Testing old proverbs

There is a saying in Russia that one old friend is worth two new ones any day of the year. Well, it looks like the Russian authorities have decided to test the truthfulness of this old proverb. Earlier this week the Deputy Prime Minister Igor Sechin called for greater cooperation between Russia and the Organization of Petroleum Exporting Countries (OPEC). Sechin, who is also the chairman of the country's state-run oil giant Rosneft, said that a "draft memorandum of understanding" on closer cooperation was submitted to OPEC. "Cooperation with OPEC is one of the priorities for Russia," the state official was quoted as saying, according to a statement that was read at the opening of the OPEC meeting.

The timing of this announcement is, of course, anything but accidental. For several years OPEC has been making advances to Russia, suggesting closer cooperation, but the country's authorities had always tried to remain as aloof as possible. There were no price agreements and no coordinated market moves. Russia never partook in any OPEC initiatives to either cut or raise its output in order to regulate the market, but just continued to pump as much as it could, while enjoying the high prices. But if the oil producers' group and Russia (which is the world's second largest oil producer after OPEC powerhouse Saudi Arabia) do engage in any closer cooperation, the effect on the market would be substantial. And so it is everybody's educated guess that Russia's move towards the "ambitious potential" of cooperation with the oil cartel is timed to show the West that it has plenty of muscle to flex in the aftermath of the conflict with Georgia. As independent analyst John Hall told AFP in London: "Russia is under pressure from the US and the European Union and is looking for allies around the world and it would strengthen its position to have an alignment with OPEC." The ties should come rather easily as Russia already has a close rapport with OEPC members Iran and Venezuela, which are also on the current US "hate list" and cooperation has much to offer to both sides of the agreement.

Even though some see Russia's appearance at the OPEC meeting as "eyebrow-raising", in fact, I don't see it as anything surprising. Moreover, the move is almost tediously predictable. It's the same story with the joint Russian-Venezuelan naval exercises off the coast of South America - Russia claims that they have nothing to do with the recent conflict with Georgia and subsequent visit by the US Navy, which brought humanitarian aid via the Black Sea, but the timing is nonetheless poignant. It is as if Russia telling the US and the European Union - if you flex your muscles, we'll flex ours. If you try to punish us, we have ways to retaliate. If you try to rid yourself of our oil and gas, we'll find other ways to guarantee the security of demand for our products. As David Kirsch, head of the market intelligence serve at PFC Energy, put it: "Sending Sechin here sends a strong signal about cooperation between OPEC and Russia. The statement is clear that Russia has its legitimate interests and will pursue them in energy markets."

To sum up: on the one hand, all of this flexing and posturing does little to promote better understanding and acceptance between Russia and the Western democracies, but on the other hand - it is good that Russia is asserting itself, unwilling to make compromises over where it stands on the global power stage. It is unfortunate that the only trump card Russia really has to show are its finite natural resources, which are only good as a bargaining chip for a certain period of time, as the world is moving and among other things it is moving to alternative sources of fuel. But then again it's good that Russia is not afraid to use what bargaining chips it has. Now it remains for everyone to see whether or not the old saying will prove false - will the new OPEC friend be worth more than old European partners to Moscow or will Russia find out the hard way that the old proverb contains timeless wisdom.

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