The rise (and fall?) of petro-states

Even before armed hostilities between Russia and Georgia ended in August, the ultra-nationalist mayor of Moscow, Yuri Luzhkov, began investing colossal sums in changing the ethnic geography of the Georgian breakaway state of South Ossetia in favor of Russia. In one public speech to Ossetians, he exuded the confidence and chutzpah that has come to symbolize the Russia of Prime Minister Vladimir Putin and President Dmitry Medvedev. Smug with the knowledge that oil and gas revenues had raised his country’s international stature, Luzhkov wooed his Ossetian audience with a startling claim, “Russia needs nothing. It has everything. It is the wealthiest country.”


The Kremlin’s assertiveness and strident defense of national interests in the Putin era is ascribed to the boom in world prices of natural gas and oil, which Russia exports in abundance. Russia reaped direct dividends from the steep increase in fossil fuel prices by accumulating foreign exchange reserves to the tune of US$560 billion by mid-2008. Indirectly, possession of the much-coveted strategic minerals enabled Russia to neutralize energy-hungry Western European countries, particularly Germany, so that the “West” was divided over taking an anti-Moscow foreign policy line.

Ever since fossil fuel prices inflated from 2004, the Middle East, Latin America and Africa saw their own versions of petro-states that turned into major regional powers to threaten American hegemony. Thanks to steady increases in the price of oil, Iran’s star rose astronomically in the most volatile area of the world. As the second-largest producer of oil and natural gas, Iran could build its own web of alliances in Europe and the rest of Asia to counter the impending American and Israeli threats to its territorial integrity.

Asia Times