http://www.usatoday.com/news/world/2005-10-09-oil-rich-countries_x.htm Oil-rich countries tap into new political power By Barbara Slavin, USA TODAY A financial windfall brought on by rising energy prices has emboldened several oil-rich nations to challenge U.S. foreign policy and given them more leverage with U.S. allies that rely on oil imports. Challenges are coming from an increasingly assertive Venezuela and Iran and a Russia no longer dependent on Western handouts. "Oil is the new currency of foreign policy," says Senate Foreign Relations Committee Chairman Richard Lugar, R-Ind. Iran and Venezuela are "not only less cooperative but almost gleeful that they are able to make trouble for us," Lugar says. "These are huge changes that have not been comprehended by most of the U.S. public." Oil prices have been driven up by rising global demand, particularly in China and India. The USA remains the world's biggest importer and consumer. It imports more than 12 million barrels of oil a day and uses more than 20 million barrels a day, or 14% of the global supply, the Department of Energy says. U.S. concerns have focused on three nations: Venezuela Lugar has asked the Government Accountability Office to study how the USA could cope without oil from Venezuela, whose president, Hugo Chavez, has become a kind of junior Fidel Castro with oil. Chavez has been an irritant to the United States since he was elected in 1998. Now he has more power to "use oil as a political tool," says Michael Shifter, vice president of the Inter-American Dialogue, a think tank in Washington. Venezuela's oil export revenue this year will top $35 billion, up from $13 billion in 1998, according to the Department of Energy. Shifter says it is selling discount-price oil to Caribbean nations in a bid to buy political support. That may have influenced Caribbean nations to oppose U.S. choices for head of the Organization of American States this year, Shifter says. The Bush administration had to accept Jose Miguel Insulza, a Chilean leftist, and may be less able to use the traditionally pro-U.S. body to support U.S. policies and counter Chavez. Chavez is providing financing to leftist politicians in Bolivia, Ecuador and Nicaragua and building opposition to U.S. positions on free trade and investment in advance of a regional summit in Argentina next month, Shifter says. Deputy Secretary of State Robert Zoellick, on a visit to Central America last week, said Nicaragua is facing a "creeping coup" by former left-wing leader Daniel Ortega and his unlikely rightist ally, former president Arnoldo Aleman. Ortega is trying to regain the presidency he lost to pro-U.S. politicians in 1990. Another Chavez tactic: countering the United States at international forums. Last month, Venezuela was the only country to oppose a resolution by the International Atomic Energy Agency, the United Nations' nuclear watchdog, condemning Iran. The resolution said Iran had not complied with its obligations under the Nuclear Non-Proliferation Treaty and should be reported to the U.N. Security Council for possible sanctions. The IAEA board must vote again to send Iran to the Security Council. It isn't clear whether the United States and its allies have the votes to do that. Iran Iran has seen its oil export earnings quadruple from $11 billion in 1998 to more than $40 billion projected this year. Recently, it has become more confrontational in its stalled negotiations with European governments over its nuclear program, which it says is to generate power. But the programs could be used to make weapons. In August, Iran ended its suspension of efforts to make uranium fuel. Last week, its chief nuclear negotiator, Ali Larijani said Iran would "use its full might to endanger America's interests" if the United States tries to punish Iran for its nuclear program. Iran has major influence with Shiite Muslims in Iraq and militant groups in Lebanon and the Palestinian territories. High oil prices appear to have made Iran less concerned about the prospect of European punishment and confident that China, a major consumer of Iranian energy, will block U.N. sanctions. "With $25 billion in windfall oil profits this year, Iranians have been debating whether they really need the West," Shahram Chubin, director of research for the Geneva Center for Security Policy, told a Washington audience recently. A domestic backlash could force Iran to be more cautious. Its stock exchange has plummeted 30% since the IAEA vote. An unelected clerical body, headed by pragmatic former president Akbar Hashemi Rafsanjani has gained new power to supervise the government. Russia Russia expects to earn nearly $110 billion from oil exports this year, up 22% from 2004. That new money has undercut U.S. and European leverage. Russia is succumbing to "petroarrogance," as it no longer has to borrow money from the West, says Fiona Hill, a Russia expert at the Brookings Institution, a Washington think tank. Russia provides more than 40% of European oil and gas and has been using its clout to punish the Baltic states and Ukraine for their pro-Western policies. It is bypassing them — and depriving them of transit fees — to build a gas pipeline under the Baltic Sea to Germany, Europe's largest consumer of Russian natural gas. Germany has been particularly deferential to Russia and joined with Moscow in opposing the U.S. invasion of Iraq. As Russia becomes richer, U.S. efforts to influence Russia to support tough measures to thwart the development of nuclear weapons by Iran and North Korea are undercut. And Russia has been challenging U.S. efforts to promote democracy in Central Asia, backing Uzbekistan despite a crackdown on dissidents there earlier this year. State Department spokesman Sean McCormack says the changed oil market has not caused the Bush administration to alter its foreign policies. "High oil prices will not always be there," he says. As Arab oil nations learned in the 1970s, high prices persuade oil consumers to conserve, which eventually lessens demand and lowers prices. It could be years before that happens, however. In the meantime, says Jim Placke, a senior associate at Cambridge Energy Research Associates in Washington, the money gives "regimes the option to do things that are risky."
