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Baltimore Sun
November 13, 2001
U.S.-Russia summit might broaden to include energy
Putin eager to present his country as potential supplier of oil to U.S.
By David L. Greene
Sun National Staff

WASHINGTON -- As he begins a summit meeting with President Bush today, Russian President Vladimir V. Putin is portraying his country as a major potential supplier of energy for the United States and other Western nations looking to scale back their reliance on Middle East oil.

Should he press the issue in summit talks, the discussions that were expected to focus on the U.S.-led war against terrorism and efforts to craft an understanding on strategic weapons could broaden significantly.

Putin will begin talks with Bush in Washington today, after which they will hold a joint White House news conference. The Russian president is to speak at Rice University in Houston tomorrow on his way to Bush's ranch in Crawford, Texas, where discussions are to continue into Thursday.

Cooperation on energy

Putin told reporters in Moscow over the weekend that he wants to make clear to Bush that Russia is "very suited" to helping the world economy "diversify its energy supplies."

Finding new energy sources is critical, he said, at a time when many nations are wary that political uncertainty in the Middle East might disrupt oil exports.

U.S.-Russian cooperation on energy would likely be well-received by many members of Congress, who are urging Bush to open his discussions with Putin to topics other than terrorism and arms control issues.

"When we started this discussion with Russia, it looked as if the only topic on the table was national missile defense," said Sen. Bob Graham, a Florida Democrat who chairs the Senate Intelligence Committee.

As the summit approaches, Graham said, it is looking more likely that a much broader strategic relationship can be developed between the two countries.

He said that Russia has a "tremendous capacity to be an alternative source of energy for the United States" and that such an arrangement "would have a significant effect in changing our longtime relationship with this former rival."

About 100 members of the House and Senate, many of them Republicans, signed a letter to Bush saying they back the call by Pennsylvania Republican Rep. Curt Weldon for the two leaders to talk about cooperation in areas ranging from energy and health policy to protecting the environment and exploring space.

"Too often, the focus of our bilateral relations has been on defense and security -- precisely the issue on which our interests often collide," said Weldon, a senior member of the House Armed Services Committee. "It would be useful, as we move forward with a Russian policy for the 21st century, to take a more holistic approach."

In a report, Weldon argues that "as the two countries seek to re-engage ... energy can claim its critical position as the centerpiece in the relationship, strengthening global energy security and promoting mutual economic growth."

Friendly relationship

Putin and Bush, who have developed a warmer personal relationship than many commentators had anticipated, are expected to talk at length about the anti-terror campaign in Afghanistan. Putin has thrown his full support behind the United States, including allowing U.S. forces to be stationed on the territory of the former Soviet Union.

The presidents, in a main order of business, will be trying to broker an agreement that would allow Bush to achieve his top national security priority before Sept. 11 -- building a national defense system against ballistic missiles.

Putin has signaled that he might be willing to accept Bush's testing program for missile defense provided the United States does not withdraw from the 1972 Anti-Ballistic Missile treaty, which bars development of a missile defense system.

Bush administration officials, meanwhile, have said they will work to reduce the U.S. nuclear arsenal -- which will please the Russians because they can't afford to maintain a comparable nuclear force -- and they have hinted that Bush might drop, for now, his threat to withdraw from the ABM treaty.

White House officials said yesterday that importing oil and natural gas from Russia has not been a topic of serious discussion between American and Russian officials going into the summit, but they said Bush was open to hearing Putin out on the subject. Bush has talked often of the importance of ending American reliance on Middle East energy sources.

Bush's aides did say that the two leaders are expected to discuss opportunities for more foreign investment to bolster the Russian economy, and experts in the energy industry said that is where Putin might urge Bush to consider Russia as a possible alternative supplier of energy.

Russia is the second-leading exporter of oil in the world, behind only Saudi Arabia. More than seeking new business, say experts, the Russians are interested in luring American energy corporations to bring fresh capital to their country.

"Russia can sell its oil," said John Lichtblau, chairman of the Petroleum Industry Research Foundation. "They are not looking for new customers, they are looking for new investment."

Thus far, U.S. oil companies have largely avoided investing in Russia, instead favoring some of the former Soviet republics, which have friendlier tax codes and less competition, said Lichtblau. He said Putin would have to usher in policy changes that would make his country "more attractive."

"The oil is there," Lichtblau said. "American companies wouldn't be taking much of a chance of coming up with dry holes. But how much decision-making will American companies have?

"And there could be competition in Russia, where the oil industry is not exactly new. It's not like the American companies would be coming in and showing them how to do it. But if Putin wants to create the right conditions, he will."

Other observers were skeptical.

'Political message'

Nathaniel Kern, a Washington-based oil industry analyst who is well-connected in Saudi Arabia, said Russia produces 6 million to 7 million barrels of oil a day, less than one-tenth the world's daily oil requirement.

Of that amount, it exports only about 1 million barrels a day, said Kern, who publishes the newsletter Foreign Report.

The Persian Gulf states combined, excluding Iraq, sell 14 million barrels of oil a day to the rest of the world. Russia could not fill the breach if Persian Gulf oil supplies were cut off, said Kern, who called Putin's offer "meaningless" and simply a "political message."

Sun staff writer Mark Matthews contributed to this article.

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