his vast wealth. Control of the Duma was to be the 
first step by Khodorkovsky in a plan to run against Putin the next year as 
President. The Duma victory would have allowed him to change election laws in 
his favor, as well as to alter a controversial law being drafted in the Duma, 
ŒThe Law on Underground Resources.¹ That law would prevent Yukos and other 
private companies from gaining control of raw materials in the ground, or from 
developing private pipeline routes independent of the Russian state pipelines.

Khodorkovsky had violated the pledge of the Oligarchs made to Putin, that they 
be allowed to keep their assets--de facto stolen from the state in the rigged 
auctions under Yeltsin--if they stayed out of Russian politics and repatriated a
share of their stolen money. Khodorkovsky, the most powerful oligarch at the 
time, was serving as the vehicle for what was becoming an obvious 
Washington-backed putsch against Putin.

The Khodorkovsky arrest followed an unpublicized meeting earlier that year on 
July 14, 2003 between Khodorkovsky and Vice President Dick Cheney.

Following the Cheney meeting, Khodorkovsky began talks with ExxonMobil and 
ChevronTexaco, Condi Rice¹s old firm, about taking a major state in Yukos, said 
to have been between 25% and 40%. That was intended to give Khodorkovsky de 
facto immunity from possible Putin government interference by tying Yukos to the
big US oil giants and, hence, to Washington. It would also have given 
Washington, via the US oil giants, a de facto veto power over future Russian oil
and gas pipelines and oil deals. Days before his October 2003 arrest on tax 
fraud charges, Khodorkovsky had entertained George H.W. Bush, the representative
of the powerful and secretive Washington Carlyle Group in Moscow. They were 
discussing the final details of the US oil company share buy-in of Yukos.

Yukos had also just made a bid to acquire rival Sibneft from Boris Berezovsky, 
another Yeltsin-era Oligarch. YukosSibneft, with 19.5 billion barrels of oil and
gas, would then own the second-largest oil and gas reserves in the world after 
ExxonMobil. YukosSibneft would be the fourth largest in the world in terms of 
production, pumping 2.3 million barrels of crude oil a day. The Exxon or Chevron
buy-up of YukosSibneft would have been a literal energy coup d¹etat. Cheney knew
it; Bush knew it; Khodorkovsky knew it.

Above all, Vladimir Putin knew it and moved decisively to block it.

Khodokorvsky had cultivated very impressive ties to the Anglo-American power 
establishment. He created a philanthropic foundation, the Open Russia 
Foundation, modelled on the Open Society foundation of his close friend George 
Soros. On the select board of Open Russia Foundation sat Henry Kissinger and 
Kissinger¹s friend, Jacob Lord Rothschild, London scion of the banking family. 
Arthur Hartman, a former US Ambassador to Moscow, also sat on the foundation¹s 
board.

Following Khodorkovsky's arrest, the Washington Post reported that the 
imprisoned Russian billionaire had retained the services of Stuart Eizenstat - 
former deputy Treasury Secretary, Undersecretary of State, Undersecretary of 
Commerce during the Clinton Administration - to lobby in Washington for his 
freedom. Khodorkovsky was in deep with the Anglo-American establishment.

Subsequent western media and official protest about Russia¹s return to communist
methods and raw power politics, conveniently ignored the fact that Khodorkovsky 
was hardly Snow White himself. Earlier, Khodorkovsky had unilaterally ripped up 
his contract with British Petroleum. BP had been a partner with Yukos, and had 
spent $300 million in drilling the highly promising Priobskoye oil field in 
Siberia.

Once the BP drilling had been done, Khodorkovsky forced BP out, using gangster 
methods that would be unlawful in most of the developed world. By 2003 
Priobskoye oil production reached 129 million barrels, equivalent to a value on 
the market of some $8 billions. Earlier, in 1998, after the IMF had given 
billions to Russia to prevent a collapse of the Ruble, Khodokorvosky¹s Bank 
Menatep diverted an eye-popping $4.8 billion in IMF funds to his hand-picked 
bank cronies, some US banks among them. The howls of protest from Washington at 
the October 2003 arrest of Khodorkovsky were disingenuous, if not outright 
hypocritical. As seen from the Kremlin, Washington had been caught with its fat 
hand in the Russian cookie jar.

The Putin-Khodorkovsky showdown signalled a decisive turn by the Putin 
government towards rebuilding Russia and erecting strategic defenses from the 
foreign onslaught led by Cheney and friend Tony Blair in Britain. It took place 
in the context of a brazen US grab for Iraq in 2003 and of a unilateral Bush 
Administration announcement that the USA was abrogating its solemn treaty 
obligations with Russia under their earlier Anti-Ballistic Missile (ABM) Treaty,
in order to go ahead with development of US missile defenses, an act which could
only be viewed in Moscow as a hostile act aimed at her security.

By 2003, indeed, it took little strategic military prowess to realize that the 
Pentagon hawks and their allies in the military industry and Big Oil had a 
vision of a United States unfettered by international agreements and acting 
unilaterally in its own best interests, as defined, of course, by the hawks. 
Their recommendations were published by one of the many Washington hawk 
conservative Think-Tanks. In January 2001 The National Institute for Public 
Policy (NIPP) issued Rationale and Requirements for U.S. Nuclear Forces and Arms
Control, just as the Bush-Cheney Administration began. The report, demanding a 
unilateral US end to nuclear force reduction, was signed by 27 senior officials 
from past and current administrations. The list included the man who today is 
Bush¹s National Security Adviser, Stephen Hadley; it included the special 
assistant to the Secretary of Defense, Stephen Cambone, and it included Admiral 
James Woolsey, the former head of CIA and chairman of the Washington NGO, 
Freedom House. Freedom House played a central role in Ukraine¹s US-sponsored 
ŒOrange Revolution¹ and all other ŒColor Revolutions¹ across the former Soviet 
Union.

These events were soon followed by the Washington-financed series of covert 
destabilizations of a number of governments in Russia¹s periphery which had been
close to Moscow. It included the November 2003 ŒRose Revolution¹ in Georgia 
which ousted Edouard Shevardnadze in favour of a young, US-educated and pro-NATO
President, Mikheil Saakashvili. The 37-year-old Saakashvili had conveniently 
agreed to back the Baku-Tbilisi-Ceyhan oil pipeline that would avoid Moscow 
pipeline control of Azerbaijan¹s Caspian oil. The United States has maintained 
close ties with Georgia since President Mikheil Saakashvili has come to power. 
American military trainers instruct Georgian troops and Washington has poured 
millions of dollars into preparing Georgia to become part of NATO.

Following its Rose Revolution in Georgia, Woolsey¹s Freedom House, the National 
Endowment for Democracy (NED), Soros Foundation and other Washington-backed NGOs
organized the brazenly provocative November 2004 Ukraine ŒOrange Revolution.¹ 
The aim of the Orange Revolution was to install a pro-NATO regime there under 
the contested Presidency of Viktor Yushchenko, in a land strategically able to 
cut the major pipeline flows from Russian oil and gas to Western Europe. 
Washington-backed Œdemocratic opposition¹ movements in neighboring Belarus also 
began receiving millions of dollars of Bush Administration largesse, along with 
Kyrgystan, Uzbekistan and more remote former Soviet states which also happen to 
form a barrier between potential energy pipelines linking China with Russia and 
the former Soviet states like Kazkhstan..

Again, energy and oil and gas pipeline control lay at the heart of the US moves.
Little wonder, perhaps, that some people inside the Kremlin, notably Vladimir 
Putin, began to wonder if Putin¹s new born-again Texan partner-in-prayer, George
W. Bush, was in fact speaking to Putin with forked tongue, as the Indians would 
say.

By the end of 2004 it was clear in Moscow that a new Cold War, this one over 
strategic energy control and unilateral nuclear primacy, was fully underway. It 
was also clear from the unmistakeable pattern of Washington actions since the 
dissolution of the Soviet Union in 1991, that End Game for USA policy vis-à-vis 
Eurasia was not China, not Iraq, and not Iran.

The geopolitical ŒEnd Game¹ for Washington was the complete de-construction of 
Russia, the one state in Eurasia capable of organizing an effective combination 
of alliances using its vast oil and gas resources. That, of course, could never 
be openly declared.

After 2003 Putin and Russian foreign policy, especially energy policy, reverted 
to their basic response to the ŒHeartland¹ geopolitics of Sir Halford Mackinder,
politics which had been the basis of Soviet Cold War strategy since 1946.

Putin began to make a series of defensive moves to restore some tenable form of 
equilibrium in face of the increasingly obvious Washington policy of encircling 
and weakening Russia. Subsequent US strategic blunders have made the job a bit 
easier for Russia. Now, with the stakes rising on both sides‹NATO and 
Russia‹Putin¹s Russia has moved beyond simple defense to a new dynamic 
offensive, to secure a more viable geopolitical position, using its energy as 
the lever.

Mackinder¹s Heartland and Brzezinski¹s Chess Game

It¹s essential to understand the historic background to the term geopolitics. In
1904, an academic British geographer named Halford Mackinder made an address 
before the Royal Geographic Society in London which was to change history. In 
his speech, titled, ŒThe Geographical Pivot of History,¹ Mackinder sought to 
define the relation between a nation¹s or region¹s geography‹its topography, 
relation to the sea or land, its climate‹with its politics and position in the 
world. He posited two classes of powers: sea powers including Britain and the 
United States as well as Japan; and he posited the large land powers of Eurasia,
which, with development of the railroad, were able to unite large land masses 
free from dependency on the seas.

For Mackinder, an ardent Empire advocate, the implicit lesson for continued 
hegemony of the British Empire following the 1914-1917 World War, was to prevent
at all costs a convergence of interests between the nations of East 
Europe‹Poland, Czechoslovakia , Austria-Hungary--and the Russia-centered Eurasia
ŒHeartland¹ or Œpivot¹ land,as he termed it. After the Versailles peace talks, 
Mackinder summed up his ideas in the following famous dictum:

Who rules East Europe commands the Heartland;
Who rules the Heartland commands the World-Island;
Who rules the World-Island commands the world.

Mackinder's Heartland was the core area of Eurasia, and the World-Island was all
of Eurasia, including Europe, the Middle East and Asia. Great Britain, never a 
part of Continental Europe, he saw as a separate naval or sea-power. The 
Mackinder geopolitical perspective shaped Britain¹s entry into the 1914 Great 
War, it shaped her entry into World War Two. It shaped Churchill¹s calculated 
provocations of an increasingly paranoid Stalin, beginning 1943, to entice 
Russia into what became the Cold War.

From a US perspective, the 1946-1991 Cold War era was all about who shall 
control Mackinder¹s World-Island, and, concretely, how to prevent the Eurasian 
Heartland, centered on Russia, from doing just that. A look at a polar 
projection map of US military alliances during the Cold War makes the point: The
Soviet Union had been geopolitically contained and prevented from any 
significant linkup with Western Europe or the Middle East or Asia. The Cold War 
was about Russian efforts to circumvent that NATO-centered Iron Curtain.

Former US National Security Adviser, Zbigniew Brzezinski, writing in the 
post-Soviet era in 1997, drew on Mackinder¹s geopolitics by name, in describing 
the principal strategic aim of the United States to keep Eurasia from unifying 
as a coherent economic and military bloc or counterweight to the sole superpower
status of the United States.

To understand US foreign policy since the onset of the Bush-Cheney Presidency in
2001, therefore, it¹s useful to cite a revealing New York Council on Foreign 
Relations Foreign Affairs article by Brzezinski from September/October 1997:

"Eurasia is home to most of the world's politically assertive and dynamic 
states. All the historical pretenders to global power originated in Eurasia. The
world's most populous aspirants to regional hegemony, China and India, are in 
Eurasia, as are all the potential political or economic challengers to American 
primacy. After the United States, the next six largest economies and military 
spenders are there, as are all but one of the world's overt nuclear powers, and 
all but one of the covert ones. Eurasia accounts for 75 percent of the world's 
population, 60 percent of its GNP, and 75 percent of its energy resources. 
Collectively, Eurasia's potential power overshadows even America's.

Eurasia is the world's axial supercontinent. A power that dominated Eurasia 
would exercise decisive influence over two of the world's three most 
economically productive regions, Western Europe and East Asia. A glance at the 
map also suggests that a country dominant in Eurasia would almost automatically 
control the Middle East and Africa. With Eurasia now serving as the decisive 
geopolitical chessboard, it no longer suffices to fashion one policy for Europe 
and another for Asia. What happens with the distribution of power on the 
Eurasian landmass will be of decisive importance to America's global 
primacy...¹(emphasis added-w.e.)

If we take the words of Washington strategist Brzezinski and understand the 
axioms of Halford Mackinder as the driving motive for Anglo, and later, American
foreign policy for more than an entire century, it begins to become clear why a 
reorganized Russian state under the Presidency of Vladimir Putin has gone into 
motion to resist the overtures and overt attempts at deconstruction being 
promoted by Washington in the name of democracy. How has Putin acted to shore up
Russian defenses? In a word: energy.

Russian energy geopolitics

In terms of the overall standard of living, mortality and economic prosperity, 
Russia today is not a world class power. In terms of energy, it is a colossus. 
In terms of landmass it is still the single largest nation in land area in the 
world, spanning from the Pacific to the door of Europe. It has vast territory, 
vast natural resources, and it has the world¹s largest reserves of natural gas, 
the energy source currently the focus of major global power plays. In addition, 
it is the only power on the face of the earth with the military capabilities 
able to match that of the United States despite the collapse of the USSR and 
deterioration in the military since.

Russia has more than 130,000 oil wells and some 2000 oil and gas deposits 
explored of which at least 900 are not in use. Oil reserves have been estimated 
at 150 billion barrels, similar perhaps to Iraq. They could be far larger but 
have not yet been exploited owing to difficulty of drilling in some remote 
arctic regions. Oil prices above $60 a barrel begin to make it economical to 
explore in those remote regions.

Currently Russian oil products can be exported to foreign markets in three 
routes: Western Europe via the Baltic Sea and Black Sea; Northern route; Far 
East to China or Japan and East Asian markets. Russia has oil terminals on the 
Baltic at St. Petersburg for oil and a newly expanded oil terminal at Primorsk. 
There are added oil terminals under construction at Vysotsk, Batareynaya Bay and
Ust-Luga.

Russia¹s state-owned natural gas pipeline network, its so-called Œunified gas 
transportation system¹ includes a vast network of pipelines and compressor 
stations extending more than 150,000 kilometers across Russia. By law only the 
state-owned Gazprom is allowed to use the pipeline. The network is perhaps the 
most valued Russian state asset outside the oil and gas itself. Here is the 
heart of Putin¹s new natural gas geopolitics and the focus of conflict with 
western oil and gas companies as well as the European Union, whose Energy 
Commissioner, Andras Piebalgs, is from new NATO member Latvia, formerly part of 
the USSR.

In 2001, as it became clear in Moscow that Washington would find a way to bring 
the Baltic republics into NATO, Putin backed the development of a major new oil 
port on the Russian coast of the Baltic Sea in Primorsk at a cost of $2.2 
billion. This project, known as the Baltic Pipeline System (BPS), greatly 
lessens export dependency on Latvia, Lithuania and Poland. The Baltic is 
Russia¹s main oil export route, carrying crude oil from Russia's West Siberian 
and Timan-Pechora oil provinces westward to the port of Primorsk in the Russian 
Gulf of Finland. The BPS was completed in March 2006 with capacity to carry more
than1.3 million barrels/day of Russian oil to western markets in Europe and 
beyond.

The same month, March 2006, former German Chancellor Gerhard Schroeder was named
chairman of a Russian-German consortium building a natural gas pipeline going 
some 1,200 km under the Baltic Sea. Majority shareholder in this North European 
Gas Pipeline (NEGP) project, with 51%, is the Russian state-controlled Gazprom, 
the world¹s largest natural gas company. The German companies BASF and E.On each
hold 24.5%. The project, estimated to cost ¤4.7 billion, was started late 2005 
and will connect the gas terminal at the Russian port city of Vyborg on the 
Baltic near St. Petersburg with the Baltic city of Greifswald in eastern 
Germany. The Yuzhno-Russkoye gas field in West Siberia will be developed in a 
joint venture between Gazprom and BASF to feed the pipeline. It was Gerhard 
Schroeder¹s last major act as Chancellor, and provoked howls of protest from the
pro-Washington Polish government, as well as Ukraine, who both stood to lose 
control over pipeline flows from Russia. Despite her close ties to the Bush 
Administration, Chancellor Angela Merkel has been forced to swallow hard and 
accept the project. Germany¹s industry is simply dependent on the Russian energy
import. Russia is by far the largest supplier of natural gas to Germany.

The giant Shtokman gas deposit in the Russian sector of the Barents Sea, north 
of the Murmansk harbor, will ultimately also be a part of the gas supply of the 
NEGP. When completed in two parallel pipelines, NEGP will supply Germany up to 
55 billion cubic meters more a year of Russian gas.

In April 2006 the Putin government announced the first stage of construction of 
the East Siberia-Pacific Ocean Pipeline (ESPO), a vast oil pipeline from Taishet
in the Irkutsk Region near Lake Baikal in East Siberia, to Perevoznaya Bay on 
Russia¹s Pacific Ocean coast, to be built at a cost of more than $11.5 billion. 
Transneft, the Russian state-owned pipeline company will build it. When 
finished, it will pump up to 1.6 million barrels/day from Siberia to the Russian
Far East and from there on to the energy-hungry Asia-Pacific, mainly to China. 
The first stage is due to be completed by end of 2008. In addition, Putin has 
announced plans to construct an oil refinery on the Amur River near the China 
border in Russia¹s Far East to allow sale of refined product to China and Asian 
markets. Presently the Siberian oil can only be delivered to the Pacific via 
rail.

For Russia, the Taishet to Perevoznaya route will maximize its national 
strategic benefits while taking oil exports to China and Japan into account at 
the same time. In the future, the country will be able to export oil to Japan 
directly from the Nakhodka Port. Oil-import-dependent Japan is frantic to find 
new secure oil sources outside the unstable Middle East. The ESPO can also 
supply oil to the Republic of Korea and the Democratic People¹s Republic of 
Korea through building from Vladivostok branch lines leading to the two 
countries and to China via a branch pipe between Blagoveshchensk and Daqing. The
Taishet route provides a clear roadmap for energy cooperation between Russia and
China, Japan and other Asia-Pacific countries.

Sakhalin: Russia reins in Big Oil

In late September 2006 a seemingly minor dispute exploded and resulted in the 
revocation of the environmental permit for Royal Dutch Shell¹s Sakhalin II 
Liquified Natural Gas project, which had been due to deliver LNG to Japan, South
Korea and other customers by 2008. Shell is lead energy partner in an 
Anglo-Japanese oil and gas development project on Russia¹s Far East island of 
Sakhalin, a vast island north of Hokkaido Japan.

At the same time, the Putin government announced environmental requirements had 
also not been met by ExxonMobil for their De Kastri oil terminal built on 
Sakhalin as part of its Sakhalin I oil and gas development project. Sakhalin I 
contains an estimated 8 billion barrels of oil and vast volumes of gas, making 
the field a rare Super-Giant oil find, in geologists¹ terminology.

In the early 1990¹s the Yeltsin government made a desperation bid to attract 
needed investment capital and technology into exploiting Russian oil and gas 
regions at a time the government was broke and oil prices very low. In a bold 
departure, Yeltsin granted US and other western oil majors generous exploration 
rights to two large oil projects, Sakhalin I and Sakhalin II. Under a so-called 
PSA or Production Sharing Agreement, ExxonMobil, lead partner of the Sakhalin I 
oil project, got tax-free Russian concessions.

Under the terms of the PSA¹s, typical between major Anglo-American oil majors 
and weak Third World countries, Russia¹s government would instead get paid for 
the oil and gas rights in a share of eventual oil or gas produced. But the first
drops of oil to Russia would flow only after all project production costs had 
first been covered. PSA¹s were originally developed by Washington and Big Oil to
facilitate favorable control by the oil companies of large oil projects in third
countries. The major US oil giants, working with the James Baker¹s James Baker 
Institute, which drafted Dick Cheney¹s 2001 Energy Task Force Review, used the 
PSA form to regain control over Iraq¹s oil production, hidden behind the façade 
of an Iraqi state-owned oil company.

Shortly before the Russian government told ExxonMobil it had problems with its 
terminal on Sakhalin, ExxonMobil had announced yet another cost increase in the 
project. ExxonMobil, whose attorney is James Baker III, and which is a close 
partner to the Cheney-Bush White House, announced a 30% cost increase, something
that would put even further off any Russian oil flow share from the PSA. The 
news came on the eve of ExxonMobil plans to open an oil terminal at De Kastri on
Sakhalin. The Russian Environment Ministry and the Agency for Subsoil Use 
suddenly announced the terminal did Œnot meet environmental requirements¹ and is
reportedly considering halting production by ExxonMobil as well.

Britain¹s Royal Dutch Shell under another PSA holds rights to develop the oil 
and gas resources in Sakhalin II region, and build Russia¹s first Liquified 
Natural Gas project. The $20 billion project, employing over 17,000 people, is 
80% complete. It¹s the world¹s largest integrated oil and gas project, and 
includes Russia¹s first offshore oil production, as well as Russia¹s first 
offshore integrated gas platform.

The clear Russian government moves against ExxonMobil and Shell have been 
interpreted in the industry as an atttempt by the Putin government to regain 
control of Russian oil and gas resources it gave away during the Yeltsin era. It
would cohere with Putin¹s emerging energy strategy.

Russia-Turkey Blue Stream gas project

In November 2005 Russia¹s Gazprom completed the final stage of its 1,213 
kilometer $3.2 billion Blue Stream gas pipeline. The project brings gas from its
gas fields in Krasnodar, then by underwater pipelines across the Black Sea to 
the Durusu Terminal near Samsun inon the Turkish Black Sea coast. From there the
pipeline supplies Russian gas to Ankara. When it reaches full capacity in 2010 
it will carry an estimated 16 billion cubic meters gas a year.

Gazprom is now discussing transit of Russian gas to the countries of South 
Europe and East Mediterranean, including based on new contracts and new volumes 
of gas. Greece, South Italy and Israel all are in some form of negotiation with 
Gazprom to tap gas from the Blue Stream pipeline across the territory of Turkey.
A new route for the gas supply is being developed now - the one via the 
countries of East and Central Europe. The interim title of the project is the 
South-European Gas Pipeline. The main issue here is to establish a new gas 
transmission system, both from Russian origin and from the third countries

In sum, not including the emerging potentials of Gazprom¹s entry into the 
fast-developing Liquified Natural Gas markets globally, energy, oil and gas and 
nuclear, is firmly at the heart of Russian attempts to build new economic 
alliance partners across Eurasia in the coming showdown with the United States.

US plans for ŒNuclear Primacy¹

The key to the ability of Putin¹s Russia to succeed is its ability to defend its
Eurasian energy strategy with a credible military deterrent, to counter 
now-obvious Washington military plans for what the Pentagon terms Full Spectrum 
Dominance.

In a revealing article titled ŒThe Rise of US Nuclear Primacy,¹ in the 
March/April 2006 Foreign Affairs, the magazine of the New York Council on 
Foreign Relations, authors Kier Lieber and Daryl Press made the following claim,

ŒToday, for the first time in almost 50 years, the United States stands on the 
verge of attaining nuclear primacy. It will probably soon be possible for the 
United States to destroy the long-range nuclear arsenals of Russia or China with
a first strike. This dramatic shift in the nuclear balance of power stems from a
series of improvements in the United States' nuclear systems, the precipitous 
decline of Russia's arsenal, and the glacial pace of modernization of China's 
nuclear forces. Unless Washington's policies change or Moscow and Beijing take 
steps to increase the size and readiness of their forces, Russia and China -- 
and the rest of the world -- will live in the shadow of U.S. nuclear primacy for
many years to come.¹

The US authors claim, accurately, that since the collapse of the Soviet Union in
1991, Russia¹s strategic nuclear arsenal has Œsharply deteriorated.¹ They also 
conclude that the United States is and has been for some time, intentionally 
pursuing global nuclear primacy. The September 2002 Bush Administration National
Security Strategy explicitly stated that it was official US policy to establish 
global military primacy, an unsettling thought for many nations today given the 
recent actions of Washington since the events of September, 2001.

One of Defense Secretary Rumsfeld¹s priority projects has been the multi-billion
dollar construction of a US missile defense. It has been sold to American voters
as a defense against possible terror attacks. In reality, as has been openly 
recognized in Moscow and Beijing, it is aimed at the only two real nuclear 
powers, Russia and China.

As the Foreign Affairs article points out, Œthe sort of missile defenses that 
the United States might plausibly deploy would be valuable primarily in an 
offensive context, not a defensive one -- as an adjunct to a U.S. first-strike 
capability, not as a stand-alone shield. If the United States launched a nuclear
attack against Russia (or China), the targeted country would be left with a tiny
surviving arsenal -- if any at all. At that point, even a relatively modest or 
inefficient missile-defense system might well be enough to protect against any 
retaliatory strikes, because the devastated enemy would have so few warheads and
decoys left.¹

In the context of a United States which has actively moved the troops of its 
NATO partners into Afghanistan, now Lebanon, and which is clearly backing the 
former USSR member Georgia, today a critical factor in the Caspian 
Baku-Tbilisi-Ceyhan Turkey oil pipeline, in Georgia¹s move to join NATO and push
Russian troops away, it is little surprise that Moscow might be just a bit 
uncomfortable with the American President¹s promises of spreading democracy 
through a US-defined Greater Middle East. The invented term, Greater Middle East
is the creation of various Washington think-tanks close to Cheney including his 
Project for the New American Century, to refer to the non-Arabic countries of 
Turkey, Iran, Israel, Pakistan, Afghanistan, Central Asian (former USSR) 
countries, and Azerbaijan, Georgia and Armenia. At the G-8 Summit in Summer 2004
President Bush first officially used the term to refer to the region included in
Washington¹s project to spread Œdemocracy¹ in the region.

On October 3, the Russian Foreign Ministry warned that Russia would Œtake 
appropriate measures¹ should Poland deploy elements of the new US missile 
defense system. Poland is now a NATO member. Its Defense Minister, Radek 
Sikorski was a former Resident in Washington at Richard Perle¹s hawkish AEI 
think-tank. He was also Executive Director of the New Atlantic Initiative, a 
project designed to bring the former Warsaw Pact countries of eastern Europe 
into NATO under the guise of spreading democracy. The United States is also 
building, via NATO, a European Missile Defense System.

The only conceivable target of such a system would be Russia in the sense of 
enabling a US first strike success. Completion of the European missile defense 
system, the militarization of the entire Middle East, the encirclement of Russia
and of China from a connected web of new US military bases, many put up in the 
name of the War on Terror, all now appear to the Kremlin as part of a deliberate
US strategy of Full Spectrum Dominance. The Pentagon refers to it also as 
ŒEscalation Dominance,¹ the ability to win a war at any level of violence, 
including a nuclear war.

Moscow¹s military status

Moscow has not been entirely passive in the face of this growing reality. In his
May 2003 State of the Nation Address, Vladimir Putin spoke of strengthening and 
modernizing Russia¹s nuclear deterrent by creating new types of weapons, 
including for Russia¹s strategic forces, which will Œensure the defense 
capability of Russia and its allies in the long term.¹ Russia stopped 
withdrawing and destroying its SS-18 MIRVed missiles once the Bush 
Administration unilaterally declared an end to the Anti-Ballistic Missile 
Treaty, and its de facto annulling of the Start II Treaty.

Russia never stopped being a powerful entity that produced state-of-the-art 
military technologies -- a trend that continued from its inception as a modern 
state. While its army, navy and air force are in derelict conditions, the 
elements for Russia's resurgence as a military powerhouse are still in place. 
Russia has been consistently fielding top-notch military technology at various 
international trade shows, and has been effective in the demonstration of its 
capabilities.

In spite of financial and economic difficulties, Russia still produces 
state-of-the-art military technologies, according to a 2004 analysis by the 
Washington-based think tank, Power and Interest News Report (PINR). One of its 
best achievements after the dissolution of the Soviet Union has been its armored
fighting vehicle BMP-3, which has been chosen over Western vehicles in contracts
for the United Arab Emirates and Oman.

Russia's surface-to-air missile systems, the S-300, and its more powerful 
successor, the S-400, are reported to be more potent than American-made Patriot 
systems. The once-anticipated military exercise between the Patriot and the 
S-300 never materialized, leaving the Russian complex with an undisputed, yet 
unproven, claim of superiority over the American system. Continuing this list is
the Kamov-50 family of military helicopters that incorporate the latest 
cutting-edge technologies and tactics, making them an equal force to the best 
Washington has. European helicopter industry sources confirm this.

In recent joint Indo-American air force exercises, where the Indian Air Force 
was equipped with modern Russian-made Su-30 fighters, the Indian Air Force 
out-maneuvered American-made F-15 planes in a majority of their engagements, 
prompting US Air Force General Hal Homburg to admit that Russian technology in 
Indian hands has given the US Air Force a Œwake-up call.¹ The Russian military 
establishment is continuing to design other helicopters, tanks and armored 
vehicles that are on par with the best that the West has to offer.

Weapons export, in addition to oil and gas, has been one of the best ways for 
Russia to earn much-needed hard currency. Already, Russia is the second-largest 
worldwide exporter of military technology after the United States. As reported 
in various magazines, journals and periodicals, at present, Russia's modern 
military technology is more likely to be exported than supplied to its own 
armies due to the existing financial constraints and limitations of Russia's 
armed forces. This has implications for America's future combat operations since
practically all insurgent, guerrilla, breakaway or terrorist armed formations 
across the globe -- the very formations that the United States will most likely 
face in its future wars -- are fielded with Russian weapons or its derivatives.

Russian nuclear arsenal has played an important political role since the end of 
the Soviet Union, providing fundamental security for the Russian state. After a 
bitter intra-services fight within the Russian General Staff which lasted from 
1998 to 2003, the General Staff realized along with the Defense Ministry that a 
further policy of neglect of nuclear forces in favor of funding rebuilding 
conventional forces in the face of tight budget constraints, was not tolerable. 
In 2003 Russia had to buy from Ukraine strategic bombers and ICBMs warehoused 
there. Since then strategic nuclear forces have been a priority. Today, the 
finances of the Russian state, thanks largely to high prices of oil and gas 
exports, are on a strong footing. The Russian Central Bank has become one of the
five largest dollar reserve holders with reserves of more than $270 billions.

The material foundation of the Russian military is its defense industry. After 
1991 the Russian Federation inherited the bulk of the Soviet defense industrial 
complex.

Today, with little fanfare, the US is building up its influence and military 
presence in the Middle East despite a general draw-down in its military 
commitments and expenditure. Why? Oil is certainly a large part of the answer. 
But in geopolitical terms, it is also to the Eurasian land power, Russia from 
access to the seas - just as Mackinder argued had to be done. The push for a US 
Œnuclear primacy¹ over Russia is the factor in world politics today which has 
the most potential for bringing the world into a nuclear conflagration by 
miscalculation.

The basic argument of the Mackinder¹s geopolitics is still relevant: ŒThe great 
geographical realities remain: land power versus sea power, heartland versus 
rimland, centre versus periphery...¹ This Russia understands every bit as 
Washington.

F. William Engdahl is a Global Research Contributing Editor and author of the 
book, ŒA Century of War: Anglo-American Oil Politics and the New World Order,¹ 
Pluto Press Ltd. He has completed a soon-to-be published book on GMO titled, 
ŒSeeds of Destruction: The Hidden Political Agenda Behind GMO¹. He may be 
contacted through his website, www.engdahl.oilgeopolitics.net.

Disclaimer: The views expressed in this article are the sole responsibility of 
the author and do not necessarily reflect those of the Centre for Research on 
Globalization.

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