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Russia: Putin To Take His Message To The Persian Gulf

Putin (left) with Saudi Foreign Minister Prince Saud Al Faisal in the Kremlin in July 2006 (epa) February 9, 2007 (RFE/RL) -- The great oil price fall of 1985-86 was one of those Cold War twists that still burns brightly in the memory of Kremlin leaders.

Petroleum prices fell precipitously from approximately $30 per barrel in late 1985 to just over $10 by mid-1986.

The drop crippled the Soviet economy and -- in the opinion of many analysts -- helped expedite the breakup of the USSR. Many in Russia think the United States and Saudi Arabia colluded to bring it about.

Now, with oil prices again falling, and with relations with the United States cooling, that history will likely be on Vladimir Putin's mind when he visits Saudi Arabia, Qatar, and Jordan February 11-13.

"You can say that Russia remembers this problem," said Fyodor Lukyanov, editor in chief of the Moscow-based journal "Russia In Global Affairs." "Today's Russia is very different from the Soviet Union of those days, but nevertheless predictability on the oil markets is a big concern for our economy and for our leadership. Some kind of communication with Saudi Arabia in this regard is very important."

Many Issues, But Energy Key

During his historic trip to the Persian Gulf, Putin is expected to touch on most of the traditional regional security issues: the Middle East peace process, the escalating crises in the Palestinian territories and Lebanon, and the deteriorating situation in Iraq.

But analysts say protecting Moscow's interests in the volatile energy market -- which the Kremlin views as key to Russia's domestic prosperity and international clout -- will be job number one.

"Russia's economy really stands and falls with world commodity prices, oil and gas prices," says Clifford Gaddy, a Russia specialist at the Brookings Institution. "And that uncertainty that is necessarily there is a big question mark, a big obstacle for Russian policies, for both its domestic policy, thinking about the health of the state, for revenues into the budget and other projects they want to undertake, as well as, of course, its international status."

When Putin meets with Saudi King Abdullah, it will be a summit of the world's top two oil producers.

And when he sits down with Qatar's Sheikh Hamad Khalifa al-Thani, it will be a meeting of two natural-gas powers. And it is here where analysts say discussions of an OPEC-style natural gas cartel are likely to emerge. Qatar has the world's third-largest natural gas reserves after Russia and Iran.

Coy On Cartel

Iran raised the gas cartel idea in January and Putin later called it "interesting" and promised to "think about it."

But Russian politicians have since dismissed it as unrealistic, saying it would limit Moscow's room to maneuver on the international gas markets.

"The fundamental principal of Russian foreign policy is to avoid binding commitments, things that tie Russia's hands in terms of its ability to determine its own destiny, its own future," Gaddy said.

He added that Russia will most likely try to get the benefits of a gas cartel, but avoid the costs and limitations. Most importantly, Russia doesn't want anybody else to have control over its pricing policy.

"They are going to make sure that they kind of run the show or at least that they will be able to withdraw and make their own decisions if they have to," Gaddy said. "So they are very cautious about it in that regard."

Russian Foreign Minister Sergei Lavrov (left) with Qatari Foreign Minister Shaikh Hamad Bin Jassem Bin Jabor Al Thani in Doha in May 2006 (epa)

Or, as Marshal Goldman, professor emeritus in Russian economics at Wellesley College put it, Moscow is seeking to establish a special kind of control over the natural gas market.

"What Russia is doing, even more importantly," Goldman said, "is trying to, in effect, create a one-country OPEC for gas. I call it OGEC, the Organization for a Gas Exporting Country."

Putin's visit to Qatar also shows how relations have improved between the two countries. A nasty diplomatic rift followed the conviction in Qatar of two Russian nationals for killing Chechen President Zelimkhan Yandarbiyev in a car bombing in 2004.

Putin's trip to Qatar coincides with the three-year anniversary of Yandarbiyev's death on February 13.

Looking For A Buyer

Putin will also try to break into the region's arms market by trying to persuade Saudi Arabia to buy T-90C tanks from Russia. But Goldman said breaking into an arms market long dominated by the United States will be difficult.

"I am sure [the Saudis] will want to keep the majority of their military contracts with the United States, who is their main supporter. But now that communism is more or less dead, they are more open to concerns and efforts and embraces from the Russians," he said.

Regardless of how successful Putin is in securing Russia's energy interests, breaking into the regional arms market or re-emerging as a key player in the peace process, a major legacy of his trip may turn out to be its symbolic value.

"Today the basic task of Russian diplomacy in all regions of the world and in different situations is to demonstrate that Russia has returned to the world arena as a great power and as a key player," said Lukyanov of "Russia In Global Affairs."

By going where no Russian leader has gone before, Putin probably hopes he will be sending precisely that message.

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