- The Washington Times - Saturday, April 1, 2006

Its coffers swollen from the windfall of soaring world energy prices, Russia has taken an increasingly assertive stance against the United States and the West on a range of critical issues.

The Russian government, which needed a string of International Monetary Fund (IMF) bailouts to avoid bankruptcy less than a decade ago, now boasts a $60 billion rainy-day revenue fund that could balloon to $150 billion by 2008, according to Julia Nanay, an analyst on Russian and the Caspian Sea at PFC Energy, a leading consulting firm.

“It’s given them a level of confidence to stand up to the United States in ways we didn’t see before,” she said.

Romanian Foreign Minister Mihai-Razvan Ungureanu said Russia’s high-stakes New Year’s Day standoff with Ukraine over natural gas prices — which briefly threatened energy stocks across Europe — was a sign of Moscow’s growing confidence in its energy clout.

“The Russians are feeling their power,” he said, “and it has now caught the attention of even the most senior leaders across Europe.”

On issues ranging from Iran’s nuclear programs and the victory of the militant Islamic Hamas movement in the Palestinian territories to trade and Russia’s domestic human rights record, the government of President Vladimir Putin has shown a rising willingness to challenge U.S. policies and reject U.S. advice.

Kremlin officials last week barely even bothered to rebut a Pentagon report that a Russian diplomat may have passed U.S. military secrets to Saddam Hussein during the U.S.-led 2003 Iraq invasion.

Russian Defense Minister and Deputy Prime Minister Sergei Ivanov bluntly told a television interviewer the report was released because U.S. officials were trying to divert attention from their own problems in Iraq.

“I would say it’s total rubbish, and will not use the proper American word starting with ‘bull,’” Mr. Ivanov said.

Mr. Putin in June will become the first Russian leader to host a Group of Eight (G-8) summit, to be held in St. Petersburg. Many had thought Russia would pursue a more accommodating and low-key foreign policy, to avoid any diplomatic blow-ups before the summit.

But Paul J. Saunders, a former State Department adviser and executive director of the Washington-based Nixon Center, said he encountered a much more challenging and pugnacious attitude in talks with senior Russian policy-makers and intellectuals during a recent Moscow visit.

Mr. Saunders said his Russian counterparts contrasted former President Boris Yeltsin’s begging for IMF loans in the mid-1990s with the more than $200 billion in reserves in Russia’s central bank. The Russians rejected the idea that Western critics could use the G-8 summit to pressure or embarrass Mr. Putin.

“The overall message was: ‘Don’t try it. We just don’t need you that much anymore,’” Mr. Saunders said.

Many Western analysts said Russia had come out far worse in the energy dispute with Ukraine, undermining Moscow’s reputation as a reliable energy supplier.

“My guess is that the Putin administration won’t be trying a second attack anytime soon,” said Michael H. Haltzel, a former senior Democratic foreign policy adviser in the Senate and now a principal with DLA Piper Rudnick Gray Cary.

And J. Robinson West, chairman of PFC Energy, warned that Russia’s current energy windfall may not last, particularly given the poor track record of Gazprom, the massive state-owned monopoly.

But Mr. Saunders said the Russians he spoke with defended the Ukraine incident, insisting Russia had the right to end Soviet-era subsidies on energy — whatever the hardships the abrupt mid-winter change might have on other customers.

Leading Russians, he said, dismiss U.S. criticism of Mr. Putin’s rule and talk of Moscow using its energy clout to join the world’s “board of directors” — the small handful of countries able to operate largely free of outside pressures.

And despite the backlash against the Ukraine deal, Gazprom officials said last week they plan to yank similar below-market price subsidies for Belarus, despite the close ties between Mr. Putin and authoritarian Belarusian leader Alexander Lukashenko.

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