You're running out of oil - Bush

PRESIDENT George Bush yesterday told leaders of the oil-rich states of the Middle East that they must face up to a future without their precious hydrocarbons.
In a stark warning, he said their supplies were running out and urged them to reform and diversify their economies. The outgoing United States president told the World Economic Forum, meeting in the Egyptian resort of Sharm el-Sheikh, that it was tiADVERTISEMENTme to "prepare for the economic changes ahead".

Mr Bush's family name is inextricably linked to the oil industry, and this was his strongest statement yet on the future of global supplies.

He told the conference: "The rising price of oil has brought great wealth to some in this region, but the supply of oil is limited, and nations like mine are aggressively developing alternatives to oil.

"Over time, as the world becomes less dependent on oil, nations in the Middle East will have to build more diverse and more dynamic economies."

Mr Bush also used his speech to call for more investment in people and "extending the reach of freedom", as well as urging other nations to prevent Iran from obtaining nuclear weapons, and to isolate Syria.

He particularly mentioned women's rights, saying they were key to building powerful economies. He cited Egypt as a model for the development of professional women, girls going to school in Afghanistan and women joining political parties in Iraq and Kuwait.

In an apparent criticism aimed at Saudi Arabia, he told the forum: "This is a matter of morality and of basic math. No nation that cuts off half its population from opportunities will be as productive or prosperous as it could be. Women are a formidable force, as I have seen in my own family and my own administration. As the nations of the Middle East open up their laws and their societies to women, they are learning the same thing."

The president's speech was made only days after he urged Saudi Arabia to increase oil production to ease prices at the pumps, as millions around the globe face increasing costs of filling up and even more grapple with rising food bills.

The future of Scotland's own North Sea oil supply is an issue for both politicians and consumers, who were given a taste of limited fuel shortages during the Grangemouth refinery dispute.

The US has turned dramatically towards biofuels, with Congress raising the federal requirement for using the oil alternative from 6.5 billion gallons last year to nine billion gallons this year. As a consequence, about a quarter of the American corn crop was used for biofuels last year, driving up the price of corn and, hence, also the price of food for millions of families.

Predictions of when the world's oil supplies will fall below global demand range from as early as the next decade, to as late as 2050. Mr Bush has been criticised throughout his term in office for not encouraging more energy alternatives in the US, and for allowing controversial drilling explorations for new fossil-fuel supplies in often environment-ally sensitive areas, such as Alaska.

Analysts warned last night that few in the Middle East, which has two-thirds of the world's oil reserves, are likely to heed Mr Bush. Many have already started diversifying their economies and do not like being preached to by someone so unpopular in the region.

Gerald Butt, editor of the authoritative Middle East Economic Survey, said: "The Gulf states have been trying to diversify their economies away from oil for years, so they'll say, 'This is like teaching your grandmother to suck eggs'.

"Arab states don't like being told what to do by outsiders, and especially by America, whose standing in the region is very low. Bush's comments will be dismissed as unwarranted interference."

Although he praised parts of the Arab world, commentators said Mr Bush had angered many with a speech at the Israel parliament last Thursday, in which he offered unflinching support for the Jewish state but mentioned the Palestinian dream of statehood only once.

Walid Khadduri, a Beirut-based consultant, pointed out that the Gulf states had already been investing windfall profits from high oil prices in major infrastructure projects, including education and housing, and in diversifying their industrial bases.

He said: "Bush's credibility is zero anyway. I really don't know anyone who follows what he says, especially after what has happened in Iraq and then his Knesset speech the other day."

The knock-on effect of rising fuel costs has led to increasing food prices and subsequent riots around the globe, as high prices hit some of the world's poorest.

There is now a desperate attempt to find oil from alternative sources to keep the supply flowing.

Potential sources in Canada would cost almost three times as much to produce as conventional crude oil because they have to be extracted from tar sands. Although the supply, in Alberta, is estimated to be second in size only to Saudi Arabian reserves, the production costs are unlikely to offer much relief for consumers.

While the Bush presidency has tried to reduce its dependence on foreign oil, it has yet to decrease fuel use, say critics.

While the UK produces about 0.3 per cent of the world's supply of oil and uses about 2 per cent, the US produces 2.5 per cent but uses 24 per cent.

Family dynasty is soaked in black gold

BOTH George H Bush and George W Bush will be remembered almost as much for their connections to oil as to the presidency.

Bush Snr owes his fortune to Texas crude, while his son also took posts in the industry before following in his father's footsteps into politics.

Commentators have accused Bush jnr's drive to war in Iraq as merely a quest for oil, with potentially billions of dollars in profit to be made from opening up the country's oil reserves – if Iraq was ever stable.

George Bush Snr, who was president from 1989 to 1993, became a millionaire off the oil industry by the age of 40 in Texas. He started the Bush-Overby Oil Development company in 1951 and co-founded the Zapata Petroleum Corporation two years later. He served as the firm's president from 1954 to 1964. He then entered politics.

After gaining an MBA from Harvard University, Bush Jnr worked in the family oil businesses.

He became a senior partner and chief executive officer of Arbusto Energy, Spectrum 7 and Harken Energy.

Arbusto Energy obtained financing early on from James Bath, a close Bush family friend and in 1979 the sole US business representative of Salem bin Laden, head of the wealthy Saudi family and brother of Osama bin Laden.

Barnett: What will America do when Iran gets nuclear weapons?

By Thomas P.M. Barnett
Sunday, May 18, 2008

Hillary Clinton promises she'd obliterate Iran if it used nuclear weapons against Israel, suggesting that, as president, she'd return the "favor" - in spades. Putting aside campaign rhetoric, the senator raises an excellent point: What will America do when Iran gets nuclear weapons?

Many national security experts still think Washington can stop Tehran's reach for the bomb. I am not one of them.

Iran has already achieved a sloppy, asymmetrical form of nuclear deterrence, meaning we can't stop it from "getting nuclear" unless we "go nuclear" pre-emptively, something we won't do.

America could stop Iran with a massive conventional invasion, but that's not something we can pull off in time.

We also can't eliminate Iran's program through conventional bombing. We can certainly raise a lot of sand, but Iran's been smart enough to distribute its assets and bury them deep underground, learning from Israel's strikes against Iraq decades ago.

Yes, Israel might strike pre-emptively with nukes. That remains the big wild card.

But let's be clear that Israel would be protecting its long-standing regional monopoly on weapons of mass destruction.

That monopoly hasn't kept Israel safe from conventional military attack; Israel's military superiority does that. It also hasn't prevented terrorism, even though Israel maintains a world-class defensive capacity there, too.

All Tel Aviv's WMD monopoly generates is diplomatic opportunity: as soon as somebody else in the region gets a few nukes to challenge Israel's roughly 200 warheads, the world's great powers will collectively force direct negotiations leading to - at least - a bilateral strategic arms treaty between the two states.

Why? We'll all find the resulting situation too much to bear, not just in the West but far more in the East, which relies on Persian Gulf energy too much to suffer such strategic uncertainty.

What does that get us? It gets us Iran having to recognize Israel to achieve its primary goal in pursuing a nuclear capacity - namely, America's promise not to engage in forcible regime change in Tehran.

Since that goal will effectively be achieved by Tehran's looming nuclear capacity, anyway, then we're heading into a different dynamic: simultaneously creating a stable nuclear stand-off between Israel and Iran, a dyad that quickly becomes a triad if Saudi Arabia decides that Arab Sunnis need their own nuclear champion to balance the Persian Shia.

For many regional and nuclear experts, such developments would constitute an almost unthinkably unstable strategic situation, but again, the only way to stabilize such a situation would be to force a trilateral or even regional security scheme that acknowledges each state's nuclear weapons explicitly and links those capabilities to one another through the condition of mutually assured destruction.

Pursued intelligently by outside great powers, Iran's reach for the bomb could end up being the event that makes real peace in the Middle East truly possible.

No, I don't expect any outside great powers, especially the United States, to acquiesce to Iran's nuclear efforts. I expect them to try and stop that outcome from unfolding, but once those efforts prove insufficient, then we'll collectively shift to the dynamics I've just described.

When that moment comes, one thing will have to be made crystal clear to Tehran: If Iran attacks Israel with nuclear weapons, the United States would retaliate massively with nuclear weapons, effectively ending Iran's existence as a nation.

Absent that firm guarantee, we'd put Israel into the scary situation of worrying about their second-strike capability.

And, yes, America would need to make the same position clear to a nuclear-capable House of Saud.

Too scary to contemplate? Hardly.

We've covered this territory before and ended great power wars across the Eurasian landmass in the process. Now, we're simply facing similar possibilities - and dangers - in the Middle East.

In this journey, offering the right promises to wage unlimited war will get us the best opportunities to forge a permanent peace.

Thomas P.M. Barnett (tom@thomaspmbarnett.com) is a visiting scholar at the University of Tennessee's Howard Baker Center and the senior managing director of Enterra Solutions LLC.

May 18, 2008
OP-ED COLUMNIST
Obama and the Jews

By THOMAS L. FRIEDMAN
Pssst. Have you heard? I have. I heard that Barack Obama once said there has to be “an end” to the Israeli “occupation” of the West Bank “that began in 1967.” Yikes!

Pssst. Have you heard? I have. I heard that Barack Obama said that not only must Israel be secure, but that any peace agreement “must establish Palestine as a homeland for the Palestinian people.” Yikes!

Pssst. Have you heard? I have. I heard that Barack Obama once said “the establishment of the state of Palestine is long overdue. The Palestinian people deserve it.” Yikes! Yikes! Yikes!

Those are the kind of rumors one can hear circulating among American Jews these days about whether Barack Obama harbors secret pro-Palestinian leanings. I confess: All of the above phrases are accurate. I did not make them up.

There’s just one thing: None of them were uttered by Barack Obama. They are all direct quotes from President George W. Bush in the last two years. Mr. Bush, long hailed as a true friend of Israel, said all those things.

What does that tell you? It tells me several things. The first is that America today has — rightly — a bipartisan approach to Arab-Israeli peace that is not going to change no matter who becomes our next president. America, whether under a Republican or Democratic administration, is now committed to a two-state solution in which the Palestinians get back the West Bank, Gaza and Arab parts of East Jerusalem, and Israel gives back most of the settlements in the West Bank, offsetting those it does not evacuate with land from Israel.

The notion that a President Barack Obama would have a desire or ability to walk away from this consensus American position is ludicrous. But given the simmering controversy over whether Mr. Obama is “good for Israel,” it’s worth exploring this question: What really makes a pro-Israel president?

Personally, as an American Jew, I don’t vote for president on the basis of who will be the strongest supporter of Israel. I vote for who will make America strongest. It’s not only because this is my country, first and always, but because the single greatest source of support and protection for Israel is an America that is financially and militarily strong, and globally respected. Nothing would imperil Israel more than an enfeebled, isolated America.

I don’t doubt for a second President Bush’s gut support for Israel, and I think it comes from his gut. He views Israel as a country that shares America’s core democratic and free-market values. That is not unimportant.

But what matters a lot more is that under Mr. Bush, America today is neither feared nor respected nor liked in the Middle East, and that his lack of an energy policy for seven years has left Israel’s enemies and America’s enemies — the petro-dictators and the terrorists they support — stronger than ever. The rise of Iran as a threat to Israel today is directly related to Mr. Bush’s failure to succeed in Iraq and to develop alternatives to oil.

Does that mean Mr. Obama would automatically do better? I don’t know. To me, U.S. presidents succeed or fail when it comes to Arab-Israeli diplomacy depending on two criteria that have little to do with what’s in their hearts.

The first, and most important, is the situation on the ground and the readiness of the parties themselves to take the lead, irrespective of what America is doing. Anwar Sadat’s heroic overture to Israel, and Menachem Begin’s response, made the Jimmy Carter-engineered Camp David peace treaty possible. The painful, post-1973 war stalemate between Israel and Egypt and Syria made Henry Kissinger’s disengagement agreements possible. The collapse of the Soviet Union and America’s defeat of Iraq in the first gulf war made possible James Baker’s success in putting the Madrid peace process together.

What all three of these U.S. statesmen had in common, though — and this is the second criterion — was that when history gave them an opening, they seized it, by being tough, cunning and fair with both sides.

I don’t want a president who is just going to lean on Israel and not get in the Arabs’ face too, or one who, as the former Mideast negotiator Aaron D. Miller puts it, “loves Israel to death” — by not drawing red lines when Israel does reckless things that are also not in America’s interest, like building settlements all over the West Bank.

It’s a tricky business. But if Israel is your voting priority, then at least ask the right questions about Mr. Obama. Knock off the churlish whispering campaign about what’s in his heart on Israel (what was in Richard Nixon’s heart?) and focus first on what kind of America you think he’d build and second on whether you believe that as president he’d have the smarts, steel and cunning to seize a historic opportunity if it arises.

Schwarzenegger calls for 'rebranding' GOP
Carla Marinucci, Chronicle Political Writer
Saturday, May 17, 2008
California Gov. Arnold Schwarzenegger created shock and awe in the Republican Party when he warned years ago that the GOP was in danger of "dying at the box office" by failing to make the sale to a wide swath of voters.

And with the presidential election looming, the Republican governor of the nation's most populous state - a decidedly blue state - has now found a chorus of agreement. The Republican "brand" - thanks to an unpopular president, a war, gas prices, foreclosures and deficit - has become such damaged goods that GOP Rep. Tom Davis of Virginia groused last week that "if we were dog food, they would take us off the shelf."

The answer for GOP presidential candidate John McCain: take a page out of the Schwarzenegger playbook and sell a product that is "counter" to the current GOP brand on issues like global warming, spending, and even immigration reform.

McCain comes to the Golden State this week on a campaign and fundraising swing, including a rally Thursday in Stockton being publicized with an invitation graced by a picture of a McCain hug - not with President Bush but with Schwarzenegger.

And the governor, in an interview with The Chronicle last week, had some candid advice and observations, not only about the GOP brand - but on McCain's efforts to expand his appeal to independents and disillusioned Democrats.

"The Republican idea is a great idea, but we can't go and get stuck with just the right wing," Schwarzenegger said. "Let's let the party come all the way to the center. Let those people be heard as much as the right. Let it be the big tent we've talked about.

"Let's invade and let's cross over that (political) center," he said. "The issues that they're talking about? Let them be our issues, and let the party be known for that."

t didn't work'

He observed that his own political opponents, including former Democratic Gov. Gray Davis, tried to define him in much the way McCain is being defined by Democrats - as joined at the hip with Bush.

"It didn't work," he laughed. But "how does (McCain) beat the Democrats? By offering a better future. He needs to offer hope, he needs to go in and show he can solve the problem in Iraq and have better relations with other countries again ... and bring the economy back."

As Democrats get closer to picking their party's nominee, McCain is getting advice on his image "rebranding" from some of the same GOP insiders who helped Schwarzenegger win re-election. They include senior campaign adviser Steve Schmidt and former Schwarzenegger communications director Adam Mendelsohn, partners in a GOP political consulting firm, Mercury LLC in Sacramento.

"The Republican brand may be in a bad position because of the Bush presidency, but people recognize that John McCain is not George Bush. ... John McCain has a long track record of being a nontraditional Republican - and so does Schwarzenegger," said Mendelsohn.

That makes the Arizona senator well-positioned to build a coalition of voters that can cut into the appeal of the Democratic presidential nominee, who increasingly looks to be Illinois Sen. Barack Obama, he said.

With less than six months until the November election, McCain isn't alone in trying to repackage the GOP's image and outreach; indeed, rebranding fever appears to have caught on across the party.

It explains why, in the wake of losing a solid Republican seat in Mississippi in a special election last week, Republican leader Rep. John Boehner of Ohio sent out a memo outlining what he called a "new positive agenda" for the GOP - titled "The Change America Deserves."

Political observers watching the rebranding effort say it represents a drive to compete with Obama - whose motto is "the change we can believe in" - as he seeks independent and Latino voters who could make or break the 2008 election.

"They don't have any choice," Averell "Ace" Smith, who managed campaigns for Hillary Rodham Clinton in California, Texas and North Carolina, said of McCain's efforts to be a "counter" Republican. "If they ran any other race, they'd doom themselves from the first day.

oters up for grabs

"(Republicans) have to move away from the status quo, because the voters up for grabs are independent and Latinos. And neither of them are particularly in love with ideologists. They both move toward moderation."

On the campaign trail last week, McCain's efforts to position himself as counter to the Republican brand were keenly evident.

He spoke in Portland on what's been described as the first leg of his global warming tour; later in the week, he delivered a landmark speech, drawing some distinct contrasts to the Bush White House - whose disapproval ratings are now a whopping 71 percent - politically as well as stylistically.

On the policy front, McCain said that by 2013, the end of his first term, he envisions most U.S. troops coming home from Iraq "in victory," as well as delivering health care and restoring "economic confidence."

And, acknowledging a White House criticized as too partisan and insular, McCain said that as president he'll ask Democrats to serve in his administration and vowed to "set a new standard for transparency and accountability. ... When we make errors, I'll confess them willingly." He vowed to institute regular presidential question-and-answer grillings before Congress, much like the British prime minister's weekly televised "Question Time."

Democrats immediately jabbed away.

"Why should McCain stop there when he could go the whole nine yards - by letting our Democratic majority in the House pick the president, just like the parliamentary system picks a prime minister?" quipped Kirsten Xanthippe, a California Democratic activist living in the United Kingdom.

"McCain isn't the real McCoy - he's just a 'prime mimicker' of conservative Bush policies, dressed up in the touchy-feely softness of sheep's clothing," she said.

Schwarzenegger disagreed.

"It was wise for him to do what he did this week," the governor said. "That's an attempt to show what his vision is. ...People need to see that there's a plan. He's in the center in a lot of ways, and that will help him - especially in states like California."

epublican brand is terrible'

Some Republicans agreed that McCain's work is required in an election year where challenges loom for the GOP.

"The Republican brand is terrible right now," said Bill Whalen, a research fellow at Stanford University's Hoover Institution. "It's been damaged by a weak presidency ... and the various legs on which the Republican platform rests have been kicked away."

Among them, Whalen said, has been fiscal discipline - crumbling along with the $1 trillion-plus deficit - and family values, a victim of corruption and scandals involving a cast of characters from lobbyist Jack Abramoff to jailed former San Diego Rep. Randy "Duke" Cunningham.

"McCain runs at a time when the party itself is ill-defined, and that means McCain has to turn the election on personality - and that ties into being a political maverick," Whalen said. "You'll see McCain saying, 'My opponent talks about change - but I not only talk the talk, I walk the walk.' "

arty's core principles

California Insurance Commissioner Steve Poizner - the only Republican besides Schwarzenegger elected to statewide office - said his party's image has been battered because GOP officials have forgotten the party's core principles: lower taxes, less government.

"Spending has skyrocketed. ... There's been this real crisis in earmarks, which are not justified, and there's been corruption because of ethics violations," he said. "Republican Party leaders have done a terrible job and let the country down."

But Poizner, speaking from Jerusalem where he accompanied Bush to celebrate Israel's 60th birthday, said GOP leaders like himself, Schwarzenegger and McCain have proven it's possible to stick to Republican principles and win elections, even when polls show the GOP to be the underdog.

"Swing voters are looking for people who have the ability to get things done in both the private sector and public sector," said Poizner, who is considering a 2010 run for governor of California. "We can win elections if we get back to the basics - and that's something that Sen. McCain can do."

E-mail Carla Marinucci at cmarinucci@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/17/MNI410LK62.DTL

Russia: A totalitarian regime in thrall to a Tsar who's creating the new Facist empire
By JONATHAN DIMBLEBY - More by this author »
Last updated at 00:00am on 17th May 2008
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As ex-President Putin settles in to his new role as Prime Minister, he has every reason to congratulate himself.
After all, he has not only written the script for his constitutional coup d'etat, but staged the play and given himself the starring role as well.

Of course, he has given a walk-on role to Dmitry Medvedev, his personally anointed successor.

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The Russian bear: Despite a new President, Vladimir Putin remains in overall control

But the transfer of power from Putin to his Little Sir Echo, Medvedev, and the show of military strength with those soldiers and clapped-out missiles in Red Square on Victory Day which followed it last week, made it clear who is really in charge.

No decision of any significance for the Russian people or the rest of us will be made in the foreseeable future without the say - so of Medvedev's unsmiling master.

Just before he stood down as President, Putin declared: "I have worked like a galley slave throughout these eight years, morning til night, and I have given all I could to this work. I am happy with the results."

As he surveys the nation today he reminds me of that chilling poem by Ted Hughes, Hawk Roosting, in which the dreaded bird sits at the top of a tall tree musing: "Now I hold all Creation in my foot - I kill as I please because it is all mine - I am going to keep things like this."

In a way he is right to be so self-satisfied. He has told the Russian people that life is much better than it was before he took over - and, after a journey of some 10,000 miles across the largest country in the world for a new book and BBC TV series, I am in no doubt that the majority of his subjects believe him.

I travelled from cities to towns to villages by road, rail and boat and met a great diversity of people - from St Petersburg glitterati to impoverished potato-pickers, from a witch who charms the sprites of the forest to the mountain herdsmen who worship fire and water, from oilmen to woodcutters.

It was an exhilarating and revelatory experience in a land of extremes. But it was also deeply disturbing.

Despite the fact that Putin's Russia is increasingly autocratic and irredeemably corrupt, the man himself - their born-again Tsar - is overwhelmingly regarded as the answer to the nation's prayers.

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Vladimir Putin welcomes his personally selected successor, Dmitry Medvedev

Russia has a bloody and tormented history. Its centuries of suffering - its brutalities, its wars and revolutions, culminating in the collapse of communism and the anarchic buffoonery of the Yeltsin years - have taken a terrible psychological toll.

Cynicism and fatalism which eat away at the human psyche have wormed their way into the very DNA of the Russian soul.

In a nation that has not tasted and - with very few exceptions - does not expect or demand justice or freedom, all that matters is stability and security.

And, to a degree, Putin has delivered these twin blessings. But the price has been exorbitant and the Russians have been criminally short-changed.

Putin boasts that since he came into office investment in the Russian economy has increased sevenfold (reaching $82.3 billion in 2007) and that the country's GDP has risen by more than 70 per cent.

Over the same period, average real incomes have more than doubled. But they started from a very low base and they could have done far better.

Nor is this growth thanks either to the Kremlin's leadership or a surge of entrepreneurial energy.

On the contrary, it is almost solely down to Russia's vast reserves of oil and gas.

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Ex-President Putin is overwhelmingly regarded as the answer to the nation's prayers

When Putin came to power, the world price of crude oil was $16 dollars a barrel; it has now soared to more than $120 dollars - and no one knows where or when this bonanza will end.

But this massive flow of funds into the nation's coffers has not been used "to share the proceeds of growth" with the people; to reduce the obscene gulf in income between the rich and poor.

It has not helped to resurrect a health service which is on its knees (and is ranked by the World Health Organisation as 130th out of the 190 countries of the UN), or to rebuild an education system which is so under-funded that the poor have to pay to get their children into a half-decent school or college.

It has not brought gas and running water to the villages where the peasants have been devastated by the collapse of the collectives, or even developed the infrastructure that a 21st century economy needs to compete with the rest of the world.

Russia may be a member of the G8 whose GDP (because of oil) should soon overtake the United Kingdom, but, in many ways, it is more like a Third World country.

Stricken with an epidemic of AIDS and alcoholism which both contribute to a male life expectancy of 58 years, the population is projected to shrink from 145 million to 120 million within a few decades.

So where has all the oil wealth gone? According to an Independent Experts Report, written by two former high-level Kremlin insiders who have had the courage to speak out, "a criminal system of government [has] taken shape under Putin" in which the Kremlin has been selling state assets cheaply to Putin's cronies and buying others assets back from them at an exorbitant price.

Among such dubious transactions the authors cite the purchase by the state-owned Gasprom (run until a few months ago by Dmitry Medvedev) of a 75 per cent share in an oil company called Sifnet (owned by Roman Abramovich, the oligarch who owns Chelsea Football Club).

In 1995 Abramovich, one of Putin's closest allies, paid a mere $100 million for Sifnet; ten years later, the government shelled out $13.7 billion for it - an astronomical sum and far above the going market rate.

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Putin claimed he worked 'like a galley slave' before he stepped down

Even more explosively, the authors claim the Kremlin has created a "friends-of-Putin" oil export monopoly, not to mention a secret "slush fund" to reward the faithful.

According to an analyst at Moscow's Carnegie Centre, which promotes greater collaboration between the U.S. and Russia, the report is "a bomb which, anywhere but in Russia, would cause the country to collapse".

In Britain such revelations would certainly have provoked mass outrage, urgent official inquiries and a major police investigation - if not the downfall of the government.

But because of Putin's totalitarian grasp on power (he has not only appointed his own Cabinet, which used to be the prerogative of the President, but will remain in charge of the nation's economy), there will be no inquiry.

You can forget any talk from the new President about "stamping out" corruption. This social and economic disease is insidious and rampant.

According to Transparency International - a global society which campaigns against corruption - Russia has become a world leader in the corruption stakes. Foreign analysts estimate that no less than $30 billion a year is spent to grease official palms to oil the wheels of trade and commerce.

But when you raise the subject, Russians shrug their shoulders: "What's the problem?" they retort.

"That's how the system works. It will never change."

And that is because everyone is at it. From corporations (including foreign investors who claim to have clean hands but cover their tracks by establishing local "shell" companies to pay the bribes) to the humblest individuals who buy their way out of a driving ban.

In a country where the "separation of powers" has become a bad joke, the law courts are no less corrupt.

Except perhaps for minor misdemeanours at local level, the judiciary is in thrall to the Kremlin and its satraps.

The threat of prosecution for tax fraud is the Kremlin's weapon of choice against anyone who dares to challenge its hegemony.

When Mikhail Khodorkovsky, once the richest man in Russia, used his oil wealth to promote human rights and democracy, Putin detected a threat to his throne.

The oligarch was duly arrested and convicted of fraud. He now languishes in a Siberian jail where he is in the third year of an eight-year prison sentence.

None of this is a matter of public debate in Russia where the media has been muzzled by the Kremlin, their freedom of expression stifled by the government.

Almost every national radio and television station is now controlled directly or indirectly by the state, and the same applies to every newspaper of any influence.

In the heady days immediately before and after the collapse of the Soviet empire, editors and reporters competed to challenge the mighty and to uncover scandal and corruption.

Now they cower from the wrath of the state and its agents in the police and the security services.

That diminishing number who have the courage to investigate or speak out against the abuses perpetrated by the rich and powerful very soon find themselves out of a job - or, in an alarming number of cases, on the receiving end of a deadly bullet.

Some 20 Russian journalists have been killed in suspicious circumstances since Putin came to office. No one has yet been convicted for any of these crimes.

Putin calls the system over which he presides "sovereign democracy". I think a better term is "cryptofascism" - though even the Kremlin's few critics in Russia recoil when I suggest this.

After all, their parents and grandparents helped save the world from Hitler - at a cost of 25 million Soviet lives. Nonetheless, the evidence is compelling.

The structure of the state - the alliance between the Kremlin, the oligarchs, and the security services - is awesomely powerful.

No less worryingly is popular distaste - often contempt - for democracy and indifference to human rights.

In the absence of any experience of accountability or transparency - the basic ingredients of an open society - even the most thoughtful Russians are prone to say: "Russia needs a strong man at the centre. Putin has made Russia great again. Now the world has to listen."

The new Prime Minister has brilliantly exploited the patriotism and latent xenophobia of the Russia people to unify them in the belief that they face a major threat from NATO and the United States.

This combination of national pride and insecurity has been fuelled by the America with its proposed deployment of missiles only a few hundred kilometres from the Russian border, allegedly to counter a nuclear threat from Iran.

No serious defence analyst believes this makes any strategic sense, while even impeccably pro-Western Russians recoil from this crass assertion of super-power hegemony by President Bush.

Similarly most Russians feel threatened - and humiliated - by the prospect that Ukraine and Georgia, once the most intimate allies of the Soviet Union, may soon be enfolded in the arms of NATO.

Georgia, which is struggling to contain a separatist movement that is openly supported by the Kremlin, has the potential to become a dangerous flashpoint in which the Western allies could only too easily become ensnared.

Does this mean - as some have argued - that we are about to face a new Cold War? I don't think so for a moment.

With communism consigned to "the dustbin of history", there is no ideological conflict of any significance. And there is now only one military superpower.

In comparison with America, Russia's armed forces are a joke. Only catastrophic stupidity on either side could lead to a nuclear confrontation.

But this does not mean that we can all breathe a sigh of relief and forget about the Bear.

An autocratic and resurgent Russia that feels bruised and threatened is an unstable beast.

The Kremlin's growing rapprochement with Beijing (the adversaries of a generation ago are now not only major trading partners, but conduct joint military exercises) shifts the balance of power in the world.

And as life on earth becomes less and less secure, with evermore people competing for a dwindling supply of vital resources, Russia, as an energy giant, is once again a big player on the world stage.

Make no mistake, we are in for a very bumpy ride.

• The second episode of Russia - A Journey With Jonathan Dimbleby is on BBC2 tomorrow at 10pm. A book to accompany the series is published by BBC Books