Obama Administration Adding Oil (and Caspian) Balance to Energy Team

One persistent knock against the Obama administration's energy team is that it is one-dimensional -- everyone has a clean-tech background, the mirror image of the oil industry bent of the Bush White House. At the top, climate and energy czar Carol Browner is a former administrator of the Environmental Protection Agency, and Energy Secretary Steven Chu ran, among other things, an alternative energy development program while director at Lawrence Berkeley National Labs. The criticism has been that, even if you want to accelerate non-fossil fuel research and controls on greenhouse gases, you still need a balance in terms of expertise since, according to most forecasts, it's going to be a long time before oil and natural gas vanish from our fuel mix. No policy can be serious unless it takes shrewd account of everything.

All the while, however, word was that the administration intended, but simply hadn't gotten around yet, to name senior global energy officials both in the National Security Council (the president's foreign policy think tank) and the State Department. Now, it looks like Frank Verrastro, one of the Caspian era's steadiest hands, will be taking the NSC job. David Goldwyn, who doesn't have the same oil industry experience but does possess a long biography in senior government energy jobs, will take the State Department position.

Verrastro, currently director of energy and national security at the Center for Strategic and International Studies in Washington, seems likely to be named senior NSC director for energy and the environment.

I first met Verrastro a decade ago when he was Pennzoil's Washington representative and a key player in the negotiation of the pivotal offshore Baku contract between the world's largest oil companies and Azerbaijan President Heydar Aliyev. He was also in the center of the mix on making the Baku-Ceyhan oil pipeline happen.

One main truth I found while researching The Oil and the Glory was that at most a handful of the players -- diplomats, oilmen, local officials, and so on -- truly understood the complex events taking place on the Caspian. Meaning not just being able to recite events, but instinctively grasping them so as to accurately and trenchantly forecast what came next.

Verrastro gets the global oil and natural gas game, and at the same time is conversant on clean energy. I'd say he'll be an effective player.

I don't know Goldwyn at all. He was an assistant secretary for energy during the Clinton administration, and is said to be a former protege of New Mexico Gov. Bill Richardson. Since Dick Morningstar, Eurasian energy czar under Secretary of State Hillary Clinton, already has the former Soviet Union, Turkey and parts of Europe, it looks like Goldwyn will handle the rest of the world. Morningstar is another former Caspian hand from the 1990s.

While we are on the subject of names, Jon Elkind, a former NSC director for Central Asia whom I first met on a plane in Turkmenistan back in 1995, is the new principal deputy assistant secretary of energy for policy and international affairs. Elkind is a no-nonsense kind of guy. The Caspian will be getting smart attention all around.

Post-Mortem on Obama in Moscow: The Greater Attractions of a Harley

The Wall Street Journal's Jonathan Weisman today puts together the four major policy speeches that President Barack Obama has made abroad -- in Cairo to a Muslim audience; in Prague to Eastern Europeans; in Ghana to Africans; and now in Moscow to Russians. Weisman's takeaway is that Obama is combining "tough" and "love" overseas -- respect for other cultures with demand for concessions on big issues.

I myself noted that Obama didn't get much traction in Moscow. My former Washington Post colleague Masha Lipman regards it as an important speech, and speaks similarly to Weisman in terms of Obama's message in Moscow. "Obama was delicate and subtle, as well as firm and concrete," she wrote in the Post.



Lipman suggests that one reason the speech went under-appreciated in Russia is that it wasn't broadcast live. Russian commenters to her column helpfully provide a link to the translated Russian broadcast of the speech on state-owned Vesti-24. Here is the full broadcast for Russian-speaking readers.



Finally, Lucky Barker, a Lipman commenter with a wicked sense of humor, poses the possibility that Obama was simply upstaged. As it turns out, Prime Minister Vladimir Putin followed his breakfast with Obama that morning with a televised visit to a local biker's club.

Obama in Moscow: A Cool Reception, and a Dose of Putin

President Barack Obama employed his signature moves -- the candid town hall address; the glamorous wife and daughters -- and to be sure Russian President Dmitry Medvedev seemed to lap it up. But in the end Russia is not Cairo, nor Berlin. This is not 1994, when then-President Bill Clinton led some Moscow women to swoon. In place of the intrigued, still-fascinated eyes of the 1990s, Obama was met largely with disinterest from the Russian public, and the wagging finger of Prime Minister Vladimir Putin in private. In short, he fell flat.

That's a dose of reality. In the best of times, on most topics, the best that can be expected in a U.S.-Russia relationship is probably respectful disagreement.

“We don’t really understand why Obama is such a star,” 25-year-old Kirill Zagorodnov, a student at Moscow's New Economic School, told Clifford Levy and Ellen Barry of The New York Times. “It’s a question of trust, how he behaves, how he positions himself, that typical charisma, which in Russia is often parodied. Russians really are not accustomed to it. It is like he is trying to manipulate the public.”

Stefan Wagstyl of the Financial Times heard the same story from the students he collared after Obama's speech at the school yesterday. But Nikolai Petrov of Moscow's Carnegie Center also cautioned Wagstyl not to go too far with his analysis: "These students are not typical. They are mostly mathematics specialists," Petrov said.

While this slap of reality was telling, probably the most important meeting of Obama's Moscow trip was his two-hour breakfast with Putin. By Wagstyl's description, it appears that Putin put on one of his bravura performances. Putin has been wowing Westerners for years with his three-hour, no-notes discourses on Russian affairs at the annual Valdai Discussion Club. Now Obama got a taste of Putin's presence of mind.

Obama's takeaway? Putin is "tough, smart, shrewd, very unsentimental, very pragmatic." And also in charge.

U.S.-Russia Summit: Warmer Temperatures in Moscow

The chief takeaway of the U.S.-Russia summit is that it's been all upside, and no downside, for the leaders of both countries: Russian President Dmitry Medvedev got to tally up respect points from hanging out and negotiating nuclear arms reductions with President Barack Obama; and Prime Minister Vladimir Putin got to stare fiercely at the American president (video). From Obama's side, he got to take down the temperature with Moscow, Washington's loudest European critic.

Yet nothing that happened in Moscow shifts the shape of world events as they were when Obama arrived there. For instance, the two sides could do nothing to change the direction of events just south of Russia, in Iran.

The State Department has denied that Vice President Joe Biden has given Israel the go-ahead to fly over Iraq and attack Iran. That's not what Biden meant when he said in an interview Sunday that the U.S. won't stand in Israel's way were it to attack Iran, the State Department asserts. In the closing weeks of his presidency, George W. Bush refused to grant such permission. An Iranian official replies that Tehran will mount a "real and decisive" response to any such attack.

This could be mere brinksmanship. Israel itself is pushing the U.S. to put together a fresh set of "crippling sanctions," according to Michael Crowley at The Plank.

Ria Misra at Inside Politics suggests that an ideological split that's just become public in the religious center of Qom "may be the critical leverage that finally forces not only the overturning of the [June 12 presidential] election results, but maybe of the ayatollah as well." She is talking about a critical statement issued Sunday by a reformist clerical group called the Association of Scholars and Researchers of Qom Seminary. Kathy Kattenburg at The Moderate Voice is also impressed with the development.

This could be another bout of getting carried away, as pundits and the media did leading up to the Iranian election. In fact, as Najmeh Bozorgmehr reports in the Financial Times, the most powerful clerical group in Qom, the Society of Scholars of Qom Seminary, issued a simultaneous statement congratulating Iranian President Mahmoud Ahmadinejad on his official re-election.

Meanwhile, opposition leader Mir Hosein Mousavi's outspoken appearance yesterday in public -- the first time he has been publicly cited in three weeks -- is bound to stir up more turbulence. That will offer up a chance for Obama and Medvedev to exercise their new-found camaraderie.

Obama, Medvedev and Obduracy in Moscow

Look for presidents Barack Obama and Dmitry Medvedev to emerge from their long hours of summitry this week massaging each other's shoulders, and riffing on their personal chemistry. While expressing the usual caveats, Prime Minister Vladimir Putin will probably do the same. They will carefully avoid the soul-gazing verbage of George W. Bush, but the meaning will be similar.

That diplomatic lubrication won't make either side yield on the respective postures that mainly irritate the other side: Despite the knowledge that a U.S. missile defense system planned for Poland and the Czech Republic doesn't work, Obama isn't going to outright renounce its deployment, not without a fairly serious tradeoff from Moscow (and it's hard to imagine what that would be); and Medvedev won't relinquish Russia's insistence on a continued sphere of influence that includes the Caucasus, Central Asia and Ukraine, even if Obama outright cedes the right of Georgia and Ukraine to join NATO, which one can't picture him doing.

Certainly Obama isn't going to drive a wedge between Medvedev and Putin, nor drive the prime minister from influence, as seems to be the push in Washington. Obama should get accustomed to the apparent fact that Medvedev and Putin simply see eye to eye -- perhaps by necessity -- on most subjects.

Perhaps this is as it should be. My Business Week colleague Jason Bush and I write in this week's magazine on the business agenda for the summit. But in traditional Washington-Moscow relations, progress is made on the edges of obduracy. And in fact neither side wants much from the other. Washington would like more Russian cooperation on its initiatives; Moscow would like more respect.

On Obama's Plate in Moscow: Iran and Breakfast With Putin

The philosophical underpinning of President Obama's arms-control agenda in Russia next week is that -- by allowing Moscow to preen on-stage, reviving its former role as a superpower state, ostensibly regulating peace in the world -- Russia will be more amenable to persuasion on other topics.

But does this reasoning hold? Will Moscow see things Washington's way on the Caspian, on Georgia, and on the balance of petro-power in Europe?

More important at the moment, could Moscow decouple from Iran, with which it has maintained an alliance of poking-fingers-in-the-U.S.-chest? Now that the chances for a game-changing U.S. opening with Iran have been all-but eliminated by the after-election crackdown in Tehran, is there anything to be done before Israel, for instance, decides it can no longer wait for Iran to become a nuclear state?

I've surveyed some old Russia and foreign policy hands from the George W. Bush and Clinton administrations, and the answer comes back that, at least on Iran, Moscow either can't or won't be able to help restrain Tehran. As for petro-power and the Caspian -- Moscow is capitalizing on the global financial crisis to re-assert power in its struggling neighborhood, and will push back on any attempt to deny it regional domination.

Steve Sestanovich, ambassador-at-large for the former Soviet Union under President Clinton and now a senior fellow at the Council on Foreign Relations, told me that Moscow is already effectively cooperating with U.S. aims on Iran -- while it committed to finishing Iran's Bushehr nuclear reactor and providing S-300 missiles, Moscow for years has failed to deliver either. "Their policy is to avoid annoying anybody too much," Sestanovich says. "The middle ground allows them to make a lot of money. And they hold in reserve a role as a possible diplomatic mediator if the U.S. or Iran indicate they are reconsidering their position."

Georgetown Professor Angela Stent, a former State Department and National Intelligence Council expert on the region, just got off the plane from Moscow yesterday. She says that Russian officials and experts have a mixed view of Iran -- the latter say that Russia can live with a nuclear Iran, just as it lives with a nuclear Pakistan and India; and the former say they don't believe that Tehran is anywhere near obtaining nuclear capability.

Whatever the case, seeking Russian help on Iran is misguided, Stent suggests. "Russia doesn't have the power to deliver Iran," she says.

A former Bush administration official who preferred to speak not for attribution said that any stiffer sanctions -- even if the Europeans and Russia were to agree -- "would not work quickly enough." "They are on the threshold" of nuclear capability, this official said, and this again raises the possibility of an attack by Israel on Iran.

Interestingly, Obama administration officials still talk of the possibility of negotiations with Iran. That seems to ignore political reality both in Iran -- Sestanovich notes that Iranian officials themselves seem publicly at least not to welcome further talks -- and the U.S., where Obama could face a buzz-saw of criticism should he be seen as equivocating after the bloody aftermath to the June 12th Iranian presidential election.

Obama will spend some 10 hours with President Dmitry Medvedev while in Moscow. But on Tuesday, Obama is also going to have a private breakfast for an hour or an hour-and-a-half with Russian Prime Minister Vladimir Putin.

Obama told The Associated Press that Putin "has one foot in the old ways," while Medvedev understands "that the old Cold War approaches to U.S.-Russian relations are outdated." This is a nice public relations setup, but not likely to result in any progress -- Medvedev has done nothing so far to indicate any separation from Putin on foreign policy, and there's no reason I can think of to believe that he will.

The former Bush administration official asserted that Obama shouldn't dignify Putin's behind-the-curtain grip on power by spending time with him; technically speaking, only Medvedev is on the same protocol level, this thinking goes. For that reason, this former official told me, Bush didn't meet with Putin once he was no longer president and began serving as prime minister. That's technically correct but disingenuous. In fact, just prior to Putin's stepping down, Bush violated his own rule precluding meetings with other heads of state unless there was a concrete deliverable to be achieved: Bush did so by flying out to Putin's vacation home at Sochi, hence delivering much prestige to the Russian leader but nothing for the U.S.

Stent says rightly that it's not realistic to ignore Putin. "To move the agenda forward, you have to meet with both of them," she told me. "It wouldn't make sense not to meet with Putin."

Indeed, rolling back a few years earlier, when Bush's father went to Moscow as U.S. president, he met with both Soviet leader Mikhail Gorbachev and his antagonist-for-Soviet-power, Boris Yeltsin, who was then the mere president of the component state of Russia.

Putin is not ignorable, any more than Russia, as usual, keeps itself in the diplomatic game by its willingness to play the outsider.

The Balance of Power in the Former Soviet Union

Moscow's envoy to NATO has signaled that Russia is ready to resume the thaw in relations triggered last month in the G20 meeting in London between presidents Barack Obama and Dmitry Medvedev. Russia had been miffed by NATO exercises going on in Georgia, and canceled a planned meeting with NATO this month. But now Dmitry Rogozin, Russia's envoy to NATO, says, "We will go ahead with restoring relations." Russian Foreign Minister Sergei Lavrov said much the same when he met with Obama and Secretary of State Hillary Clinton in Washington last week.

Yet Rogozin and Lavrov can behave statesmanlike because in a big way recent events have gone Russia's way.

NATO proceeded with the exercises despite Russia's objections, thus ostensibly demonstrating that no country will determine who can join the military alliance, and where it will act. But look under the hood. One of the nations missing from the games is Kazakhstan -- President Nursultan Nazarbayev declined to send troops to the month-long games. Why did this deft balancer of great powers go along with Russia's wishes on NATO? Perhaps he would have declined even if there had been no Russia-Georgia war last summer, when Russian troops overran large parts of Georgia in anger over Tbilisi's violence in South Ossetia (or perhaps Kazakhstan simply didn't want to go, as the country itself explained.). Yet, Russia's former colonies are behaving with more circumspection than, say, a year ago, and one suspects that the August war is much responsible for that.

A super-smart former senior U.S. diplomat to the former Soviet Union told me yesterday over coffee that the U.S. has not yet lost its influence in the Caucasus and Central Asia; the August events, he said, were "a shot over the bow." But an actual "diplomatic disaster," he said, would come only if Russia actually overran all of Georgia, and seized control of the Baku-Ceyhan pipeline, along with some of the financial benefits accruing to such a move. In this former envoy's view, possession of the "economic rent" would be "qualitatively different" from the current state of affairs, because it would amount to effective Russian reconquest of the Caucasus and Central Asian states.

Possession of the economic benefits -- meaning the pipeline transportation tariffs -- would be different. But I don't see Russia making such a move, one reason being that it doesn't have to: Actual occupation of Georgia isn't necessary; rather, with the August war, Russia signaled that it is prepared to go to any lengths -- in this case military -- to enforce its will. The outcome has been one 'Stan after another falling into line.

Kazakhstan's non-participation in the NATO exercises is just one sign of that. In another, just two days ago, the European Union signed an agreement that Dan Bilefsky of the NYT describes as intended to speed up the Nabucco natural gas pipeline, the western-backed effort to reduce Russia's energy influence in Europe; Kazakhstan, Turkmenistan and Uzbekistan -- the current biggest sources of natural gas for the line -- declined to sign. Diplomats told Bilefsky that the three countries did so "because of pressure from Russia." Moreover, after meeting with Medvedev, Azerbaijan President Ilham Aliyev suggested that he will sell his country's natural gas to Russia, at the same time that Europe and Washington have all-but begged him to commit his gas to Nabucco. There has been a mood shift recently in the U.S. on whether Nabucco is singularly important; yet it's one thing determining that in the West, and quite another doing so in Moscow.

Meanwhile, on the military front, there is the U.S. ejection from its military base in Kyrgyzstan in favor of Russia.

Current and former U.S. officials with whom I've spoken in the last week or two hew to the belief that the August events were strategically meaningless to the U.S. That is, that the U.S. retains roughly the same influence across the Caucasus and Central Asia as it did prior to the war.

The truth is that U.S. energy policy in the region is a shambles. A U.S.-Iran rapprochment could change that (there is a genuine chance, for starters, that Mahmoud Ahmadinejad will lose the presidential election next month. His three major rivals, while perhaps not differing substantively from Ahmadinejad, are distinctive from him in tone and approach. Talks with the U.S. could be much smoother.).

The State Department has a super-skilled diplomat on Eurasian energy in the form of Dick Morningstar. At the National Security Council, my former Stanford colleague Mike McFaul is clear-eyed on Russia; and, with the Obama administration fixated on alternative energy and climate change to the exclusion of any expertise in oil and natural gas, NSC Adviser Jim Jones is seeking a much-needed senior director for global energy, I'm told.

Washington has no equivalent in this sphere to the roles played in South Asia by Richard Holbrooke and in the Middle East by George Mitchell. Perhaps the combination of talent in State and on the NSC will be sufficient to handle the complex brief straddling the lines of Russia, the 'Stans, Iran, nuclear proliferation and energy.

For Writers Only: Joseph Ellis on Being a Historian

When I met with Joseph Ellis at Mt. Holyoke, part of my interest was the art of historical writing. Ellis' work is elegant; it sparkles. But he has also attracted a broad audience -- and a Pulitzer -- because he breaks new ground. Ellis clearly has a knife out for critics who say he is a mere popularizer; he also seemed to have slight regard for colleagues who are happy in the weeds. (To be fair, Ellis has his own skeleton -- the matter of his vivid imagination regarding Viet Nam). Here is an edited version of this part of our chat:

O&G – You think that a pure historian would not engage in the exercise of comparing one president with his predecessors?

Ellis – A pure historian would resist the notion that you can compare now and then without a very, very large translation. They speak a different language back there. The context in which the problems were being perceived were not the same as now. So the straight-forward literal comparison without some kind of recognition of the context is different. The L.A. Times calls me and asks me to write something on what George Washington would do about Iraq. I said, ‘Well first of all he wouldn’t know what the hell Iraq was. Nobody would. It didn’t exist then. It didn’t get created until 1920 by the British. But secondly he wouldn’t know about Osama bin Laden, the weapons of mass destruction, CNN, the 24-hour news cycle. He’s in a different world, brother.’ Now, having said that, if you want to write the op-ed piece, then you say, ‘If you read Washington’s correspondence and life, the conclusion I would reach is …’ – not to say that Washington himself would. You can’t bring Washington into the present – ‘… is that the United States in Iraq is mired down in the same kind of military situation that the British were in North America during the American Revolution. They don’t have enough troops. They cannot subjugate the entire population, and eventually they are going to do what the British did. The British didn’t lose. They just decided it’s not worth it. And get out.’ So my take is that there is something to be learned from that, but it’s more of a historian having written about Washington, but it’s also reading about Iraq on a day by day basis. That’s what I’ve learned based on my knowledge of Washington. But to say that Washington would know that is ridiculous.

Q – Full disclosure – did you vote for Obama?

A – Yes.

Q – And did you vote against Bush?

A – Yes.

Q – Would you wish you were writing about someone whom you could watch in the flesh?

A – We know more about Abigail and John Adams’s relationship than we will know about any relationship of any 21^st century president. Because they wrote letters.

Q – This is the new book you are writing.

A – Yes. But what I’m saying is that the telephone and the cellphone and the Internet eliminate evidence for a historian. And I think the way it really works in my case. I’m pretty much a news junkie. Not a blog junkie though. I think when I go back tonight to try to write a paragraph about Abigail’s relationship to her daughter, Nabby, what I’ve seen today in the paper will affect me somehow. Or to put it more pointedly, watching the way Obama moves physically matches with people’s statements about Washington. He was an athlete, he was a dancer. He was the best rider. He is physically overwhelming. Now, Obama is not overwhelming, but watch the way he gets to a podium. He’s almost running. It’s like a stride. It flows, too. The guy is together. So there’s a back and forth to me as a historian so instead of the past helping me understand the present, which sometimes it does, the present sometimes helps me reinterpret the past. I live more of my time in the late 18^th century than I do now. I appreciate the opportunity to watch things on CNN, but my mind is always using that to try to explain a specific research problem I am facing at that very time. I’m not very smart. It takes me a lot to do that. It’s 99% perspiration. Just hanging in.

Q – But you teach and you write.

A – I’ve really made a conscious effort to be writing to people like you – serious American readers of history who read the New York Times, etc., not to other historians. Some other historians like what I have to say, you know a serious contribution to scholarship, but that’s not my audience. Some of them, it’s clear, would like a larger audience – who wouldn’t? But they don’t know how to do it. There is a socialization process that has occurred in many instances that has prevented them, created a new vocabulary, of references that nobody else cares about. And they are not only writing for other historians, but the framing of the problems they address are themselves done by other academics. ‘We should develop the theory of public space that so-and-so has … you know, study the constitutional convention using [Jurgen] Habermas’ theory of public space.’ Okay! If that’s what you want to do. For me it’s the primary sources, all the stuff that they actually said and wrote or were said and written about them in their time. I’ve read Charles Beard, I’ve read hundreds of books about the Constitution to be sure. But my job is to come to the primary material, read it with as much intelligence and imagination as possible, and write about it with as much clarity and cogency and at times lyricism as I can muster. That’s it.

Greatness and Treachery in Power. The Oil and Glory Interview: Pulitzer Prize-Winning Presidential Historian Joseph Ellis

At O&G, we are using the occasion of Obama's 100th day in office as an undisguised pretext to interview one of my favorite historians. In 2000, Joseph Ellis won the Pulitzer Prize for his slender Founding Brothers, a masterful collection of portraits of seven of America's revolutionary leaders. We visited in his office at Mt. Holyoke College.

Ellis proved to be a lot of fun. Among the takeaways: He much likes Obama, thinks that George Washington's treasury secretary, Alexander Hamilton, would do well in Tim Geithner’s seat today – though given the menacing description, that might not be such a good thing. And he thinks that the nation’s prior tests – the Civil War, the Revolution and the Great Depression – all tower above our current travails in terms of a threat to the country. The edited interview:

O&G – The press has been filled with stories comparing Obama with Franklin Roosevelt mostly, but also with Kennedy, with Johnson, with Lincoln …

Ellis – Lincoln is Obama’s favorite

Q – Is it legitimate to compare? People just don’t know how to take him on his own merits?

A – We’re experiencing something akin to the Great Depression. Therefore to what extent is FDR or references to the greatest challenges that presidents faced coming into office? Lincoln had the greatest, and Roosevelt right after him. This doesn’t rate in quite that category. Those were nuclear explosions. This is still only a conventional explosion.

Q – Are his fans trying to put him up on a pedestal?

A - I think there are more people who are pro-Obama engaged in that enterprise. But once it starts, Fox News will do it too as a way of developing a critical perspective on Obama.

Q – In His Excellency, you write that only Roosevelt and Lincoln faced a comparable challenge to Washington’s. How do you rank the presidents?

A – I would put [Washington] at No.1 and Lincoln second. But I’m a late-18^th century historian. I’ve got my own biases. I just think that coming at the beginning has enormous advantages and has enormous risks. He made all the big decisions right. That’s one of the things I see in Obama. I don’t agree with some of his decisions. I don’t agree with the Afghanistan decision. I don’t agree with the failure to nationalize. I think he’s still under the influence of [economic adviser Larry] Summers and [Treasury Secretary Tim] Geithner. Eventually they are going to have to [nationalize]. But we’ve had him under the microscope of national media for over two and a half years now, and I’ve never seen a guy perform so well. And even though the European trip – we didn’t get the NATO support for Afghanistan, but that was never going to happen; and even though we didn’t get Germany to stimulate their economy, that also was never going to happen. It’s clear it’s a breath of fresh air. Finally there’s an adult in charge.

Q – You think the economic situation is not a nuclear explosion.

A – I don’t think the survival of the republic is at risk. I think it was at risk in 1861 and 1933. Not just the Depression, but it was beginning to appear that a totalitarian form of government was the wave of the future – fascism, Nazism or the [Hedeki] Tojo Japanese version. And capitalism itself was at question. And by the way I think the terrorist threat has been hyped out of the ballpark. The greatest threat to national security is global warming. It’s not terrorists. They can’t do much to us – blow up a city maybe, but that’s the worst. Let’s hope that doesn’t happen. But this was constructed by the Bush administration with the support of the media.

Q – I’m intrigued by your description of Alexander Hamilton, the first treasury secretary. You write that Washington handed over to him the books – ‘please fix this,’ he said. Of course you can’t compare him directly with Tim Geithner because he was with Washington, as you described, during the war …

A – He was. He was his aide de camp.

Q – And he was a huge personality. Geithner doesn’t have a personality.

A – And Hamilton creates an American fiscal policy. There is nothing. Geithner’s got to fix it. But it’s already there. Hamilton would have gotten the highest grade on the SATs of all of the founders back then. He’s the smartest. He’s brilliant. He’s fast, too – he’s not deliberative; he’s on a dime. You know the Federalist Papers were written overnight. Like, bing bing bing. And he’s also the most dangerous. And as long as he operates within Washington’s aegis, both during the war and during Washington’s presidency, his creative abilities are channeled into unbelievably productive things. Once Washington leaves, Hamilton goes nuts and he becomes a very dangerous man during the Adams presidency. When you see what Hamilton is doing in 1797, ’98, ’99, he’s attempting to raise an Army of 50,000 troops responsible to him on the basis of a pumped-up threat of a French invasion. That’s the reason I’m so sensitive about the terrorists being pumped up. That’s where you get the Alien and Sedition Acts, he’s behind that. He’s got the cabinet of Adams in his hands. They report to him, not to Adams. And he envisions declaring war against France, taking his Army south and imprisoning all the Jeffersonians who have opposed him, continuing to Florida and the Gulf coast, which is Spanish-owned and therefore we’ll claim it because Spain is an ally of France, then going all the way to New Orleans and claiming the Louisiana territory, and if possible heading south and taking Mexico. I’m not kidding. That’s what he said he was going to do. That would have ended the whole American republic.

Q – What are the lessons from Hamilton on fiscal matters?

A – Hamilton would have been happy with the New Deal. Jefferson would have been devastated. Hamilton foresees the creation of a powerful American nation state with a powerful federal government and a global power.

Q – And what would he think about the bailouts, the stimulus?

A – If you could somehow bring him back alive and make him aware of all the stuff that’s happened since, he’d be brilliant. But it’s another world. I do think there are parts of his fiscal policy that clearly suggest that he thinks that free markets are not always the best thing.

Q – Such as what?

A – I mean you’ve got to regulate industry. And he wants subsidies for American manufacturers. He wants protective tariffs. And his stuff on manufacturing, which is the most imaginative part of his fiscal policy, nobody reads it but he really is a New Dealer. But he’s coming at the beginning. He’s trying to start the engine. He knows the incredible resources we have. The North American continent is unbelievable. He’s trying to create an engine that’s going to take make use of the extraordinary wealth that’s inherent in our location, our geology and our geography. I think that at some point since 1980, a much greater part of the economy became dependent on finance. We don’t make anything. We gotta make stuff again. I think he’d say that. Even though he helps the bankers, he wouldn’t be a guy to run a hedge fund. He has too much of a public commitment. He thinks it’s wrong if some guy is making $15 million a year.

Q – A final question: Bush and Condoleeza Rice have said repeatedly – ‘They are still figuring out about George Washington today. No one knows how we will be seen.’ Comment?

A – The bottom is still [Warren G.] Harding and the guy who precedes Lincoln (James Buchanan). So you ask, are there cases where presidents have been low, and then they went up? Yea! Truman is the classic example. Truman left with horrible poll numbers. And so theoretically it’s possible for that to happen to Bush, too. However, the following things have to happen: A) It has to be seen that global warming is a myth. B) Iraq has to produce this flowering democracy in the Middle East that wins hearts and minds. In other words, things of that magnitude have to happen that are very unlikely. In fact, it’s going to get worse. And in fact, the eight-year delay on global warming may be his most serious blunder. Bush and his people are theologians. They have committed themselves to a cause that is religious. And they believe that God will save them. Ain’t gonna happen. This is going to go down as one of the worst presidencies in American history.

A Front-Row Seat to Momentous Events. The Oil and Glory Interview: Albanian Prime Minister Sali Berisha

Albania has had a prime view of some of the most dramatic events in Europe of the last decade and more. Most recently, they have included the West's showdown with Russia over Kosovo's independence, which led directly to Moscow's effective absorption of the Georgian regions of Abkhazia and South Ossetia. In addition, while Russia has opposed further expansion of NATO, Albania along with Croatia became the alliance's newest members three weeks ago.

When I was last in Albania – during NATO’s 1999 bombing of Serbian troops in Kosovo – I had a great time, but the country was overrun with criminal gangs. There were Mercedeses everywhere – all of them absent license plates since Albania served as the way-station for stolen vehicles traversing Europe. It also was a smuggling route for people of all sorts seeking to migrate illegally to Europe; I watched a couple of boatloads of these migrants traveling fast late one evening on to Italy. Today, with the country a NATO member and seeking to join the EU, those old days seem largely gone.

Albanian Prime Minister Sali Berisha has traversed this entire period. A 65-year-old trained cardiologist, he was Albanian president for five years during the 1990s, before losing the post in a huge investment scandal. After ten years in the opposition, he returned to power in 2005. I called Berisha in his Tirana office. The edited interview:

O&G – The International Monetary Fund calls Albania “highly vulnerable.” Yet it is one of the few economies in the world expected not to shrink this year. How is the country withstanding the financial crisis? How are remittances from Albanians abroad holding up?

Berisha – I have high esteem for the IMF. But it should not [encourage] a panic. It’s not helpful, in my view. I told them, ‘Look, you’re a very, very crucial institution. I’m glad that the G20 provided you with a new role.’ But many governments are hesitant to work with them because their scheme at a time of social unrest could create more problems than it solves. I don’t consider the [Albanian] economy as highly vulnerable. It’s a real economy. Remittances are not coming [to the same degree] because of the loss of jobs in Greece and Italy. But we are encouraging tourism.

Q – Is NATO membership a right? Russia, while opposing Kosovo independence, for instance, has vigorously opposed NATO membership for Georgia and Ukraine, and made that a benchmark for good relations with the West.

A – For my country, NATO membership was the most important achievement since independence day. Albania suffered more than any country from security problems. It suffered from isolation and self-isolation. It was an orphan nation. Now it’s part of an alliance. We have all the potential to build freedom. It means high credibility for Albania in the world. It is high credibility for investors. Albania will never walk alone.

Q – Is NATO membership a right?

A – For a free nation, yes. NATO proved to be a shield of nations. NATO has faced no difficulty adapting to the new situation. It has brought freedom everywhere.

Q – Is it valid for Russia to make good relations with it contingent on opposing NATO membership for Georgia and Ukraine?

A – I know no country that is afraid of Russia. I know only countries that are willing to work with Russia. Based on some imperial heritage, if you go into their history, expansion is in their psychology. What effect would Georgia or Ukraine have on Russia? What effect would NATO expansion have on Russia? [The assertion of a NATO threat to Russia] is nonsense. It will take time, but with realism [Georgian and Ukrainian membership] will happen.

Q – The decisive factor in deciding who should be a member of NATO is whether it would send troops to defend that country, Article V of the NATO charter. Would NATO defend Ukraine or Georgia if need be?

A – Is Russia intending to attack Ukraine or Georgia? If Russia intends to partake an aggression, NATO must firmly stand, because that would mean the new Russification of Europe.

Q – What is your view of the August war between Russia and Georgia?

A – Who attacked first is unclear. But a [Russian] scenario was there to invade Georgia. The Russians moved not only into Ossetia. They moved into Abkhazia, and toward Tbilisi. Russia probably wanted to occupy Georgia. The stand of the international community worked.

Q – How will Albania respond to President Obama’s call for more NATO troops in Afghanistan?

A – Albania is sending a new company, doubling our current number of troops. We also sent 20 nurses and doctors.

Q – Is Afghanistan a threat for NATO countries?

A – Afghanistan and Pakistan must both be helped. It is difficult terrain. Politics at home aren’t easy. But I think the strategy will be effective. The U.S. sent a man over there who is highly skilled in negotiations.

Q – [Richard] Holbrooke?

A – Yes. Holbrooke. It’s very important to promote peace there.

Q – Unlike elsewhere in Europe, President Bush seemed highly popular when he visited Albania in 2007. Can you explain why?

A – First, he was the first U.S. president to visit my country. Second, we suffered more than any country from dictatorship. So we definitely support toppling dictators, including Saddam Hussain and [Taliban leader] Mullah Omar. Third, he came with great messages here – support for Kosovo independence, and NATO membership for us.

Yes, But Will An Obama Visit Put the U.S. Back in the Great Game?

President Obama has told a senior Kazakhstan official that he intends to visit the Central Asian nation, a senior American official has told me. The visit comes as Russia has rolled back U.S. power in the region after a decade in which Washington established military bases there and encouraged the construction of non-Russian energy pipelines to the West.

Yesterday, Reuters reported on a Kazakhstan statement about an invitation issued to Obama by Kazakhstan Senate Chairman Kasymzhumart Tokayev, who is second in the line of power to President Nursultan Nazarbayev.

In an email exchange, a senior Obama administration official confirmed the report. He told me that Tokayev issued the invitation while meeting with the U.S. president in Istanbul this week. Tokayev happened to be in town for a conference called the Alliance of Civilizations, and Obama met him along with a dozen heads of delegation.

On meeting Obama, Tokayev invited him to Kazakhstan. "Obama responded that he knows well the importance of Kazakhstan and intends to visit, but does not yet have a fixed date scheduled to do so," the administration official said. One opportunity would be July, when Obama plans to visit Moscow.

No U.S. president has ever visited any Central Asian country, though the U.S. had a military base in Uzbekistan until it was ejected in 2006, and another in Kyrgyzstan, which is scheduled for closure in July. The closure of the Manas Air Base in Kyrgyzstan came in February after Russia promised the country more than $2 billion in loans.

For an excellent synthesis of the retrenchment of U.S. power, and its replacement by Russia, read this piece by the FT's Charles Clover and two colleagues.

Reset: Russia, yes; Iran, Kinda

Rose Gottemoeller, assistant secretary of state for verification, compliance and implementation, will be the chief U.S. negotiator for nuclear arms reductions with Russia. The goal is to sign a completed deal by Dec. 15, when Start I expires.

That's not a surprise -- Gottemoeller negotiated one of Washington's single most-important successes in the post-Soviet era, which was the removal during the Clinton administration of 4,000 nuclear warheads from Ukraine, Kazakhstan and Belarus.

It's also not a surprise that presidents Barack Obama and Dmitry Medvedev today made the re-negotiation of Start I the core of a reset of U.S.-Russia relations. Arms reduction, highly favored in Russia, "is the most productive vehicle to start with," Angela Stent, director of the Center for Eurasian, Russian and East European Studies at Georgetown University, told me by phone. "It doesn't mean we will be finished by December, but the statement provides which systems will be included" in the talks.

Yet in a post-mortem with reporters, two senior U.S. officials seemed downright giddy after today's meeting between Obama and Medvedev in London, where the Group of 20 summit will be held tomorrow. One reason was that the two leaders were even able to agree on a final agenda going forward; and second was a stronger agreement on how to deal with Iran's nuclear program.

All of this has an economic component -- energy. Geopolitics in the region are highly inter-connected: Better relations with Russia can help fertilize the ground toward a thaw of U.S. relations with Iran, which could then significantly improve global natural gas supplies, particularly to Europe, which is highly dependent on -- who else? -- Russia. It's all fairly circular. Iran has the world's second-largest natural gas reserves, and whenever the financial crisis tamps down, Europe's energy thirst is going to resume its rise.

What Obama officials said on the four-page Obama-Medvedev statement itself: "I'll tell you honestly, I was not optimistic when we started this process of negotiating this that we would get it done for this meeting. ... It started very differently several weeks ago, and that he got his government to engage in it in a very serious way and get it done in time for our meeting today I think is a statement of the possibilities in U.S.-Russian relations."

And on the statement's position on Iran: "I've dealt with [Russian Foreign Minister Sergei] Lavrov over the last several weeks and they've always said Iran is not developing a nuclear weapon -- 'We have no evidence of that; show me that this is there.' And this was a different tone than that."

The two sides will continue to meet ahead of a planned Obama trip to Moscow in July.

In a blog post at Democracy Arsenal, Adam Blickstein seems as delighted as the Clinton officials. Matthew Yglesias is of a similar mind.

On Iran, progress isn't as clear-cut. Secretary of State Hillary Clinton made much of a brief conversation yesterday in The Hague between U.S. envoy Richard Holbrooke and Iranian Deputy Foreign Minister Mohammad Mehdi Akhundzadeh. The diplomats were all there as part of a parlay on Afghanistan.

Michael van der Galien of PoliGazette blogged on that the encounter was significant, as simple as it was. John Boonstra at UN Dispatch thinks it's good news that Iran is even "in the mix."

Alas today, Iran denied that the Holbrooke-Akhunzadeh encounter took place. The political ground in Tehran is apparently not as far along toward a thaw than it is in the U.S.

This must be why experts say a true rapprochment between Washington and Tehran will be years away.

New Washington Team and a Fresh Game in Russia, Iran and the Caspian

After much gnawing over the notion, the Bush administration decided last year to issue a White House invitation to Turkmenistan President Gurbanguly Berdymukhamedov. That was wise -- this trained dentist is one of a handful of indispensable players in Eurasian energy.

Alas, the invitation was also late -- geopolitical rival Vladimir Putin had marked up a several-year-long head start of mutual state visits between Moscow and Ashgabat. And it was clumsy: the Turkmen leader was asked to come after the November presidential election. In other words, after Bush was officially a lame duck.

Understandably, Berdymukhamedov declined.

Today, the Obama administration is trying to lower the temperature in U.S. relations with Russia, what it calls a "reset." In two weeks, President Obama will meet with President Medvedev in London. As part of the warming-up exercise, Secretary of State Hillary Clinton is cobbling together a basic agreement for the presidents' perusal on replacing the Strategic Arms Reduction Treaty, which expires in December.

At the same time, the administration is forming its foreign policy team for Eurasia, the former Soviet Union, and energy. Russia has largely regained the upper hand in Central Asia and the Caucasus, which Washington had treated as a region of U.S. strategic interest since it backed construction of the Baku-Ceyhan oil pipeline connecting the Caspian and Mediterranean seas in the 1990s. Washington called it the East-West Energy Corridor.

Will the Obama administration get its timing better in terms of inviting Berdymukhamedov to the White House? If so, he might become friendlier toward the parade of U.S. diplomats and oil company executives who call and email me and others regularly with tales of woe regarding their reception in Ashgabat.

Members of the new team include Mike McFaul, the long-time Russia hand who co-wrote a prescient analysis of the Russian economy in Foreign Affairs a year ago. McFaul is running the Russian and Eurasian Affairs desk at the National Security Council. Also at the NSC is Liz Sherwood-Randall, a key architect of the U.S. embrace of Uzbekistan dictator Islam Karimov in a stint at the Pentagon during the Clinton administration, who will watch the rest of the former Soviet Union. The talk is that NSC chief James Jones will also establish a new NSC slot for global oil, but I've heard the names of no firm candidates. At the State Department, the administration is losing Steven Mann, the ultra-experienced Coordinator for Eurasian Energy Diplomacy, who was offered various posts, but instead is leaving to go into the private sector. Stepping back into Eurasian energy is Dick Morningstar, who served as Caspian czar during the 1990s before leaving to teach law at Harvard and Stanford.

In addition, there's talk in Washington of deputizing Vice President Joe Biden as a direct, regular interlocutor with Putin, along the lines of the Al Gore-Viktor Chernomyrdin Commission of the 1990s, which scored numerous successes on political and commercial issues.

In terms of energy itself, the Obama administration has signaled a break with previous administrations by naming a team focused on climate change and alternative fuels. But, in the case of Eurasia, policy can't be one-size-fits-all. Fossil fuels are king there, and Putin has recently handily bested U.S. diplomacy in that sphere. The final act of his triumph was the five-day Russian-Georgian war last August, which revived Russia's premier great power status throughout the former Soviet Union.

Recently, the U.S. has struck back with an West-East corridor. Turning the trans-regional corridor into a two-way route, West-East is a railroad route to supply U.S. troops in Afghanistan with non-lethal commercial supplies -- food, toilet paper and the like. Want to sell something that the troops can use? This is the way to get it there.

The context is the apparent U.S. loss of the Manas Air Base in Kyrgyzstan, and the uncertainty of the overland supply route from Pakistan through the Khyber Pass.

After Russia helped to persuade the Kyrgyz to eject Manas, it told Washington that it was willing to pick up some of the slack. (One alternative overland route starts in the Baltics, runs through Russia, and on through Kazakhstan and Uzbekistan to Afghanistan; traffic on this route could be expanded, Russia points out).

But the last 16 years in the region have been all about the uncanny power of alternative routes on geopolitics. So the U.S. appears to have politely declined and, in addition to the trans-Russia route, begun to run the West-East corridor through Georgia and Azerbaijan, across the Caspian to the Kazakhstan port of Aktau, then on to the Uzbekistan city of Termez and Afghanistan.

The ultimate game-changer in the region would be a U.S. diplomatic breakthrough with Iran. Clinton has tried to set the stage by inviting Iran to a March 31 conference in The Hague on Afghanistan to be attended by her and ministerial-level officials from some 75 countries.

As part of the attempted thaw with Moscow, Clinton is also trying to get Russia to help forge a breakthrough with Iran. There's talk of an Obama trip to Moscow in July.

Though Clinton is focused on other benefits to be gained by normalized relations with Iran -- mainly a better chance for Middle East peace -- such a change would also open up a new source of oil and natural gas. And that would change the geopolitics of Europe by diversifying its natural gas supply. That makes the Iran policy in part a new Russian policy.

Obama Energy Team Stresses Break with Bush

In announcing his energy team, President-elect Barack Obama seemed to take a not-very-subtle swipe at the Bush administration. Obama did so in introducing Steven Chu, his designate for energy secretary, invoking a frequent complaint of critics -- that Bush and his team have neglected science in favor of politics and ideology, and been slow to act on global warming.

Obama said this evening in Chicago that Chu's appointment would "send a signal to all that my administration will value science, make decisions based on facts and understand that facts require bold action."

Indeed, Obama's team -- excluding anyone with any expertise in oil -- seemed to be a repudiation of Bush's fossil fuel-centered energy policy. In addition to Chu, Obama named Lisa Jackson, the former head of New Jersey's state environmental agency, as head of the U.S. Environmental Protection Agency; and Los Angeles Deputy Mayor for Energy and Environment Nancy Sutley as head of the White House Council on Environmental Quality.

Chu is the star of this bunch -- he is a Nobel Prize laureate in physics. Yet an energy expert whose opinion I've come to trust over many years says that the real power will reside in the White House, and in particular Carol Browner, named to hold the new White House post of energy and climate czar. Browner was EPA administrator under former President Bill Clinton. Still, questions have been raised as to how much true influence Browner will enjoy in a White House filled with heavyweights with perhaps competing agendas.

On the light side, Lynn Yarris, the bundle of enthusiasm and science know-how who serves as Chu's spokesman at Lawrence Berkeley Laboratory, says no one at Berkeley -- with the possible exception of Chu's wife -- even knew that he was interviewing for the energy post.

Chu was in London at the time word started filtering out last week regarding the appointment, and went incommunicado. Yarris said at the time that if the talk was true, Chu was so low-key when they spoke, that he must be the best poker player he had ever encountered.

The Berkeley lab has planned a celebration for Chu on Thursday, but given the arc of events, Yarris isn't sure Chu will be back in town for it.

What Chu Means as Energy Secretary

By appointing Steven Chu as energy secretary, President-elect Barack Obama appears to be making concrete his campaign pledge to focus on alternative energy. Obama also is continuing his streak of favoring serious personalities with star power in the cabinet.

Chu is the first Nobel laureate to serve on a presidential cabinet. (He won the prize for physics in 1997.) As the current director of the Lawrence Berkeley National Laboratory, he has been a high-profile advocate of an accelerated program of weaning the U.S. off of fossil fuels.

Expect a highly active, non-ideological and scientifically focused drive to develop alternatives to oil and natural gas.

I talked to Chu in May, when he described being part of an attempted "revolution" since taking over the directorship of the Berkeley lab in 2004. He said:

When I came to the lab, I came with the idea that there are a lot of brilliant scientists here. If I could get the intellectual brainpower to come up with new technologies on the energy supply side, that could be as efficient but less costly than oil, and on energy efficiency and energy storage, that that is something we do need and need quickly. We can't wait a half-century, given what we fear with climate change.

... Do I want my guys to stop basic research and work only on energy? No because they are also working on other revolutions to take place 10 years down the road. But given the magnitude of the problem, it's okay to have some of our best and brightest working on it. In the end, the quality of the solution will depend on the quality of the people working on it.

Washington Pay Attention: Silver Clouds in Moscow

For the diplomatically stretched United States, there's a possible silver lining in the cloudy financial turmoil in Russia.

Russia's financial regulators today yet again halted trading on the ruble-dominated stock exchange, the MICEX. They acted just after the MICEX opened, and kept traders at bay for two hours before reopening the exchange. At the close of the day, the index had fallen by 6%; it also fell 5.5% yesterday, and is down by about 50% for the year.

Meanwhile, also yesterday Prime Minister Vladimir Putin coughed up $50 billion on top of the previous $130 billion he has injected into Russia's financial system to keep the economy from completely locking up. The subprime collapse is one matter. But the plummet in oil prices is also hurting the country. According to a story today by my friend Charles Clover at the FT, Russia's budget will go into deficit if oil prices fall below $70 a barrel, which isn't the loopy notion it seemed just a month or so ago (they dropped to about $97 yesterday). This latter data point is especially interesting because, when I was researching Putin's Labyrinth in Moscow last year, a Kremlin official told me that the budget would remain in balance at $39-a-barrel oil. What a difference a year makes.

All of this means that Russia's high-flying financial health is wholly different from even a month ago, in addition to that of the western banks and investment banks that have underwritten Russia's foray into global finance.

In a nutshell, there's serious reason to doubt that Russia can raise the money any time soon to carry out its grand energy strategy -- a new natural gas pipeline network stretching from Turkmenistan into Europe.

Washington -- with its myopic focus on Iraq and neglect of its long-cultivated policy on the Caspian Sea -- has been handed a gift of a pause in the seemingly inexorable march of the Nord Stream and especially South Stream pipelines. As O and G readers know, these two pipelines -- championed through the peripatetic work of Putin and President Dmitri Medvedev -- are behind the potent rise of Russian influence in Europe.

A previous posting on this topic provoked reader alarm that Europe will go dark and cold without these new pipelines, an unwarranted reaction considering that Europe uses just half the capacity of the three Russian natural gas pipelines that currently serve it. Nord Stream is arguably a good idea, but South Stream is purely political, a geostrategic ploy to pre-empt the equally political, western-backed Nabucco natural gas pipeline.

How long the pause in Russia lasts depends on who you talk to, but one or even two years are entirely reasonable projections.

That's a window for a Western oil company to get an on-shore natural gas deal in Turkmenistan, which would be key to any resurrection of moribund Nabucco. If the next president, whether John McCain or Barack Obama, rapidly launches a well-considered and -led strategy -- meaning recruiting an American graybeard of the gravitas of Jim Baker or Zbigniew Brzezinski as spearpoint -- he could possibly salvage some of the lost U.S. political and economic influence in the region.

One sure thing is that the window won't remain open. When it closes, Putin will be back as Europe's most dynamic and determined leader.

Russia's Achilles Heel

Over the last couple of days, the post-mortems have begun to roll in from big-thinkers on Russia. The prescriptions advised in order to bring about status-quo ante in Georgia -- ejecting Russia from G-8, distancing Moscow further from global trade treaties -- add up to a consensus of "Oh Dear, Oh My." Non-membership in G-8 and WTO no doubt is provoking snickers in the Kremlin.

Contrary to these views, however, the West and the U.S. in particular do have one very real lever, one that Karl Rove might recognize -- Russia's very strength.

Russia's Achilles Heel is its petro-power. It's a message that both senators Barack Obama (and his running mate Joe Biden) and John McCain should keep in mind as they prepare to deal with Russia.

For more than a year, O and G has been describing progressive U.S. setbacks in what I've called the Pipeline War, the struggle with Russia for energy-driven political influence in Europe. We've also been writing here during that period about the growing tensions between Russia and Georgia.

In a nutshell, Russia understands that power in a large swath of the world -- Europe, the former Soviet Union and parts of the Middle East -- can be exerted from control of oil and natural gas pipelines. That's how the U.S. has inserted its power into Russia's backyard -- through the Baku-Ceyhan oil pipeline that crosses the country of today's conflict, Georgia. Now, Vladimir Putin intends to build on Russia's restored power by erecting two gigantic new natural gas pipelines into Europe, which already relies on Russia for almost a third of its gas.

Here's where the Achilles Heel comes in. One of these pipelines -- South Stream -- would pass through nations like Bulgaria, Hungary, Serbia and Austria. These are countries in which the U.S. has influence.

If the U.S. wants Russia's attention, persuade these countries and others -- for instance Germany, the main European partner on the second pipeline, called Nord Stream -- to freeze their support for the lines until it's satisfied that Georgia's sovereignty is no longer compromised.

Energy, and specifically Nord Stream and South Stream, are a Russian strength, and a genuine vulnerability.

Listening to Iowa, India and China

The West has made it so difficult for Russia to join the 153-member global trade group called the WTO that, under Vladimir Putin, Moscow adopted the Groucho Marx dictum, "I refuse to belong to any club that will have me." After the performance of the leading trading nations in Geneva this week, one might be tempted to have sympathy for that sentiment. Freer trade is important -- if done right, poorer nations can spread the wealth beyond the corrupt elite. But the emphasis is on the execution.

The prevailing wisdom after this week's unprecedented collapse of talks for a freshened, global trade deal is that the world may have become too complex for such grand deals now. Better to turn to smaller, piecemeal pacts among nations and regions, and curb one's ambitions.

From such smaller agreements, according to this line of thinking, those antagonistic toward freer trade will be more comfortable with it. Or, say some people, such limited accords may be the wave of the future – it may no longer be possible to strike a global trade agreement, not with so many competing interests.

It seems to me that that's at best a limited reading of what happened to the so-called Doha trade agreement. My BusinessWeek colleagues Bruce Einhorn and Mehul Srivastava go a ways in explaining why India and China, for instance, dug in their heels at the last moment:

The field has changed around the world. Just as politics has led the U.S. Congress in June to renew subsidies of its cotton and sugar farmers, China and especially India are responding to domestic unease with more open trade borders.

Look at the trouble getting the Columbia trade deal through the U.S. Congress. Are the Democrats going to be more amenable if they see Canada, for instance, do bilateral deals? It seems absurd on its face. Extend that out to the rest of the world, and you get the picture.

Instead, free-traders need to start over with roll-up-the-sleeve politicking. Quite apart from increasingly hostile domestic opinion, a President Obama or McCain will - far more than previous U.S. leaders -- have to satisfy emerging economic states.

India's trade minister, Kamal Nath, used humor to make just this point. At the last moment, it seemed that U.S. Trade Representative Susan Schwab understood that the West could no longer ram through its agenda, and tried to finesse India. But it was to no avail. "Susan Schwab said that she loved me," Nath said in Geneva. "I said that I loved her too. But probably she didn't love me enough."

One of the most striking aspects of the final hours of the talks was the decidedly undiplomatic language used by China's trade representative, Chen Deming, in complaining that the West simply didn't take the rest of the world seriously. "There were no serious efforts to convince the Third World to accept the developed world's package." Deming said. He said, "Once their interests were guaranteed, the Americans demanded a sky-high price" of developing nations.

After the way he has talked down Nafta, Sen. Barack Obama not surprisingly may not be in an enormous hurry to find a way to resurrect Doha. In statements after the collapse, the campaign issued soft support for Doha, but said that the Bush administration was "right to walk away" from China's and India's last-minute demands. Asked what precisely would be needed to move Doha forward, Dan Tarullo, a Georgetown law professor who advises the Obama campaign, told me that it's too early to know. It is also too early to know whether one should use the building-block approach suggested by the McCain campaign. Talking to the Obama camp, the feeling is of a campaign punting what it probably regards as a back-burner issue.

I also spoke with Colin Bradford, a scholar at the Brookings Institution in Washington. He said that the collapse isn't necessarily a bad thing. All the major economies involved – the U.S., China, India, Japan, Brazil and so on – are listening more closely to their domestic constituencies than they ever have, he says. Agriculture subsidies are a sensitive issue in all the major economies. "Are we ourselves going to say we are not going to listen to our Iowa farmers?" Bradford said.

Photo: Eurritimia

Rights: Creative Commons

Nice Try, Sen. McCain

John McCain today credited President Bush with the plunge in oil prices over the last couple of weeks. He says the market is breathing easier because Bush has come down on the side of easing offshore drilling restrictions. I'm not impressed with the energy positions taken by either McCain or Barack Obama. But just to get this on the record before it takes off in the spiral of political commentary -- Bush's reversal of a presidential ban on coastal drilling has had no impact on the markets, nor is it likely to.

The price of oil is dropping for other reasons. The main one is that, contrary to popular opinion, there is no shortage of oil, and traders are starting to notice. The reason that prices have gone through the roof until now is that traders see that, if any emergency happens, such as a Katrina-type hurricane, there might be a shortage.

It's like a healthy person panicking over a lack of catastrophic illness insurance -- if she or he does contract a really serious condition, or is hit by a truck, there won't be enough money to pay the rent.

Traders are worried that, if there's a hurricane or war with Iran, there won't be enough oil. And they've pushed prices through $100 a barrel and on almost to $150 a barrel because of that trepidation.

Ed Morse, the oil contrarian over at Lehman Brothers whom I profiled this week in BusinessWeek, predicts that we are heading below $100 a barrel.

As for offshore drilling -- traders are looking to the medium term, a few years at most. None is looking as many as a decade ahead, the likely time horizon before any new oil from U.S. coastal waters would come to market.

Photo: mikelens
Rights: Creative Commons

The Real War: Autocrats Versus Democrats

Seventeen years after the Soviet breakup, why has Kazakhstan's Nursultan Nazarbayev never run a fair election? Why is Russia's leadership the subject of a selection as opposed to an election? Why, for that matter, is China so successful as a Communist state?

According to Robert Kagan, this is the natural order of things. The last two decades have been an anomaly, and we are now seeing a revival of real ideological balance, he says in, "The Return of History and the End of Dreams."

For O and G readers, here is the best paragraph in the short, 105-page, pocket-size book: "It is a mistake to believe that autocracy has no international appeal. Thanks to decades of remarkable growth, the Chinese today can argue that their model of economic development, which combines an increasingly open economy with a closed political system, can be a successful option for development in many nations. It certainly offers a model for successful autocracy, a blueprint for how to create wealth and stability without having to give way to political liberalization. Russia's model of 'sovereign democracy' is attractive among the autocrats of Central Asia. Some Europeans worry that Russia is 'emerging as an ideological alternative to the EU that offers a different approach to sovereignty, power and world order.' In the 1980s and 1990s, the autocratic model seemed like a losing proposition as dictatorships of both right and left fell before the liberal tide. Today, thanks to the success of China and Russia, it looks like a better bet."

A cottage industry is under way of books dissecting how we started out with a peace dividend from the fall of the Soviet bloc, and ended up with a hyper-charged war atmosphere. Today's New York Times, for instance, reviews America Between the Wars, by Derek Chollet and James Goldgeier.

The books are part of the current electoral atmosphere -- while McCain and Obama battle for the White House, wonks are girding for a place in one or the other's foreign policy superstructure, including senior spots in the National Security Council and the State Department.

This is perhaps Kagan's current aim. With that in mind, he takes aim at Francis Fukuyama, who in 1992 argued in The End of History and the Last Man that liberal democracy was the final stage of governance.

For those unacquainted with him, Kagan is a long-time provider of intellectual heft for neoconservatives. In this book, he puts on a show of shedding his ideological past. Indeed the first two thirds of the book -- through page 82 -- is a bracing and sweeping display of knowledge and analysis of his argument that the world has returned to a competition between democratic and autocratic states. And that that -- and not a struggle between the West and Islam -- is the main geopolitical contest to which the world will be treated in the years ahead. Militant Islam, he says, will fall by the wayside to this more robust rivalry.

But then Kagan reverts to his past as a factory of neo-con ideological thought. For instance, other reviewers have asserted that, with this work, Kagan loses his embrace of Iraq and the transformational global change he promised in the lead up to the current war. But they apparently missed his assertion, on page 90, that Iraq remains a place that, if handled correctly, could still become a strategic boon for the U.S. "A stable, pro-American Iraq would shift the strategic balance [in the Middle East] in a decidedly pro-American direction," Kagan writes.

Indeed, he argues, unlike the criticism rendered by some major scholars, the Bush administration's foreign policy record stacks up well against its predecessors'. The Cold War resulted in "major strategic setbacks"; during the 1950s and 1960s, Egypt and Syria allied with Moscow.; and, under Jimmy Carter, the U.S. lost its crucial ally, Iran, to the uprising of Ayatollah Khomeini. "Nothing similar has yet occurred as a result of the Iraq war," Kagan writes.

One might also quibble with Kagan's characterization of one of the impulses behind Bush's foreign policy -- the same "noble generosity of spirit" that has long driven U.S. actions. In Kagan's telling, Bush's policies have dove-tailed with how Americans have been all along.

Though it might have upset his publisher, the book easily could lose 10 or 20 pages, where Kagan veers off his theme of democracy versus autocracy and into his drum-beating on behalf of the neo-con cause.

Yet I found the clear-eyed crunching of the genuine current battle worth the cover price.