Presidential Candidates Clueless on Russia; Report: Putin to be NYT columnist

The presidential candidates as a whole don't look very sure-footed on former Soviet policy. That is except for John McCain, who says Russia should be shoved out of the G-8, and that the U.S. should proceed with the non-working missile shield in Poland and the Czech Republic. The Council on Foreign Relations collected the candidates' various positions, and The Washington Post ran them out on Friday.

How about returning to part of the Soviet-era approach -- averting McCain's petulant muscle-flexing, but accepting that there's little overlap in belief systems, that the U.S. and Russia are each out for their own self-interest around the world, and that it's each country for itself in terms of competition?

One challenge of 2008 -- winning the battle to control the new flow of energy into Europe. Russia has the edge in winning over the key country in this battle -- Turkmenistan and its huge natural gas supplies. But Turkmenistan President Kurbanguly Berdymukhamedov is still leaving the door open for Europe and Washington's idea to direct his country's natural gas West.

Putin in the New York Times? The Media Bloodhound reports that NYT editorial page editor Andrew Rosenthal, who just announced a deal to publish his sworn enemy Bill Kristol once a week, has struck a second masterstroke: a weekly column by Vladimir Putin. Satire at its best.

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For Kate Webb

A friend kindly forwarded a piece from today's New York Times Magazine -- an article from its annual remembrances of those who passed on during the year. The story was on Kate Webb, a war reporter whom both of us first met in Afghanistan in the late 1980s. This unforgettable New Zealander, with her long, brunette hair, her voice raspy from the years of cigarettes and whiskey, was one of the two or three best and most fearless reporters I encountered in eighteen years abroad.

It almost didn't matter how many consecutive nights you sat down with Kate for a beer. She had another hair-raising memory to recount, the type of story that -- if it alone had happened to anyone else, why he or she would have dined off of it for the rest of their lives. Not Kate. She was just passing the time with friends.

Like her first experience with journalists in Indonesia in the mid-1960s. Suharto had gone on his murderous rampage in Java, in which his forces were said to have killed about a million people. Kate, at the time about 22 years old, happened to be visiting the island, and hid out in a hut or something as the killing went on, all the time fearful that she would be next. When she got back to Jakarta and told correspondent acquaintances what she had witnessed, no one believed her. It was six months later before conclusive evidence came out, and Kate's legend began.

Or the time in 1971 when, now Saigon bureau chief for United Press International, she was captured by North Vietnamese soldiers. She emerged three weeks later, delirious and malarial, to the gaping jaws of her friends -- Kate had been reported dead; the Times was among those who published an obituary.

Or the time that an Afghan warlord pulled Kate away from the telex machine in the Kabul Hotel by her hair. Kate escaped. But the bald spot on her skull showed what she had to leave behind to manage it.

Kate was often to be found at that telex machine, filing her stories to Paris. Once, she had typed in the code to the Paris operator, and received a message back from her editors indicating a live connection, but other correspondents were at other telex machines in other capitals, waiting in line ahead of her to send their stories. She was told to stand by. Just then, a rocket landed just outside the hotel, shattering the plate-glass window and sending shards across the lobby behind her, details that Kate now urgently relayed to the Paris operator in an effort to get him to hurry up so she could get to safety. "C'est la guerre" -- Such is war -- came back the reply.

And so it was, Kate would say.

Kate died in May at the age of 64. She had retired in 2001, feeling she was too old to be in her default position at the front lines. She was a mentor and generous friend. Rest in peace, Kate.

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Big Oil's Salvation in the Video Arcade?

The accounting firm Deloitte & Touche has devised a fascinating way to predict how events will transpire in the Alberta oil industry. It's a video game called Producers Dilemma. Gordon Jaremko, a reporter at CamWest News Service, wrote a piece about it last week.

The game, which seems so far to correctly anticipate moves both by the industry and the government, was built by a Deloitte team along with a Canadian game theory firm called Priiva Consulting. On its web site, Priiva says that it uses game theory "to help clients assess and solve their strategic business decisions."

The story piqued my interest a couple of ways. I've thought for some time that there will be a paradoxical resolution of global warming and plateauing oil supply. I've thought that Big Oil will play a big, early role in solving them because these lumbering giants have much to lose by there being a runaway train.

Big Oil has lost its global primacy to state-owned oil and natural gas companies in Russia, Venezuela, Saudi Arabia and elsewhere. Chuck Marvin at Thestreet.com wrote an excellent year-ender on this last week. So, unlike in previous decades, it's actually important to Big Oil's survival to develop alternatives to carbon-based fuels.

One has to think that these or other theorists have bigger challenges in mind. Have they already produced a video game that simulates Big Oil's current dilemma, and shows the way out? If they haven't started, here is an existing platform.

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Pakistan's Playboy and the Oil King

Who Will Succeed Bhutto? The clearest thing amid all the chaos in Pakistan is that the country's most likely kingmaker won't be Pervez Musharraf, and it certainly won't be the United States. It will be Benazir Bhutto's 51-year-old husband, Asif Zardari. The roguish Zardari isn't very well known in the West, but in South Asia he's a celebrity, a charming former playboy who was imprisoned by Musharraf for corruption during Bhutto's terms as prime minister. I've interviewed Zardari, and he's got a natural feel for politics, and has his own magnetism, something lacking in most of the other people Bhutto surrounded herself with. I strongly doubt that he himself could lead the party because of his tainted past. But, given the sympathy factor, and the disarray engulfing Bhutto's Pakistan People's Party, he is likely to choose who does. Dark horse: remember the name Aitzaz Ahsan, who led the lawyer's uprising against Musharraf. He broke with Bhutto but could emerge from the pack, that is should Musharraf ever release him from prison.

Exxon in Russia: The American company may be undergoing the Shell treatment. Last year, Shell was forced by Gazprom to hand over control of the giant Sakhalin-II natural gas field – that is if it wanted to keep doing business in Russia. Now, Russia’s respected business newspaper Vedemosti says that the two giants of the world – Exxon and Gazprom – have held talks about Gazprom taking a stake in the American company’s Sakhalin-I project. This isn’t a shocking report – Vladimir Putin has made it clear that Russians, and not foreigners, will control the country’s energy resources. And it could simply be a trial balloon, as the Russians are prone to float. But it comes after Exxon’s tough-guy negotiating style in Russia and Kazakhstan, insisting that it will never buckle under to resource nationalism. And it’s clear that ultimately the company will have to retreat and compromise in both countries as its roster of possible new global reserves shrinks.

Kashagan: Papa Calls Together the Families

It appears that Kazakhstan's Nursultan Nazarbayev is prepared to pronounce judgment on the long-running dispute with the foreign companies developing the supergiant Kashagan oilfield.

Gabriel Kahn, my former colleague at The Wall Street Journal, reports that Nazarbayev has summoned the companies for a meeting with him and Prime Minister Karim Massimov in the capital of Astana next month.

For Kazakhologists, that can mean only one thing -- he will announce to the companies how the settlement will look. Thus, the six-month-old dispute over this 13-billion-barrel field -- the largest discovery in three decades -- appears near a conclusion.

As Kahn quotes Eni chairman Paolo Scaroni, "For me it is difficult to imagine that President Nazarbayev and Prime Minister [Karim] Massimov meet the most important oil companies without a resolution."

Scaroni is right. This is Nazarbayev's style. He's been known, for instance, to scratch out a number on a piece of paper, and hand it to his foreign interlocutor. That's regarded as written on a tablet.

The meeting is scheduled Jan. 11th.

The dispute started because of the Eni-led consortium's over-budget spending and five-year tardiness in field development. As a settlement, Kazakhstan wants to double its current 8.3% holding in the field, plus a cash settlement, and to receive its oil profits on a bigger scale and faster than written into the current contract.

Nazarbayev's intervention is probably welcome news. He's no Hugo Chavez -- look for a decision that all parties can live with. Even malcontent Exxon may grudgingly accept.

Dumbest story on Kashagan: The leaks have been few from the inner chambers in which the Kashagan talks have taken place. Yet in my view the news coverage has been fairly impressive. Even if it hadn't been, I'm not a press-basher, and as a matter of habit almost never go after other writers.

However, a piece by Motley Fool I think begs scorn. This article, posted yesterday, attributes the stand-off to yet another example of "government heavy-handedness," and chalks it up as more proof that "those who follow energy carefully should be concerned about an expanding outbreak of government strong-arming in a number of important producing nations."

In other words, Motley Fool has precious little knowledge of this dispute, and rather than studying up on it so as to accurately inform its investor readers, has conflated Kazakhstan's position with those of other petro-states in the world. As if to underline this point, Motley Fool boasts that the analyst -- David Lee Smith (I am conveniently providing his email address) -- "really has never set foot in Kazakhstan."

For the record, the dispute has nothing to do with Russian- or Venezuela-style petro-nationalism, and a lot to do with incompetence on the part of the oil companies, and an inflexible contract written during the days of $15 oil.

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What Benazir Bhutto’s Death Doesn’t Mean

Was Benazir Bhutto killed because of American negligence? Was Pervez Musharraf to blame for failing to provide sufficient security? Should the U.S. send more troops to Pakistan?

These questions are being asked around the world, particularly by U.S. presidential candidates. The answer to all is no.

Bhutto sadly was killed because she decided to campaign entirely in the open, in large crowds, popping out of the sunroof of her SUV, in one of the world's best-armed militant-filled countries. Given her chosen style of politicking for the Jan. 8 election, jammers and policemen standing or driving beside her car, as one report suggested she had requested, wouldn’t have stopped the simple pistol and body explosive the killer apparently used.

The U.S. and Musharraf are responsible, but for something entirely different.

For Washington, it goes back to the George H.W. Bush administration and the decision effectively to halt the U.S. relationship with both Afghanistan and Pakistan following the 1989 Soviet withdrawal from Afghanistan. At the time, both countries were crawling with both lethal weapons and a multi-national force of militant Islamic fighters who were now out of work, and looking for some. Fast forward to the 1993 and 2001 attacks on the World Trade Center, and the various militant Islamic bombings and shootings between and after, including the Bhutto assassination, and you have a snapshot of the result. Neither Bill Clinton nor Bush’s son, George W., fully took cognizance of that enormous blunder.

That leads us to Musharraf, who at this point is the only one, along with his Army, who can seriously address the crisis in Pakistan. He has the men, the materiel, the cash and the intelligence services to suppress the militancy. If he didn’t before, he knows now that there's no other choice.

Earth to Exxon: Your World is Not Enough

Exxon Mobil has received a fresh message from Russia: We are in charge. Get used to it.

No doubt the oil giant -- which is in battle on two fronts in the former Soviet Union, not to mention in Venezuela -- will ignore the warning and crash-land blithely into the dinosaur pit.

I mean that only slightly tongue in cheek. Around the world, Big Oil is having to cut deals with petroleum-rich states that want to control their own resources. I've recently come around a bit to Exxon's view that resource nationalism will moderate -- petro-states like Russia will need high technology to arrest their declining production and develop difficult new fields -- but only a bit.

The direction of global oil is clear, and it's toward the demise of the Big Oil companies as we know them. In general, the petro-states that control more than 80% of global oil reserves can get what they need from technology-rich oil services companies, and will largely do without the Exxons, Chevrons and BPs of the world.

Yet Exxon seems to think that the old rules hold, those of prior decades in which Big Oil called the shots.

Forbes reports on the latest news on the Russian front. It's a salvo from a Gazprom deputy chairman named Alexander Ananenkov. In a news conference yesterday, he called Exxon's control of the giant Sakhalin-I natural gas field an "infringement of Russia's national interests." He added that Exxon's wish to sell its Sakhalin-I gas to China had made Russians "poor relations who see their gas siphoned off."

The fact is that, according to Exxon's contract, it can sell the Sakhalin production wherever it wants, and China is willing to pay a higher price than Russia.

But that ignores political reality. Russia wants the Sakhalin gas for the domestic market. Why? So it can keep selling its own gas for enormous profits to Europe. And, in case it must curtail its exposure to Europe because of growing alarm there over Russian market dominance, Gazprom itself wants to be able to sell to China.

Exxon would be wise to find a middle ground now rather than wait -- as Shell, BP and Total did to their chagrin over the last two years -- for Russia to build into a lather.

Exxon is also the lead rebel in a several-month-long dispute with Kazakhstan over the supergiant Kashagan oilfield. The Kazakhs are in a fit over a minimum five-year delay in first production at the Caspian Sea field, plus a huge budget over-run. The Kazakhs want more money, and they want it faster than they are contractually guaranteed.

The word is that the other foreign partners developing Kashagan -- Total, Shell and Italy's Eni -- are amenable to Kazakhstan's terms. But Exxon is holding out for an extension in the length of the forty-year contract.

The reason for Exxon's stubbornness is mainly its instinctual bloody-mindedness. But it's also highly concerned about what a concession on Kashagan will mean for its other former Soviet holdings -- 25% of Tengiz, a supergiant sister field to Kashagan; and of course Sakhalin-I. I personally think that the other companies sympathize with Exxon and are hiding behind its willing to play bully. But that's besides the point. Exxon is the lightning rod.

And Exxon doesn't want to look like a pushover as it stands firm, its back right at the edge of the dinosaur pit.

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Benazir Bhutto's Legacy

I first met Benazir Bhutto at a political rally north of Karachi in November 1988. Three months earlier, Pakistan ruler Zia ul-Haq had died in a plane crash, setting up Pakistan's first contested elections in more than a decade. Zia had hanged her father, Zulfikar Ali Bhutto and jailed her, which gave Benazir Bhutto the political potency of a martyr, and she was running hard on that image for election to Parliament.

It would be an immense understatement to say that Bhutto, then 36, was immensely popular at home in southern Sindh province, and with followers of her Pakistan People's Party across the country. These people treated her like a rock star, and she and her husband, Asif Zardari, behaved like they were. Bhutto, educated at Harvard and Oxford, promised to bring democracy and its fruits home, and a lot of people -- including much of the West -- believed her. I know that I did. I went on to meet her a few times in three years as the Pakistan-based Newsweek correspondent.

Nineteen years later, Bhutto had served two terms as prime minister. She was removed both times by the nation's strong president for alleged corruption and incompetence. To be fair, her political rival, Nawaz Sharif, was removed twice as prime minister in intervals with her during the 1990s on similar charges. And when Pervez Musharraf came to power in a coup in 1999, both were sent into exile.

As a candidate for prime minister again the last two months, Bhutto made the same promises of democracy. The vows had worn thin -- people knew that she had failed twice as prime minister to transcend her feudal roots. At heart and in behavior, she was imperious, and her strongest sense was one of self-entitlement.

But Bhutto's legacy, I think, is the hope she brought the country back in 1988. Young, beautiful, and confident, she promised to fearlessly take on those who would challenge democracy. And she continued to do so until the end.

Hummer Humor and Russia in Serbia

Leanan over at The Oil Drum, who never sleeps, has some interesting posts. One is on a Russian Hummer owner with a sense of humor. A second provides insight into Russia's support for Serbia's position opposing Kosovo independence.

Hummer Humor: Reuters reports that a Russian owner of a $49,500 Hummer is inviting anti-consumerists to vent their anger on his vehicle, specifically by pelting it with rotten eggs and tomatoes. This unidentified Good Samaritan is said to live in the Russian city of St. Petersburg. The back story is that a local activist group calling itself "Peter Antiglobalist" has been in a naturally difficult search for a Hummer owner willing to undergo food abuse. The good-natured fellow who responded plans to sell the food-decorated vehicle, and donate the proceeds to an orphanage, according to the report. I have to say that this is a difficult story to believe. However, as post-Christmas Day entertainment, I shall list it in the category of, "If it isn't true, it ought to be."

Russia in Serbia: For some eight years, Russia has supported Serbia's position that Kosovo is an integral part of it, and opposed independence for the majority ethnic-Albanian region. Moscow says its position is rooted in the principle of territorial integrity: If Kosovo can unilaterally pull away absent Belgrade's agreement, Russia argues, then what about the separatist Georgian regions of Abkhazia and South Ossetia, for instance? Mightn't they see Kosovo as a green light to declare independence too? I've argued that Russia is throwing up an empty rhetorical threat. Abkhazia and South Ossetia perfectly serve Russia's purposes as they are, as an instrument for needling neighboring Georgia, which Russia loves to hate.

Now the other shoe drops. UPI reports today that Russia wants to take control of Serbia's state oil company, called NIS. Russia is offering $1.5 billion in cash and other incentives, plus access to its planned South Stream natural gas pipeline. There's nothing wrong about mixing politics and economics -- that's how the world works. But it does make Russia's position clearer.

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Putin: Koni, Koni! Here Koni! Put on this GPS Collar!

Vladimir Putin is challenging the West in as many spheres as he can. And one beneficiary will be his adventurous dog, Koni.

This black labrador apparently has a habit of loping away a bit too far for the Russian president's comfort. So Putin has asked his deputy prime minister, Sergei Ivanov, to make sure he gets a special collar fitted with a satellite tracker, Ivanov told a reporter today.

Russia is putting up more satellites to compete with America's Global Positioning System and Europe's Galileo. It's called the Global Navigation System, or GLONASS, and it traces back to the 1980s. It went moribund in the post-Soviet collapse, but the country is firing up three satellites today using a Proton-K rocket -- bringing the total to 18 -- and by 2009 plans to have 24 in place.

``When can I buy the necessary equipment for my dog, Koni, so that she won't run away too far?'' Putin asked Ivanov. Ivanov replied that such collars will be available for sale by July, Bloomberg reports, quoting Russia's First Channel.

Ivanov said the commercialization will not be biased. Cat collars will be available, too.

What it Takes in the Former Soviet Union: Assassination, Theft, Corruption

I've seen multiple references in recent weeks to Richard Ben Cramer's classic account of the 1988 presidential campaign, What It Takes. Inveterate footnote-and-index readers such as myself miss having neither, yet it is a wonderful read, all 1,051 pages of it, narrating in colorful detail what campaign shenanigans were required to win that year. Cramer's descriptions of George H.W. Bush are particularly unforgettable.

Cramer comes to mind because of the latest news out of the former Soviet Union: Another apparent assassination plot, this time between presidential campaigns in Georgia; another stolen election by Islam Karimov in Uzbekistan; and a report that the good times attributed to Russian President Vladimir Putin may in fact not be as advertised.

Georgia: In a story published yesterday by The Sunday Times in the U.K., David Leppard, Anna Mikhailova and Mark Franchetti report on a possible assassination plot against Boris Berezovsky's former business partner, Badri Patarkatsishvili. The news peg is a 14-minute audio tape that's surfaced in which a Georgian Interior Ministry official apparently attempts to hire a Chechen killer to off Patarkatsishvili. The killer, according to the paper, is Uvais Akhmadov, "a member of a notorious gang of Chechen brothers who specialised in kidnapping and murder," as the writers put it. There's a snap presidential campaign under way at the moment, and Patarkatsishvili is challenging former president Mikheil Saakashvili. Only, Patarkatsishvili is doing so from London, where he says he fears for his life if he goes home. The thing is, we need not sympathize with Patarkatsishvili as a sort of Goldilocks -- he is a tough businessman with a long career of dealing with some of the former Soviet Union's most unsavory sorts. The important point here is what the report might imply about Saakashvili, Georgia's Columbia University-trained former leader. What has his campaign got up to in order to win election Jan. 5th?

Uzbekistan: My former Baku roommate David Stern at The New York Times reports that Karimov won yesterday's election with a reported 88.1% of the vote. Some people are calling it fraudulent since Karimov shouldn't be running -- he was constitutionally forbidden to seek a new term -- and he allowed no real opponents. In addition, there are the usual forebodings that Uzbekistan is headed for instability either during Karimov's continued rule or after he dies (the only way these fellows leave). I personally have sympathy for the stolen election crowd, but have my doubts on the instability part. Equally undemocratic Turkmenistan, for instance, just went through a transition after a presidential death without a hiccup. There's an argument that Uzbekistan isn't Turkmenistan, meaning that it already has produced a home-grown rebellion based in the Fergana Valley. I personally adhere to the muddle-along theory, meaning that even the apparently least likely states tend to muddle along.

Russia: My former Washington Post colleague Fred Hiatt weighs in today with a tart salvo at Time magazine's selection of Putin as its Person of the Year. Against Putin's unwillingness to face serious electoral competition, Hiatt writes: "Why would a leader of such steely confidence, heroic achievement and massive popularity be so afraid of political competition? Perhaps he will explain at Time's awards banquet." Hahaha, Fred. But Hiatt's central argument is serious, based on paraphrases from a must-read report in the new Foreign Affairs by my former colleagues at Stanford University's Institute for International Studies, Michael McFaul and Kathryn Stoner-Weiss. This report challenges the prevailing wisdom that, under Putin, crime has fallen, economic activity has improved and corruption lessened. McFaul and Stoner-Weiss detail at length how in fact the opposite is true in all three cases and that, specifically, Russia's economic growth is near the bottom of the 15 former Soviet states. "Whatever the apparent gains of Russia under Putin, they gains would have been greater if democracy had survived," they write.

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Presidential Humor From Central Asia

Thanks to David Hoffman for this entertaining link. For identification purposes: From left to right, Uzbekistan's Islam Karimov, Kazakhstan's Nursultan Nazarbayev, Turkmenistan's Kurbanguly Berdymukhamedov and Tajikistan's Imamali Rakhmanov.

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A Possible Kashagan Settlement; Exxon Tries to Keep the Old Days Alive

The signs are that the Italian-led partners developing the suspended supergiant Kashagan oilfield are near a settlement with Kazakhstan.

The four-month-old dispute at Kashagan -- the largest discovery in the world in four decades -- has become emblematic of petro-nationalism that has shifted the center of gravity in the energy world.

So far, Kazakhstan has been different from belligerents such as Venezuela and Russia in that it hasn't sought to take back a controlling stake of its oilfields from big private companies. But, given $90-a-barrel oil, the state is highly irritated at the terms of the 1997 Kashagan, and is seeking a better deal. There is at least a five-year delay in first oil from the 13-billion-barrel field.

An excellent report by the U.K. firm PLATFORM provides the first credible numbers I've seen from the contract itself -- it seems to have gotten ahold of a copy. According to these figures, Kazakhstan effectively carries much of the financial risk -- it will get almost no money until the companies recover all the costs of developing the field -- while the companies are virtually guaranteed a profit.

News agencies are reporting that there's been agreement on the payment of a $4 billion fine by the companies as compensation for the delay. And all parties are agreed that Kazakhstan will become an equal partner with the largest shareholders, including Exxon Mobil, Shell, Eni and Total, although according to Kazakhstan officials Exxon has been a holdout on the undisclosed price the country must pay for an increase in its current 8% share.

Exxon -- playing its usual role of no compromise -- is convenient for the other partners because any seeming intransigence can be blamed on the American oil giant. But in the end they're all going to have to bend. What's their leverage?

The biggest stumbling block, as we've discussed previously, appears to be the upside. Meaning, how will Kazakhstan share in the profits should global oil prices remain so high?

The Kashagan deal was signed under an assumption of turning a profit on about $18-a-barrel oil. Meanwhile, power in the industry has shifted, with national oil companies like Kazakhstan's now in the driver's seat as oil has skyrocketed to $90 a barrel and more.

Kazakhstan wants a piece of that -- contractually. In other words, it's probably demanding a contract revision that gives them more profit when the price of oil rises -- an adjustment in the so-called upside clause.

The companies will try to keep the final agreement secret so as not to encourage others to be so bold. Exxon in particular is a stickler on this -- it's a 25% partner in the supergiant Tengiz field, a sister to Kashagan, and it won't want to encourage Kazakhstan to now shift its contract revision efforts there (expect Kazakhstan to do just that).

But the terms are bound to leak out. Petro-nationalism is a spreading disease.

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Note on Yesterday's Post on the Pipeline War

I received a couple of warranted complaints about yesterday's description of a delay within the Bush administration in naming a top envoy to direct the U.S. side of the West's pipeline war with Russia. As background, I've complimented the choice of gray beard Thomas Pickering as Washington's chief envoy for the Caspian. Steve Mann, another talented senior diplomat, would be his deputy. But I've not understood why these men aren't already in the field making the case for a western-directed, trans-Caspian pipeline for Turkmenistan gas. Yesterday I reported that an 11th-hour struggle over personnel was partly to blame. Specifically I reported that Dan Fried, the U.S. assistant secretary of state for European affairs, was trying to get one of his deputies into the envoy's slot.

Fried rightly notes that I didn't offer him a chance to respond, and I regret that. Today Fried said the following in a telephone chat: "I think it's a great idea to have a senior person doing it, and he will be most effective if there is a team representing all the bureaus, economic, mine. (Under Secretary of State for Economics and Energy) Ruben Jeffrey should also be involved. We should get that team together and get them to work." On why there is a holdup, he said, "I'd like to do this as soon as someone identified is in place. The sooner the better is best."

Fried couldn't say so, but I'm still told that Pickering is headed into the top slot. I'm also told that there's a cat fight over who will be his deputy, including a turf war between the State Department and the National Security Council.

While the bureaucrats tussle over the details, they risk Russia gaining greater advantage.

Merry Christmas, Alan Johnston

In a great year for me, by far the best news of all came July 4th when my former Tashkent roommate, BBC correspondent Alan Johnston, was released unharmed from captivity in Gaza. Alan, who is 45, had been hostage for almost four months. He credits Hamas, otherwise branded a terrorist organization, for his release.

I saw Alan a couple of months ago over a meal in London, and he looked and sounded great. I was reminded of this when his voice came on NPR this morning in an interview about his new book, Kidnapped: And other Dispatches. It appears not to be available as yet in the U.S., but I did find it on Amazon.co.uk. It's sure to be a wonderful read.

Merry Christmas, Alan.

Behr-dee-mukh-uh-MEH'-duv in the White House

In the 1990s or earlier, some knuckle-head who couldn't get his (or her) arms around Central Asia nicknamed it the 'Stans as a catchall for all five of the previously little-known nations. At times the monniker even crossed the Caspian and embraced Azerbaijan, which while also a Muslim Turkic nation technically is part of the Caucasus. The stab at a cutism, however, I think helped ordinary outsiders digest these new nations as places distinct from, say, Russia. And the rest is history -- Kazakhstan's Nursultan Nazarbayev it seems only has to call to say he's in town to get an Oval Office visit. The same goes for Azerbaijan's Ilham Aliyev.

But what can you do with Gurbanguly Berdymukhamedov? There's simply no dignified way of abbreviating the ten-syllable name of Turkmenistan's new president. I even inquired of my wife, who as regular readers of this blog know is a Kazakh; she looked at me as though into the eyes of a child.

Which brings me to President Bush. Bush and his successor are simply going to have to bear down and learn to pronounce this man's name. Why? Because Turkmenistan, the possessor of the world's fourth-largest reserves of natural gas, is the improbable key to winning the current European pipeline war with Russia. Russia wants Turkmenistan's gas to nail down its dominance of the European natural gas market, while the U.S. and Europe want it to diversify Europe's natural gas supply away from Russia. Without Turkmenistan, neither can win.

So far, Russia is far in the lead, and a large part of the reason is courtship -- Russia's Vladimir Putin has met with Berdymukhamedov multiple times over the last year, even flying down to Turkmenistan. Yesterday, Putin seemed to win the fruits of his effort by signing a final agreement with Turkmenistan and Kazakhstan to carry their gas north through a new pipeline. In that part of the world, final is a fungible word, and in my opinion the game still goes on.

Meanwhile Bush has relegated Berdymukhamedov to a mere handshake at the United Nations. This is a blunder. Berdymukhamedov needs to find himself in the White House, over at Camp David, in America's embrace, getting a shoulder massage, a drink, a cigar.

Again, the West has something to learn from Putin.

Putin's Hidden Wealth

Last August, I sat down for dinner in Moscow with Stanislav Belkovsky, an estranged Kremlin insider with extraordinary political antennae. This compelling, 36-year-old Russian, a computer programmer by training, runs a think tank called the National Strategy Institute along with a news website. Amid a long discussion of Russian politics and history, Belkovsky provided his take on the main thrust of Kremlin policy today -- allowing the folks who have lined their pockets for the last seven years to cash out their winnings.

Among those folks? Vladimir Putin. Belkovsky claimed that, as part of the spoils of being president, Putin was bestowed with lucrative shares in two Russian energy companies -- 37% of Surgutneftegas and 3%-4% of Gazprom. He said this wasn't provable at the moment, but that the signal of veracity would be if that 37% went on the market before March, when Putin steps down as president. Belkovsky was sure that, given the non-transparent aspect of most Russian companies, the shares would be snapped up by another big Russian company such as Gazprom or Rosneft. If Putin does cash out, Belkovsky said, these shares would be worth some $40 billion. A nice bit of change, but not surprising for those familiar with the publicly known holdings of the presidents of the former Soviet Union's other petro-states, Kazakhstan and Azerbaijan. At that level in government in that part of the world, one does not retain respect among peers solely with political power -- one must also have enormous personal wealth to project the mystique that's necessary to grip the political reins in this treacherous environment.

I raise this now because Belkovsky has recently given a couple of interviews repeating his assertions, including one published in today's London Guardian. Robert Amsterdam, who is imprisoned oligarch Mikhail Khodorkovsky's lawyer, has concluded on his blog that Belkovsky's remarks are a "leak" reflecting a struggle among the Kremlin's wealth-holding factions. Amsterdam thinks that one of these factions must be behind this supposed leak.

There does seem to be a struggle going on, but that isn't very surprising. The same has gone on with some regularity in both Kazakhstan and Azerbaijan. These fellows have a lot of spoils to fight over.

Belkovsky, a bearded bear of a man, once worked for exiled oligarch Boris Berezovsky. Then he went to work for Putin. In other words, there is no ideology here. With Belkovsky, it's all business.

And I think there's a simple, non-conspiratorial explanation for the appearance of this material now. It's called the news cycle. Putin is on his way out as president, and there's uncertainty on the outside as to how the levers of power -- and the spoils -- will be shared. So naturally there is interest among journalists, editors and pundits about anything that would shed light.

Belkovsky's theory has simply intersected with that news cycle. This man strikes me as no one's errand boy.

Christmas Cheer in Kyrgyzstan

They tried with Vladimir Lenin. Then they took a stab at Boris Yeltsin. Now the wise white Muslim beards in Kyrgyzstan are turning to a can't miss tourist grabber -- Santa Claus.

Kyrgyzstan, which has totally missed out on the region's oil rush since it doesn't have any, is now trying to cash in on what it's got in plenty -- mountains.

Here's the AP dispatch out of Bishkek:

BISHKEK, Kyrgyzstan — This former Soviet republic has mountains honoring Communist and Russian leaders. Just in time for Christmas, authorities say they plan to name a snowy peak "Mount Santa Claus."

Three climbers set off Wednesday to scale the designated peak and bury a capsule containing the flag of Kyrgyzstan at the summit on Christmas Eve.

Why is a predominantly Muslim and former Soviet land honoring the jolly old elf?

"We want to develop tourism, and Santa Claus is an ideal brand to help us do this," said Nurhon Tadzhibayeva, an official with Kyrgyz tourist authorities.

Plans are afoot to hold an international Santa Claus congress in Kyrgyzstan in the summer, Tadzhibayeva said. The country also intends to hold annual games in which Santas from all over the world will test their chimney-climbing, sled-racing and tree-decorating skills.

Other Kyrgyzstan peaks bear the names of Soviet founder Vladimir Lenin and former Russian President Boris Yeltsin.

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The Pipeline War: As the CondiBoys Bicker, Putin Laps The West Again

Vladimir Putin has advanced again in the principal current theater of battle between the West and Russia -- the European pipeline war. His antagonists meanwhile are bickering over who will general their troops.

As wars go, this one is easy to figure out. It's purely business driven -- over who will dominate Europe's energy market -- and the spoils are political influence in Europe, where the votes are decisive on numerous issues vital to the West, in particular the U.S.

Russia, which currently controls about a third of Europe's oil and natural gas market, is seeking to enhance its dominance further by building large, new natural gas pipelines into northern and southern Europe.

On the other side, the European Union and the U.S. are trying to lessen Russian influence by building a competing set of natural gas pipelines into Europe.

The improbable key for both sides is that little can happen unless a single state -- Turkmenistan -- goes along. It possesses the world's fourth-largest reserves of natural gas, and it's these supplies that would make either side's pipeline strategy work.

So both the West and Russia have been assiduously courting this desert Central Asian nation, and its new president, Gurbangly Berdymukhamedov.

Except that Putin has been much more assiduous, and today that bore fruit as the leaders of Turkmenistan and also Kazakhstan signed a final agreement to build the first leg of Russia's new pipeline system. It would gather up the natural gas supplies of Turkmenistan and Kazakhstan, ship them north to Russia to be combined with Gazprom's volumes, then exported on to Europe at a much higher price (the profit to go to Russia alone).

I still think this is not a done deal. I've seen such seemingly concrete agreements silently disappear before. The real test is whether the pipeline lengths and bulldozers arrive on the spot, and welders begin working. As a smart friend posed the situation this morning, "Will Putin/Medvedev/Gazpromistan cough up the funds for it? Stay tuned." He was referring of course to Putin's probable successor, Dmitri Medvedev, and the character of today's Russia: The Gazprom State. The Russians aren't renown for willingness themselves to finance such projects.

As if to highlight this point, Berdymukhamedov himself didn't attend the signing ceremony -- which is notable since Putin and Kazakhstan's ultra-cautious Nursultan Nazarbayev did. He seems to be keeping the door slightly ajar for the Western route.

Still, the signs are not propitious for proponents of the Western route. While Putin has personally sat down with Berdymukhamedov numerous times, even flying down to Ashkabad to see him, President Bush gave him a mere photo op at the United Nations a couple of months ago.

Meanwhile, Bush's foreign policy team is in a catfight over who is going to lead the charge. Last month I reported that diplomatic warhorse Thomas Pickering was about to be named the new Caspian energy envoy. It's an inspired choice -- one of America's top two or three statesmen, Pickering brings undisputed gravitas wherever he goes. He exudes seriousness. His deputy is to be Steven Mann, a long-time ambassador and authority on the Caspian Sea.

But I'm told that Dan Fried, the U.S. assistant secretary of state for European affairs, isn't happy. He's intent on installing a senior deputy, Matt Bryza, in one of the two jobs. Bryza is deputy assistant secretary of state for European and Eurasian affairs. Fried and Bryza served together under Condoleeza Rice on the National Security Council before she became secretary of state.

Which brings me to CondiBoys. I realize I am out of it, having spent too much time in Central Asia, but until this week I had never heard this term. It apparently refers to the prevalence in key foreign policy positions of Rice's former mates at the NSC. Such proximity and loyalty to Rice, and not necessarily merit, is said to be key to promotion; loyalty to Bush is said to be helpful as well.

I happen to admire Dan Fried. I was told back in 2005 that he was singularly responsible for America's humane response to the massacre of hundreds of people in the Uzbekistan city of Andijan, apparently on the order of President Islam Karimov. Knowing that Karimov would force out the U.S. military base at the slightest hint of provocation, Fried pushed through a decision to fly out dozens of survivors who had fled to neighboring Kyrgyzstan, and eventually relocate many in the U.S. The U.S. did lose the base.

I also think that Bryza is a highly qualified Eurasian hand, probably the longest-serving Caspian expert in government. Plus he's a nice guy.

But Fried's campaign is absurd. If the CondiBoy description is true, neither Pickering nor Mann are Rice proteges. But you don't bench your first string quarterback if he's willing to play (Asian and European readers: You catch the drift). It seems to me that Fried and Bryza ought to get out of Pickering's and Mann's way so they can go to work.

They have a slog ahead. My friend Russell Zanca, an Uzbek export over at Northeastern Illinois University, just sent a comment on yesterday's posting about Putin containing the following notable remark:

"It's totally natural for the Cen Asians to go w/ Russia--all connections, work ethics, everything is well in place--um, not to mention geography. Meanwhile the U.S. organizes conferences and exhibitions in Ashgabat. As a Tashkent hat seller once told me, America's a good country, but Russia's much closer. "

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Time Is Right -- Putin is the Person of the Year

Time has chosen Vladimir Putin as its Person of the Year for 2007. The magazine notes as it usually does that this does not connote endorsement. The selection rather recognizes a person who Time's editors believe had the greatest impact in one way or another in the world.

For reasons different from those Time lays out, I agree with the choice. The biggest is that Putin has forced the world to take Russia seriously. Just a few years ago, it would have been regarded as absurdist to suggest that Russia would have its current voice in global politics and business.

It's irrelevant that he's done so on the back of high oil prices, and that Russia's influence no doubt will wane when those prices inevitably do. One place where Time is wrong is in saying that Russia possesses an inherent central role in world affairs -- on the basis of what? Its nuclear weapons? It's Putin's personality that has put Russia at center stage.

Oddly enough, and perhaps more importantly, Putin has also brought a much-needed balance to global diplomacy. He has rightly pointed out that the unipolar world that's followed the Soviet collapse has put global diplomacy off-kilter, especially given the rigid Bush administration view of the world.

Some of Putin's actual policies -- such as energy domination in Europe -- are decidedly contrary to Western interests. But because of his very belicosity, Putin has made the ordinarily dismissive Bush actually engage, and that can only be positive.

Time's selection highlights the world now faced by the other countries on which this blog mainly focuses -- the eight states of the Caucasus and Central Asia. Putin's disciplined determination means they face a tougher prospect in terms of weaning themselves away from Russia's economic embrace. The next year will bring a continued battle of pipeline politics between Putin and U.S. and Europe, with Central Asia -- specifically Turkmenistan -- the key prize.

Russian Spy Priests and Venture Capitalists

I'm reading two excellent stories that use different prisms to examine the growing tentacles of the intelligence services in Russian society.

In the first, Andy Higgins, my former colleague at The Wall Street Journal, produces one of his best pieces in a couple of years. It's a look at how Vladimir Putin has re-corrupted -- or perhaps just increased the corruption -- of the Russian Orthodox Church. The church, which was a conspiring arm of Stalinism, has granted Putin deific cover, silencing any priest who strays from Putin's pronouncements. Higgins' main character, Sergei Taratukhin, transforms in the telling from a stiff-backed human rights proponent and defender of imprisoned oil magnate Mikhail Khodorkovsky into a sniveling sycophant of the Putin regime. As the Journal is not yet free on line, you might have to borrow or buy a copy to read this one. But it's worth it.

The second piece, by New York Times writer Andrew Kramer, offers a new take on the often-told story of the FSB's intrusion into high Russian business. Now senior intelligence officials are the ranking investors in multi-billion-dollar venture capital equity funds. The story's lead character is Oleg Shvartsman, a smooth, English-speaking VC who wanders into Silicon Valley and smoothly informs his interlocutors that he represents these spies. He was outed by a Kommersant reporter. Shvartsman does not deny his words but says that, for his indiscretion, the reporter should "drink poison." How apt.

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Anti-Missile Defense and Iran's Nuclear Intentions

Two bits of news deserve the rubric: How far do you intend to push this game of chicken?

Missile Defense: U.S. anti-missile defense policy has been misguided. It continues to argue the system’s merits for placement in Poland and the Czech Republic despite the failure of the technology so far when decoys are employed. Yet Russia has been similarly imprudent. Its latest rhetorical fusillade comes from Armed Forces chief Yuri Baluyevsky, who said over the weekend that any missile fired from the anti-ballistic system could inadvertently trigger an automated strike by Russia’s own defenses. Vladimir Putin has been vocal but articulate. Baluyevsky’s remarks, by contrast, are Soviet-era blather.

Iran: And now is the news that Russia has delivered the first nuclear fuel rods to an Iranian power station that’s at the center of Western concerns regarding the country’s enrichment of uranium. In statements today, Russia and Iran confirmed the shipment to the plant near the city of Bushehr. The plant can start six months after the final shipment is made, and it’s not clear when that will be. Meanwhile there’s talk in Russia and the West that this is part of Putin’s plan to get Iran to cooperate with international inspectors, and stop enriching uranium. I’ve argued previously that Putin would like to win the diplomatic prestige to be accorded any person who can resolve the Iranian-Western standoff. Putin must be confident of what he’s doing. But it’s a perilous game.

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Rights: Creative Commons

Book discussion note

I'm delighted that The Issue is featuring The Oil and the Glory this week in a discussion of the last hurrah of Big Oil, and what comes next in the industry. The blog has placed it beside one of my favorite current books, Zoom: The Global Race to Fuel the Car of the Future, by my colleagues at the Economist, Vijay Vaitheeswaran and Iain Carson. By agreement with Alex Welles over at The Issue, comments can be left at this blog. Just press the comments link below.

The Putin

Does Putinism require Vladimir Putin?

Putin announced today that he’s prepared to stand beside Dmitri Medvedev as his prime minister. He also says there’s no plan to transfer presidential powers to the prime minister's office.

I personally think that Putin will exercise much more power than any Russian prime minister in the post-Soviet period after the March elections. After all, he only said that there are no plans to change the law – Medvedev needn’t formally change any rules to allow his mentor to govern, for instance, the ultra-powerful military and intelligence services.

Yet I recall a conversation on my last trip to Moscow this year with a super-smart Russian analyst who predicted that Putin would step aside – there would simply be a shifting of seats as in musical chairs.

So let’s take Putin at his word and consider whether Putin is a requirement for the current system to go on.

The prevailing wisdom is yes. Putin failed to build up Russian stable institutions of governance during his almost eight-year tenure, but instead erected power around himself, the argument goes. In an editorial Saturday, my former newspaper, The Wall Street Journal, wrote, “Putinism hangs on a single man.”

That's an enormous categorical assumption. And I think it's wrong. Putin did build up an institution, and it’s hiding in plain sight: The people all around him, in public and behind closed doors, who run the Kremlin, Gazprom, Rosneft and the rest of the economy are that institution. Heirs to the fortunes wrested in part from Russia's powerful oligarchs of the 1990s, they aren't going anywhere.

Putin has just bequeathed one of the most powerful parts of that institution to Medvedev, and that's his political brain trust. Russia's Vedomosti newspaper says Medvedev's presidential campaign will be run by Putin chief of staff Sergei Sobyanin and possibly also his main strategist, prince of darkness Vladislav Surkov.

Yes, I think my Moscow friend had a point. Though it can seem otherwise, what's been built up in Russia is bigger than one man. Still, Putin will be around a long time. From close in, he can ensure that his successor is getting along well. He can reassure the many people counting on this institution for their fortunes. He can continue to help balance these forces. And he can step in forcefully should Medvedev unexpectedly falter.

Many people call Putin’s practices “Putinism.” So what shall we denote the institutional proper noun for those who practice Putinism?

I suggest The Putin.

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Becoming Like the Soviets - Part II

While researching The Oil and the Glory, an amusing story I heard again and again from the oilmen and diplomats who found themselves on the Caspian Sea was the ubiquity of eavesdropping. As they sought their lucrative deals or carried out statesmanship, they would find KGB microphones hidden behind portraits in their hotel rooms, and dug into the walls of their offices. Somehow the Azeris were able to surveil them even in five-star hotels all the way in London.

The Westerners described a resultant atmosphere that was paranoid, poisonous and wholly over the top.

Once, two Britons in Baku – BP’s Terry Adams and Ambassador Thomas Young – had something confidential to discuss, too confidential to risk being overheard indoors, and went for a rainy walk along the shoreline. Their privacy seemed assured — few cars or people were braving the nasty weather. Just then, a small Soviet-made Lada stopped fifty yards ahead of them, and a sheepdog with a big collar jumped out. The dog trailed after the men, making them suspicious. “When the dog’s tail would go up, Tom would say, ‘Careful, it must be transmitting,’” Adams told me. As bizarre as it sounded, the story took on a life of its own, and it helped convince many other oilmen that most if not all conversations were being recorded.

The foreigners began to treat it as a game. They would tailor their conversations with the express purpose of manipulating government negotiators. Some of the locals themselves tried to confound the bugging by dropping crumpled-up notes on the floor to caution foreign guests to watch their mouths.

Meanwhile the foreigners resorted to code names in hopes of confusing those listening in. One member of Azerbaijan’s loyal opposition was dubbed “Loyal Avis” by the Pennzoil team. Another who wore alligator shoes became “the Big Bopper,” and a third who owned a house near the president’s was known as “the Landlord.” A fourth who was in the local KGB was “the Lamp.”

As we see in today’s New York Times, the Bush administration set off on an eavesdropping campaign within two weeks of taking office, in February 2001. We can debate the merits of becoming like the Soviets, which I've blogged about previously.

But I can tell you after years of researching the KGB experience that in this respect it doesn’t work, at least not for long – shrewd listenees find a way to disguise their conversations, and conduct their genuine ones out of earshot.

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Invasion of the Zebra Mussels

Communities around the U.S. are in a panic over the creeping invasion of a native Caspian Sea mollusk called the Zebra Mussel.

This tiny, shelled creature – less than two inches long – has installed itself into hundreds of bodies of water around the country, from California to New York. In all, they are in at least 23 states. And along the way they are eating up life-giving phytoplankton, thus starving other organisms, and clogging the pipes and drains in dams, power plants and factories.

Federal, state and local agencies are extremely unhappy about this shellfish. As the U.S. Geological Service puts it, “They colonize pipes, constricting flow, therefore reducing the intake in heat exchangers, condensers, fire fighting equipment, and air conditioning and cooling systems.” The agency says that the mussels colonize so densely that they were found to be congregating in numbers of 700,000 per square meter in a single Michigan power plant.

The Zebra Mussel was first described in the eighteenth century by a visitor to the mouth of the Ural River in the northeastern Caspian near present-day Kazakhstan. It was then found as well in the Azov and Black seas. In the nineteenth century it spread into Europe through canals, and in 1988 it was discovered for the first time in the U.S.

But how did they reach the U.S.? For that answer, I e-mailed Zebra Mussel expert Thomas Horvath, director of the environmental sciences program at the State University of New York at Oneonta. "The Ponto-Caspian region is home to zebra mussels," Horvath replied a little while ago.

As for how they got from there to here, Horvath said, "Caspian ships can make their way out to the Baltic via various canals. The Great Lakes's zebra mussels may very well have come from a number of places -- European ports, Black Sea areas, and even the Baltic ports."

In writings elsewhere, experts have suggested that a tanker traveled from someplace between the Caspian and Europe, went through the St. Lawrence Seaway and on to the Great Lakes, where it dumped ballast containing Zebra Mussel larvae.

With no native enemies, the mussel spread.

A problem is that there’s been no proven way to eradicate them because poisons tend to hurt other organisms. But there is hope. In England, scientists are testing something called the bio-bullet, which is a small capsule of potassium chloride, coated in vegetable fat. In the States, according to Encyclopedia Britannica, scientists are testing something a bit more afield – anti-depressants. This is a spinoff of an experiment showing that pregnant zebra mussels that ingest serotonin produce nonviable larvae.

Image: California Department of Water Resources

Prosecuting Foreign Bribery Under the Bush Administration

When they unveiled the indictment in April 2003, U.S. prosecutors portrayed their case against James Giffen as open and shut -- the largest foreign bribery case in U.S. history. And by the looks of the detail, they had reason for confidence. There they were -- six individual examples of U.S. oil company payments totalling some $80 million being coursed through European bank accounts linked to the president of Kazakhstan or his associates.

As regular readers of this blog recall, Giffen once controlled the biggest oil deals in the world as oil adviser to Kazakhstan President Nursultan Nazarbayev. He's the principal character in The Oil and the Glory.

Yet in a New York court hearing today, the case seemed a lot more complex. Judge William Pauley, who two years ago issued fiery warnings to both sides to accelerate the pace, was reduced to a mild rebuke of the prosecution, and scheduling the next hearing for April 18th. And jury selection? Not a hint.

There's also a strange moseyness about the prosecution. At one point, Pauley directed the government team to proceed with depositions of European witnesses who in previous hearings they mentioned requiring; the prosecutors themselves seemed to lack the initiative to grab these folks before they die or forget all they know.

That's not the main holdup. It's the defense, brilliantly led by former U.S. prosecutor William Schwartz, who wants documents from a handful of U.S. intelligence agencies to prove Giffen's contention that the whole time he was negotiating those oil deals for a fee, he was doubling as an effective agent for the American government.

This being probably the most secretive administration in U.S. history, dislodging such documentation takes time. Perhaps a friend of mine is right -- we may not see a trial until this administration is out of office.

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Rights: Creative Commons

Fence-Sitting on the Caspian

Oil and the Glory readers are acquainted with irascible Valekh Aleskerov, Azerbaijan’s preening, blustery, table-pounding former chief oil negotiator. Aleskerov was in Washington this week for a conference run by my friend Zeyno Baran at the Hudson Institute.

I unfortunately wasn’t present, but heard that Aleskerov was his best, straight-talking self. I was particularly struck by a point on the second round of Pipeline Politics currently under way between Moscow, Europe and the U.S.

He noted that Azerbaijan’s courage was largely responsible for the diplomatic triumph in the game's first round, capped by last year’s completion of the Baku-Ceyhan oil pipeline linking the Caspian and Mediterranean seas. Azerbaijan President Heydar Aliyev opted to ignore Russian threats and, in partnership with Georgia’s Eduard Shevardnadze, spearhead the strategy of the thousand-mile, U.S.-backed line.

But Aleskerov was speaking in the context of the second-round battle between the West and Russia over who will control the resources of the Eastern side of the Caspian. Russia wants to take Kazakhstan’s and Turkmenistan’s natural gas north for onward shipment to Europe. But Europe and the U.S. are pressing a competing proposal to ship the gas west through a new trans-Caspian pipeline linking Turkmenistan to Turkey.

The Western proposal is prudent since going along with the Russian plan would mean isolation for Kazakhstan and Turkmenistan, which would then rely on a single buyer and shipper of this huge cash-earner.

The trans-Caspian idea is beset with indecisiveness and bungling from the Caspian all the way to Washington -- mainly in Europe and Washington -- but one of the problems is that neither Turkmenistan nor Kazakhstan have committed to the proposed line. And that’s the foremost step before anyone else can move. As Aleskerov put it: “Turkmenistan will not take risks like Azerbaijan took risks” with Baku-Ceyhan.

Yesterday, Kazakhstan unintentionally provided Aleskerov a coda.

For more than a decade, Kazakhstan’s president has played the cautious middle ground in Pipeline Politics. When Nursultan Nazarbayev is in front of Russian leaders, he says, We will ship our oil through Russia! Before Chinese leaders, it’s, China or bust! And with his Turkic brothers or the West, he’s a gushing fan of Baku-Ceyhan.

Yesterday was more of the same in the Kazakh capital of Astana. Standing with Turkish President Abdullah Gül, Nazarbayev was uncontainable. “Kazakh oil will be transported to the Baku-Tbilisi-Ceyhan pipeline,” he stated unequivocably.

Well, yes, because Chevron intends to ship a few hundred thousand barrels a day that way from its Tengiz oilfield. And so do the Italian-led developers of Kashagan, the mother of all Caspian oilfields, once they get on line in a few years.

But do the Kazakhs intend to ship any of their state-owned oil through the line? More to the point, would Nazarbayev ship oil or natural gas through trans-Caspian lines were they built?

As I write these questions, their absurdity becomes almost profound. Why would Nazarbayev not do so? And if there's no reason not to, why doesn’t Nazarbayev – the strongest current leader in the eight-nation Caucasus and Central Asia region – commit definite volumes to Baku-Ceyhan and a trans-Caspian line?

The answer is wrapped into Russia's own assumptions in its Pipeline Politics strategy. As Aleskerov put it so well, Vladimir Putin assumes that Turkmenistan and Kazakhstan "will not take risks like Azerbaijan took risks.”

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Blow to Bush: Russia Says No New Sanctions on Iran

Russia today joined China in a public rejection of the Bush administration's effort to increase sanctions on Iran. In Moscow, Russian and Iranian officials announced that they moved closer to finalizing Russian construction of a $1 billion nuclear power plant near the southern Iranian city of Bushehr.

The agreement in itself is unimpressive -- another of those interim pacts in which the parties agree to do something later, in this case to finalize a timetable for completing the plant, which is at the heart of Western concerns about Iran's uranium enrichment program.

But it puts meat on Vladimir Putin's resistance to further Iranian sanctions after a U.S. intelligence estimate last week said Iran had stopped trying to develop nuclear arms four years ago. The Bush administration has continued to push for stepped-up sanctions, saying the new intelligence doesn't mean that Iran is less dangerous.

The Russian position makes it even harder for Bush to get agreement since China on Sunday made its feelings on the matter known when Sinopec, the Chinese oil company, signed a $2 billion oil contract with Iran.

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What if Russia's Communists Had Won in the 1990s?

I'm re-reading David Hoffman's "The Oligarchs," which is a riveting reminder of how, a little over a decade ago, the West was in a lather over the possibility that Russia's Communist Party could upend Boris Yeltsin. And if it did, privatization would be reversed, democracy would go out the window, and Russia would become more nationalist.

There must be a huge qualitative difference with how events in Russia have turned out, but I'm strained to define it.

This is important not as an ideological point, but in terms of the compromises made along the way to Vladimir Putin's rise to power in 1999.

When I've been to Moscow the last several months tracking the trajectory of events -- how we got from the Soviet collapse to Putinism -- experts there are fairly well agreed that the seeds were planted years ago.

Some say Russia lost its way back in 1993, when Yeltsin used tanks and Alpha troops to crush a revolt by hard-line rightists. Others say it was 1996, when the nation's independent journalists and billionaire oligarchs joined forces with articles, news broadcasts and cash that secured Yeltsin's re-election.

Whichever event was pivotal, here's their point: With these acts, Russia's ostensible democrats lost the moral high ground, showing their willingness to use any means to keep power, and thus legitimizing the same methods by others.

There are numerous examples of countries balking at the result of democracy: Algeria in 1992, when the military government canceled elections as it became clear that Islamists were going to win big; and Palestine two years ago, when the West rejected the triumph of Hamas.

The question being: Is the taint on democracy worth an intervention that may or may not alter the eventual outcome?

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Is America's Dethroned King of Kazakhstan on his Way Back?

After four years of ignominious exile from his powerful perch in Kazakhstan, New York lawyer James Giffen may have an opening for a revival.

Those who have read The Oil and the Glory are familiar with the outsized Giffen, its garrulous principal character. Born to relatively humble roots in Stockton, Ca., the 66-year-old Giffen had a spectacular rise after marrying into American society, eventually becoming the go-to man for American blue chip companies wishing to trade in the Soviet Union. After the Soviet collapse, Giffen gained a similar gatekeeper role in Kazakhstan, where at one point he controlled the world's biggest oil deals.

All that crashed in 2003 with Giffen's indictment in the largest foreign bribery case in U.S. history, what's known in Central Asia as Kazakhgate. On Friday, there's a hearing in New York in the case, in which Giffen is accused of channeling some $80 million in payments from U.S. oil companies to Kazakhs including President Nursultan Nazarbayev and former Prime Minister Nurlan Balgimbayev. Meanwhile Giffen is stuck in New York, his passport confiscated, and by appearances no longer in contact with his old pal Nazarbayev.

It's Balgimbayev who's the key to my suspicion that Giffen may regain, or have already regained, some influence in Kazakhstan. Yesterday, Farkhad Sharip at the Jamestown Monitor reported that Nazarbayev had appointed Balgimbayev as an adviser. And that is Giffen's opening.

The 60-year-old Balgimbayev lost his power at about the same time as his mentor, Giffen. The two were rightly seen as a pair, with Giffen providing intellectual heft to Balgimbayev -- who headed Kazakhstan's oil industry when he wasn't prime minister -- and Balgimbayev supplying Giffen a place to channel his genius. Balgimbayev gave Giffen a hilltop house overlooking Almaty right next door to his, the properties connected by a gate. After the U.S. bribery scandal, Balgimbayev also vanished; some said he had moved to Dubai for awhile.

But now that he's back, I'd say Giffen may not be far behind.

As long as we're on the topic, I had already sensed Giffen's presence over the last couple of months in Kazakh affairs, specifically in the country's dispute with the Italian-led consortium developing the Kashagan oilfield.

The original Kazakh demands, and the style in which they've pursued them, remind me of previous, Giffen-led battles with the companies. One of Giffen's signatures is the use of meticulously prepared reports, done usually by western contractors in London and elsewhere, containing every conceivable profit formula, cross referenced for every conceivable production volume, and so on, all of them beautifully packaged in color and with the rest of the graphic design bells and whistles. Another is the juxtapositioning of these reports with extremely well-reasoned, breathtakingly ambitious, hardball demands.

Sound familiar?

We know that the Kazakhs have allowed Giffen's company, Mercator, to continue operating in Kazakhstan because they don't want him to become tempted to spill some of his many secrets about the First Family. So it's not a stretch to imagine the former King of Kazakhstan providing expert strategic advice from his distant exile, either directly or through his representatives.

Whatever the case, the Kazakhs have clearly been holding their own.

Photo: Andy Freeburg

Russia's New Prime Minister

As we've discussed on this blog for many months, the likeliest Russian power scenario going forward is that Vladimir Putin steps from the presidency into the prime minister's chair. Today, Putin's chosen successor, Dmitri Medvedev, made that scenario official.

There's some commentary out there that this is Putin's way of assuring a platform to return as president. But I think we've got the power structure as it will probably play out: Medvedev as president and Putin as prime minister, a position whose powers will be increased by the rubber-stamp parliament.

Here's why -- as soon as a person steps into the president's chair, the clock begins ticking. He's limited to two, four-year terms, and Putin is on record as opposing any change in that rule. The prime minister has no such limits, so Putin could remain Russia's paramount leader for life if he so wishes. And he -- and the Kremlin-bound clans that control Russia underneath him -- seem to so wish.

For both Russia and the world, this means the same current course: in Russia itself, a state-led economic boom with limited political freedoms; and outside the country, a Gazprom-led attempt to assert Russian influence.

America's Deal in Europe

I've been critical of the West's decision to allow Kazakhstan to chair Europe's chief political watchdog in the former Soviet bloc. I've puzzled over why Europe and the U.S. would choose to be led by a country that's never run a free election.

The issue is important because the group we're talking about, the Organization for Security and Cooperation in Europe, is the face of Western credibility on a number of issues. Compromise the name, compromise the credibility.

For the last few days, I've exchanged messages with people knowledgeable about the talks over the OSCE leadership. They've told me the political calculus -- at least within Washington -- in consenting.

And it's all about Russia, and the dealmaking-within-dealmaking that characterizes the most skillfully conducted diplomacy.

Here it is: Kazakhstan, its name tarnished because of a huge U.S. corruption case known as Kazakhgate, has been trying for years to polish its public image through a bid to chair the OSCE. But it was making little headway -- until, that is, Russia got behind it.

Why did Russia's Vladimir Putin back Kazakhstan? Because the assertive leader has his own political aims in Europe, one of which is to halt the West's presumption of the right to judge Russian human rights practices. (Putin has one point -- it's humiliating for a foreign power to slam your elections. But he could easily get around that by running a fair election.)

Specifically, Putin proposed to weaken the power of the OSCE's election observation arm, which has condemned about every single former Soviet election since the 1991 breakup. And, for cover, Putin got Kazakhstan to help spearhead the Russian proposal.

So what you had when the OSCE met in Madrid at the end of last month were two proposals on the table -- Kazakhstan's petition to chair the group, and Russia's to weaken its powers. And once Russia's lobbying was over, almost all the OSCE's 56 members were backing Kazakhstan to chair the OSCE in 2009.

So the U.S. did a deal. It got Kazakhstan to reverse itself on Russia's proposal and become effectively the leading opponent to weakening the OSCE's election activities. In exchange, Kazakhstan got the chair -- but a year later than it wanted, in 2010.

There's much bureaucratic gibberish on Kazakhstan's pledges to reform its election practices, meaningless clauses unless one believes that there's a chance that anyone apart from Nursultan Nazarbayev can be president and control Parliament.

In a nutshell, Europe caved to Russia on Kazakhstan, but not on the election watchdog issue.

That's a perilous calculus, but it reveals the reality of influence in Europe -- Russia's is growing, and Washington's shrinking.

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Putin Lays Out Russia's Future: The Gazprom-KGB State

For years, scholars, think tank commentators and journalists have been fond of a cute phrase to describe Russia: The KGB State. That's because of Vladimir Putin's KGB past, and the men who generally surround him.

But Putin's clever choice today of successor shows how he sees his country, and that's a hybrid -- what one might call the Gazprom-KGB State.

The levers of power will be distributed like this: Dmitri Medvedev keeps the money that's fueled Russia's roar back onto the world stage rolling in; and Putin keeps his hand in decision-making through his power base -- the FSB, the successor agency to the Soviet-era KGB.

Medvedev, who unless someone mightier than Putin intervenes will be Russia's next president come March, is chairman of the Russian natural gas giant. He's also of course Putin's deputy prime minister, but it's the Gazprom title that has demonstrated Putin's confidence in his 42-year-old protege.

Gazprom is the spearpoint of Russia's foreign policy. Through its control of natural gas pipelines, Gazprom is the instrument of Russian influence in its former colonies in Central Asia, the Caucasus, the Slavic states of Belarus and Ukraine, and even in the Baltics. And Gazprom is also Russia's lever of influence in Europe, where the company supplies 30% of the natural gas. That influence is likely to grow with the construction of new pipelines from Russia to Europe.

But what Medvedev doesn't have is links to the FSB, or any of the other security services. That means he's absolutely no threat to Putin's aspirations of holding on to power. If Putin had selected Medvedev's main rival, former KGB officer Sergei Ivanov, it would have sent a different message.

Last week, Putin proved that he's the country's most popular political figure in a massive sweep of parliamentary elections. Now he's moved to consolidate his position with the appointment of a milquetoast successor who seems likely to gladly stay on the economic side of power, and leave the rest to his patron.

We all assume that Putin plans not just to exert continued influence, but paramount power. Expect to hear more on that front.

China Replies: No New Sanctions Against Iran

China has replied to President Bush’s request for a tougher global stand against Iran. Sinopec, the Chinese company, today signed a $2 billion contract to develop a supergiant Iranian oilfield called Yadavaran.

The field is impressive, with an estimated 3 billion barrels of recoverable reserves. But the lousy terms show that Iran is still in the driver’s seat. Still insisting on fixed profit rather than the industry-standard big-risk-big-possible-reward formula, Iran gave Sinopec just a 14.98% rate of return.

In addition, production will be extremely slow. The contract calls for just 185,000 barrels a day. By comparison, the BP-led developers of next-door Azerbaijan's offshore – which contains just under twice Yadavaran's reserves – plan to ship 1.5 million barrels a day when it’s at maximum production in the next decade.

But the message is clear. The U.S. has lost the punch of its main claim against Iran – that it’s trying to build a nuclear bomb; a fresh intelligence estimate says that Tehran stopped doing so four years ago. So that has made it difficult for Bush to step up the isolation of Iran in what he asserts is the best way to get it to halt its enrichment of uranium.

China’s action shows that Iran will find ways around the western embargo.

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Big Oil's Last Heyday and What Comes Next

This blog tracks Big Oil’s last heyday – on the Caspian Sea – alongside its visible sunset as the major oil companies die off. As those who also follow these events know, the ‘Stans and Vladimir Putin already impact prices at the pump, and seem likely to have greater influence in the coming years. Meanwhile, what is coming a few decades ahead – the darkness and despair suggested by the self-proclaimed “doomers” of peak oil, or the relatively smooth transition to hydrogen cars and cellulosic fuel predicted by other futurists?

A couple of articles in today’s New York Times have interesting angles on the futurist questions. In one, Clifford Krauss describes how some of today’s big petro-exporters are themselves developing big carbon appetites, and will be competing with their customers for the world’s oil. In the second, Norman Mayersohn takes a spin in Honda’s FSX Clarity, the Japanese company's attempt to make a hydrogen car commercial. He likes it.

Both are worth Sunday reads.

Cheetah Anyone?

If you want to communicate that you've arrived, some of your options are to drive a Ferrari, move to the Côte d'Azur, or perhaps walk around with an exotic animal, say a cheetah.

Or you can build a 67-story headquarters that resembles ... well ... it's obvious what Gazprom's new headquarters resembles.

Russia's Gazprom -- the world's biggest natural gas supplier, the breaker of nations, the scourge of Europe -- is erecting the building, designed by the U.K. architects RMJM, in St. Petersburg.

Can the Hermitage compete? UNESCO, the United Nations cultural arm, has complained that the building, well, diverges from the rest of the three-century-old city. But the city administration is aptly pugnacious. UNESCO "only came to our city because they smelled gas,” said Vera Dementyeva, who heads the city's Committee for the Preservation of Historical Monuments.

Diplo-Capitalism: Bush's Clintonian Iran Strategy

One needn't be a gene physicist to see that President Bush looks a lot like -- gulp -- former President Clinton these days. He's hosting Israeli-Palestinian talks, speaking with Syria, and now we hear that he's opened a pen-pal exchange with the mother of all totalitarians, North Korea's Kim Jong Il.

As my former Wall Street Journal colleague Jay Solomon notes today, neo-con John Bolton hates this shift. "Our foreign policy is in free-fall at the moment," the former U.S. ambassador to the U.N. and advocate of uni-polar diplomacy tells Solomon. Engaging dictators, Bolton says, will only "diminish our prestige and influence."

Bah humbug.

So what's next in Bush's embrace of the foreign policy he's spent seven years deriding? Adoption of Clinton's diplomatic two-step with corporate America?

As readers of this blog know, I see one of America's most triumphant foreign policies of the last decade as the successful linking of the Caspian and Mediterranean seas through the Baku-Ceyhan oil pipeline. When this million-barrel-a-day came on line last year, it cemented a decade-long challenge to Russian suzerainty in Central Asia and the Caucasus.

And it was all a joint diplomatic-commercial effort of Clinton administration officials and Big Oil, specifically BP, Pennzoil and a few other companies. It was cutting-edge stuff -- geopolitics at the intersection of diplomacy and commerce.

Now it seems Bush is following the same tack. Today my friend Dean Rose was kind enough to pass along a transcript of Bush's news conference this week on the fresh intelligence that in fact Iran stopped seeking development of a nuclear weapon four years ago.

Bush said he's working to get companies both in the U.S. and abroad to help persuade Iran to stop enriching uranium. One presumes Bush was talking about oil companies -- what other type of company would he be describing?

Here's Bush's direct language when asked what's next in U.S. policy on Iran:

"And I believe now is the time for the world to do the hard work necessary to convince the Iranians there is a better way forward. And I say, hard work -- here's why it's hard. One, many companies are fearful of losing market share in Iran to another company. It's one thing to get governments to speak out; it's another thing to convince private sector concerns that it's in our collective interests to pressure the Iranian regime economically.

"So I spend a fair amount of time trying to convince our counterparts that they need to convince the private sector folks that it is in their interests and for the sake of peace that there be a common effort to convince the Iranians to change their ways, and that there's a better way forward."

This is not to mock Bush but simply to note the dovetailing of long-standing foreign policy practices.

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Don Quixote and Exxon's Contrarian Gamble

Does Exxon Mobil know something that the rest of Big Oil doesn't? Or is Exxon on a noble but ultimately quaint and quixotic quest for the old days?

Around the world, Big Oil has been knocked back on its heels by the assertiveness of state-owned oil companies that are both developing their own fields, and competing vigorously in auctions for the rights to oil and gas reserves elsewhere. The upshot is that major oil companies look to be on the verge of a long, unpleasant (for them) decline, with the result that some of them -- such as Italy's Eni -- are scrambling to adapt by forming alliances with the state-owned companies.

Exxon is not only refusing to play along with this scenario, but is in battle around the world in a claim that the prior rules hold.

In Kazakhstan, it was announced this week that Exxon is the lone holdout on an agreement to resume work on supergiant Kashagan, the largest new oilfield on the planet; the rest of the field's big partners -- Europe's Total, Shell and Eni -- have agreed to shave off a bit of their collective shares in the field so that Kazakhstan can become a full partner.

In Russia, too, Exxon is at odds with Moscow's insistence that the company sell natural gas from its giant Sakhalin-I development within Russia instead of at a higher price to China. Meanwhile, the rest of Big Oil has thrown in the towel and done compromise deals with Moscow.

And, as my friend Paul Sampson at Energy Intelligence notes in a story this week, the company is in conflict with Venezuela after abandoning participation in the Orinoco heavy oil project when Hugo Chavez demanded a larger piece of the pie. Exxon and Venezuela are in arbitration over how the company will be compensated. Meanwhile, Total, Chevron, BP and Norway's Statoil went along with Chavez's terms.

In a speech last month in Rome, Exxon Chairman Rex Tillerson said, "Some exporting and importing countries are losing sight of their interdependence. They are responding to the energy challenge by pursuing policies of resource nationalism."

Tillerson is betting that the current phase is a blip. Oil prices ultimately will moderate, his thinking goes, and state-owned companies in Venezuela, Russia, China and elsewhere will be back on Big Oil's doorstep.

Meanwhile, Exxon's strategy is to morph into more of a natural gas company. My former colleague Russell Gold at The Wall Street Journal reported during the summer that more than a third of Exxon's total proven reserves are in the Middle East and Asia; five years ago, Gold said, Exxon reported just a sixth of its reserves from that region. Exxon's biggest play on the planet is Qatar, which accounts for much of its growth.

It seems un-Exxonish to bet one's future on a single country or region. But it's not contrary to company culture to resist change. This is a company that until recently was the biggest corporate funder of the narrow club of greenhouse gas "scientist" deniers. Exxon reduced that funding when it became too public and too embarrassing.

It would be foolish to pass judgment on Exxon's strategy. But it does seem to be betting the house against the tide.

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Russia: Note to Presidential Candidates

This week's U.S. reversal on Iranian nuclear aims is a wake-up call on multiple fronts for those who will run American foreign policy for the next few years.

Among them is this: Vladimir Putin isn't a simple gadfly. Instead, he's one of the most important leaders the U.S. can cultivate over the next few years. Why? Because he's engaging and challenging the U.S. on issues that both countries care about, and happens to get it right -- and the U.S. wrong -- at important times.

As we learned this week, Iran is one. For years the U.S. tried to stampede him into supporting ever-escalating sanctions, leading to possible war, against Iran. But he resisted, asserting that President Bush's claims about Iran's nuclear weapons capability were overblown, and according to the new U.S. intelligence estimate it is Putin's judgment that was correct.

The new Iran intelligence highlights another needed correction: Putin in fact isn't inaccurate -- nor belligerent -- when he asserts that the U.S. presumes to know the only way on foreign policy.

U.S. policy on Russia currently amounts to this: You hurt my feelings.

It would be better to focus on issues, and the main one is energy, the foundation of Russian -- and Putin's -- power, how he's asserting Moscow's prerogatives in Europe and elsewhere.

As readers of this blog know, I think that one of the most potent instruments of power in Europe today is control of the flow of oil and natural gas. Putin has learned the lesson of the momentous U.S. foreign policy triumph last year with the completion of the Baku-Ceyhan oil pipeline and is conducting his own, much more ambitious pipeline policy.

Putin's strategy is market-oriented -- to cement and increase Russia's current control of 30% of Europe's natural gas market. It so happens, in my opinion, that that aim is incompatible with European and U.S. interests in a more diversified natural gas supply so that no one can dictate terms.

The U.S. is attempting to counter the Russian pipeline thrust, but is late to the game. U.S. energy bureaucrats led by Steven Mann are meeting in Sofia tomorrow and Friday to talk over how the U.S. can polish its strategy, and it'll be interesting to know the outcome.

I personally think that the new intelligence assessment on Iran -- like the previous one -- sounds too smugly certain. Anyone who has read Tim Weiner's excellent Legacy of Ashes can see that the intelligence business is barely manageable at best, like herding cats as the saying goes. But the fact that the intelligence services did not have rock-hard evidence before on Iran's intentions gives little comfort to those reading this week's abrupt, contrary assertions.

And it's equally discomfiting to those who have watched American policy on Russia amount to finger-pointing.

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Notes on the Pipeline War: Amateur Hour in Washington and Europe

Note: I had an interesting interview today with David Inge of WILL Radio at the University of Illinois. Lots of history, Russia, Iran and China.

Now to pipelines. I’ve been exchanging emails with an oilman friend about a long natural gas pipeline championed by the United States and Europe to meet Vladimir Putin’s petro-thrust into Europe. This friend, who chooses to correspond privately, thinks the West’s handling of the pipeline, called Nabucco, has been amateurish at best. And I must say after going over it with him that he makes a strong case.

As background, this clumsily named, 2,000-mile-long pipeline would start in Turkey and terminate in Austria. It would transport natural gas from the Central Asian republics of Turkmenistan, Kazakhstan and Uzbekistan, providing them a financial channel independent of current monopoly-buyer Russia. It would also help to diversify the natural gas supply of Europe, which relies on Russia for some 30% of its gas.

Nabucco is the West’s response to three big Russian-planned pipelines that instead would channel Central Asian gas north to Russia, for onward export to Europe through the planned Nord Stream and South Stream pipelines. The pipelines would advance a shrewd Russian market strategy to cement and build on its domination of Europe's energy supply.

Russia is far advanced in the contest, but the West thinks it can catch up. As readers of this blog know, the Bush administration is about to name Thomas Pickering, one of Washington’s most seasoned statesmen, to head the diplomatic effort in a newly created office within the State Department.

But my friend argues that, not only would Pickering not be poised to push Nabucco over the finish line, the West is currently “not even in the starting gate.”

Putting aside for the moment that the Central Asians have yet to make a necessary commitment to the line, Nabucco’s advocates have to date failed to perform a detailed economic analysis of the proposed line. And because they also have no convincing engineering study of the line, along with a detailed, country-by-country understanding of how big or small the role of each player in the complex line would be, the West ends up at risk of being manipulated by those with a vested interest in its construction.

In the 1990s, when the U.S. got behind the Baku-Ceyhan pipeline – the million-barrel-a-day line connecting Baku with the Turkish Mediterranean – it corralled support money from organizations like the Export-Import Bank and the European Bank for Reconstruction and Development. No equivalent effort has accompanied the campaign for Nabucco.

So is the West serious? If so, my friend says it might move beyond a pose and create a program. He makes sense.

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How to Tarnish A Hard-Won Reputation

It's not a household name in the United States, but in the former Soviet Union the Organization for Security and Cooperation in Europe is a source both of irritation and solace. The distinction depends on whether you are one of the region's autocrats or one of its independent thinkers.

Whichever the case, the OSCE -- financed in large part by the U.S. -- has played a hard-fought, 16-year role as Europe's official conscience.

Until now. The OSCE has bafflingly jeopardized its reputation as Europe's premier human rights watchdog in order to satisfy an understandable if misguided campaign by Kazakhstan for the prized chair of the organization.

Last Friday, the OSCE for publicly unknown reasons succumbed to Kazakhstan's full-court press on the issue, and announced that the Central Asian republic will take over the one-year chair a little over two years from now, in 2010.

Kazakhstan is hardly the region's worst human-rights violator. But neither is its record worthy of holding up as an example, which is what the chair represents. This is a country that has never held a fair election; although President Nursultan Nazarbayev has led the country since 1989, there's no way to know for sure that he actually ever won a contested election.

Nazarbayev has never permitted a genuine opponent to run against him, and like his neighbor to the north, Vladimir Putin, he has routinely beefed up the election results to show swelled support. He recently signed a law allowing him to serve as president for life. And there's no evidence that, short of his own death, Nazarbayev will ever agree to give up the post; to the contrary, the probability is that he'll stay on the job for years to come.

If the OSCE states wished an example from the former Soviet Union, why not choose Ukraine? For all its flaws, it has been holding truly competitive presidential elections for some 13 years. Or better yet, how about Georgia? There, Mikheil Saakashvili has actually stepped down from the presidency in order to run in a snap election next month.

Kazakhstan ran its OSCE campaign through its own offices and the paid help of lobbying groups like APCO in Washington. It's not clear to me what precisely turned the tide, but the OSCE decision is appalling, in my opinion. It will be hard-pressed to recover its reputation.

Business Week Names The Oil and the Glory A Top-10 Business Book of the Year

Thanks to Business Week for the recognition. SL

Who's Afraid of Vladimir Putin?

In a long interview I did last night for Bob Brinker's show Money Talk, a man asked me whether I think that Vladimir Putin is the most dangerous man on Earth. I replied that I could think of five men more dangerous.

But the exchange raises a question: How has Putin -- a glad-hander of rogues to be sure, a petro-nationalist definitely, an intolerant autocrat at home as well -- managed to earn the impression of a menacing figure abroad? He hasn't started any wars; as far as I know, he hasn't sold nuclear weapons or fissible materials to anyone he shouldn't have.

A more sensible view of the 55-year-old Putin -- whose party won a landslide victory in parliamentary elections yesterday, and appears likely to be the country's leader for some years to come -- is that he's a politician who one underestimates at one's peril. He is indisputably dangerous to his domestic enemies, both directly and in the atmosphere of impunity toward murder that he has created at home.

Human Rights Watch should harangue him about his human rights policy. The British should continue to demand the extradition of Andrei Lugovoi in last year's Alexander Litvinenko assassination. And Washington and the European Union should move to prevent Gazprom from gaining a bigger foothold in the European natural gas market.

But Putin is not likely to provoke a war. I also don't think he believes he's contributing to Iran's nuclear weapons capability -- he lives in the neighborhood, and could be among those to suffer most directly in a nuclear exchange.

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Kazakhstan Wants Equal Ownership Status at Kashagan

The news today in one of the world's great oil disputes is that Kazakhstan has made public a demand for an equal share in the supergiant Kashagan oilfield. Bloomberg reports that six of the field's seven partners have agreed.

Work at Kashagan, the world's largest oilfield discovery in the last few decades, has been suspended while Kazakhstan and an Italian-led foreign oil consortium settle their differences. Kazakhstan is upset that, in a period of $90-a-barrel-oil, the field will be at least five years late coming to market; in addition, costs are nearly double what was originally estimated, and Kazakhstan will have to wait several more more years for some profit until those costs are paid off.

It's been clear that the Kazakhs want more control over the field, plus more money, and earlier receipt of it. The announcement today, however, is the first concrete statement that the country expects a full share of the field. That would approximately double Kazakhstan's current 8.3% holding.

What wasn't said is the terms: Does Kazakhstan intend to pay for the share? If so, are they talking cash? And if they are, how will the price be decided? Or will the companies carry the Kazakh interest?

And who is the holdout on agreeing? Given its record, a solid guess would be Exxon Mobil, which previously said it would consent only if the country extends the contract beyond its current 40-year life.

Kazakhstan is unlikely to agree to that condition when the dispute revolves around fault on the part of the foreign companies.

Exxon, which like Total, Eni and Shell has 18.5% of Kashagan, still behaves as though it's in the driver's seat. But the final settlement -- according to Kazakhstan it will be tomorrow; the companies say it will be later this month -- is likely to reflect a much stronger position for Kazakhstan.

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Trolls and Hugo Chavez

On one of my favorite websites, The Oil Drum, I often see the commentary, "Don't feed the trolls." I had no prior idea what this meant, but learned from context (and Wikipedia) that a troll is a person who goes out seeking unprovoked trouble, in this case inserting unpleasant lines onto a discussion group designed to send blood pressure into the stratosphere.

We have trolls large and small in our midst, and they have one thing in common: a desire to make themselves larger by attacking established beings with huge credibility. One who comes to mind is the Rolling Stone's tiresome Matt Taibbi, whose trolldom against three-time Pulitzer Prize winner Thomas Friedman has even earned him a Wikipedia listing. Everyone knows a troll.

But there are also trolls in politics, which is what triggers this post, and a question: Why do ordinarily smart people fritter away their time dissecting and vilifying buffoons with no impact on their lives?

I speak in this case of Roger Cohen at the International Herald Tribune, who has now wasted two consecutive columns trashing Venezuelan leader Hugo Chavez. In his article today, Cohen leads off by saying, "An oil-rich country bent on humbling the United States is an instructive place from which to view the world, so here are eight rules of modern political life as seen from President Hugo Chávez's Venezuela."

Who cares what Chavez is bent on? Can he do it? No.

We definitely have a world changing because of oil nationalism. But do the other oil nationalists -- Putin and Nazarbayev, for instance -- themselves take Chavez seriously? No sign of it.

When I returned to the U.S. from the Caspian and covered oil for The Wall Street Journal a couple of years ago, the Chavez phenomenon was one of the first things that struck me, that is: Why were my friends vexed over a fellow in a tiny country whose main crime, as far as I could tell, was running his economy into the ground in the name of patriotism?

Why indeed. The reason is his big mouth. Americans get really irritated by foreigners with that indiscretion, against which we've been known to order assassinations and even go to war.

Why, Chavez may even be as dangerous to the United States as, as ... Fidel Castro!

To which I can only say, Don't feed the trolls.

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Satisfying the Kazakhs at Kashagan

My former newspaper, The Wall Street Journal, is reporting that the Italian-led consortium in Kazakhstan has signed a "memorandum of understanding" toward settling their dispute at the supergiant Kashagan oilfield. They will now have until Dec. 20th to talk.

This is a huge issue -- involving 13 billion barrels of oil at a time big private oil companies are having momentous trouble finding new reserves to back up their value. The players include the biggest names in the business -- Exxon, Shell, Total, Eni, ConocoPhillips and others.

But today's announcement smells like the boilerplate Soviet-era "protocol," the worthless pieces of paper that two interlocutors would sign at the drop of a hat to demonstrate continued good will, or simply to show their bosses some sign of progress.

The two sides have much separating them.

Yesterday, the WSJ's Guy Chazan reported that a chief stumbling block is Kazakhstan's demand for a $7 billion penalty payment. According to the report, the companies want to pay just $4 billion. I suspect that is not a key stumbling block, as they'll no doubt settle at a middle point between the two sums.

This is only conjecture, but I'd say the bigger obstacles must include how to meet Kazakhstan's demands for a larger share and co-management of the field. And, possibly more important, there's Kazakhstan's demand for an earlier and bigger share of the proceeds once oil sales begin in 2010 or later.

When you are discussing a one-time-only penalty of a few billion dollars spread over several partners, it's painful but not overly so in a $90-dollar-a-barrel world. But when you are shaving percentage points off a field ownership share to give to the country involved (Kazakhstan), that's tens of billions of dollars spread out over decades.

And when these proceeds are demanded earlier than expected -- before the field development costs are paid off -- you are also increasing the companies' risk profile, the calculation that an investment could go south before it begins to earn money.

And, as much as everyone understands that Kazakhstan is in the driver's seat, and the companies have few places to turn for large reserves these days, the corporate lawyers will have something to say about any change in the risk involved. And so will the shareholders.

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Stalking the Caspian Horse

Back in July, a New Zealand page called Horsetalk ran out an interesting story on a British woman named Pat Bowles and her personal efforts to save and spread a breed of horse re-discovered in the 1960s in Iran and dubbed the Caspian. I missed the piece, and thanks to a horse specialty web page called Simply Marvelous for reprinting it this week.

As the story goes, an American woman named Louise Firouz who had married into Iranian aristocracy found this lilliputian-size horse -- average height about 11.2 hands -- trotting around a place called Amol, about 13 miles south of the Caspian Sea. It turned out that it was a long-lost breed that in past times was used to pull chariots. The locals were using them as work horses.

Firouz set out to save them -- she reckoned there were around fifty at the time -- and now there are well over a thousand around the world. One of the main U.S. breeding centers, the Kristull Caspian Ranch, run by Francie and Chuck Stull in Brenham, Texas, sold its last Caspians (except for two family pets) in September, and the couple retired. But there are other ranches selling them in the U.S., Britain, and elsewhere.

Pat Bowles, the woman profiled in the New Zealand story, is another of the horse's saviors, based in England.