The Decline of the Petro-Czar

Plunging oil prices have created an unexpected diplomatic bright spot in the global recession by weakening unfriendly regimes.

What a difference a half a year makes. Last summer, when oil prices hit an all-time high of $147 a barrel, so did the hubris of the petro-czars. Vladimir Putin sent Russian tanks rolling into Georgia, laying bare his ambition to restore Russian dominion over the lands of the old Soviet empire. In Iran, President Mahmoud Ahmadinejad was busy bashing the dollar, which he had declared “worthless,” and transferring Iran’s reserve wealth into euros. Meanwhile, Venezuelan President Hugo Chavez was in Russia meeting with Putin to negotiate arms deals.

The rise of these leaders was the dark side of an otherwise golden era of growth in the global economy. A prospering world was thirsty for oil, and had little choice but to buy heavily from them. Not now. With the world economy collapsing in recession, and falling demand driving the price of oil down to $37 per barrel, the trio of Putin, Chavez and Ahmadinejad are losing their strength. The empires that they built on oil are proving rickety, vulnerable to inflation and joblessness, and now mounting political unrest is jeopardizing their personal power. “High oil prices and oil wealth reshaped geopolitics in recent years,” says energy expert Daniel Yergin. “Now we’re seeing the reversal of all that.”

Newsweek