The mighty Russian bear is back, and energized as never before. Under President Vladimir Putin’s stewardship, Russia may now be more powerful than at any time in its history, including its peak during the Cold War. However, the West is only beginning to wake up to this new reality.

Seven years of strong economic growth based upon rising commodity prices has given Russia a confidence and a bulging pocketbook not seen since before the Berlin Wall fell.

And it is all based upon one thing: Russia’s massive energy and natural resource reserves. Oil, natural gas, uranium, platinum, gold, silver, copper, zinc and nickel prices each remained near all-time or multi-decade highs during 2006. Consequently, state coffers of resource-rich Russia are overflowing, pumping life back into the national economy.

Booming resource demand in China and India, as well as growing geopolitical instability in many producer nations such as Iran and Nigeria, suggest high energy and raw-commodity prices are probably here to stay, so the strength of the Russian revival may be much greater than many have anticipated.

Yet if rising energy and global resource demand is the anvil of Russia’s geopolitical revival, the hammer is certainly the Kremlin’s policy to nationalize and use state control of strategic industry and natural resources for political purposes.

During the 1990s—when many commodity prices, including those of oil and gas, were low—Russia needed foreign resource companies to develop its deposits. Now that prices for oil, gas and other minerals have risen, Russia no longer needs Western investment.

Putin’s plan, according to analyst Jim Willie, editor of the Hat Trick Letter, is for “Russian companies to be made majority partners on any project on its soil, no exceptions.”

Consequently, Russia is confiscating (or what amounts to confiscating) billions of dollars’ worth of foreign-built infrastructure and placing it under control of state-owned corporations.

In September, the Russian government revoked the environmental permit for Royal Dutch Shell’s massive Sakhalin-2 energy development and threatened the consortium with environmental fines of up to $30 billion. Shell was coerced into selling a controlling 50 percent plus one share interest in the $22 billion project to Russia’s state-owned energy giant Gazprom for $7.45 billion. Literally minutes after the handover, Putin revealed that the environmental problems were no longer a concern (they had effectively vanished into thin air), and the government now fully supported the project (Prime-Tass, Dec. 21, 2006).

“As far as I’ve been informed, the fundamental issues can be considered resolved,” Putin said. “Russia is satisfied by a serious and businesslike approach of the partners.”

Using similar tactics, it looks like Gazprom is also set to gain control of British Petroleum’s Kovykta gas field, which is the largest in Siberia. French energy company Total is now facing mysterious “back tax” bills. Exxon Mobil’s Sakhalin-1 project is rumored to be the next Kremlin target.

As Putin has consolidated state-control over strategic resources, he has been able to wield it with war-hammer ruthlessness, battering opponents into submission.

In January last year, Gazprom cut Ukraine’s gas supply off—and consequently much of the rest of Europe’s—after Ukraine’s newly elected, pro-Western government balked at paying gas prices that were much greater than those paid by the previous, pro-Russian government. Being in the midst of winter, Ukraine had little choice but to accept higher prices.

Georgia has also endured Russian energy punishment. Last year, relations between Russia and Georgia broke down after Georgia accused four Russian military officers of spying. The Kremlin responded with economic and transport sanctions. In December, after Gazprom threatened to completely cut off gas supplies, Georgia agreed to payus$235 per 1,000 cubic meters, up from $110.

Belarus too just succumbed to similar Gazprom strong-arm tactics. On Monday, Russia forced Belarus into accepting price hikes which more than doubled Belarus’s current costs. “If a gas supply contract for next year is not reached, Gazprom will have no grounds for deliveries of gas to Belarus as of … 1 January, 2007,” warned Gazprom chief executive and Putin ally Alexey Miller just prior to Belarus’s submission. As part of the deal, Gazprom demanded Belarus sell it 50 percent of the shares in the Belarusian pipeline network, which supplies gas to Poland and Germany.

Estonia, Latvia, Lithuania, Moldova and Armenia are other known victims of Russian-energy coercion.

Meanwhile, Russia’s treatment of its eastern neighbors has revealed Europe’s energy weakness and is driving further European cooperation and integration.

Energy vulnerability will be a major issue on the agenda for German Chancellor Angela Merkel as Germany assumes the European Union presidency this year. “Europe must reduce its dependence in order to guarantee its energy supplies in the long term,” Merkel wrote in an article for the daily Handelsblatt. “Moreover, it must speak with one voice on foreign energy relations. This also goes for relations with our important energy partner Russia.”

The EU now imports 56 percent of its energy needs—much of it from Russia. In 1995, this figure was only 44 percent. If trends continue, then by 2020 the EU will need to import two thirds of its energy demand, according to the European Commission.

Germany, Italy and France already import 90, 91 and 95 percent of their daily oil needs respectively, and the vast majority of their natural gas needs. These nations typify the foreign energy dependence that plagues almost all EU nations.

Russia’s growing energy clout is also drawing China and India into Russia’s sphere of influence.

China and India are increasingly drinking up and competing for available energy supplies. Of all nations, Russia is uniquely situated to meet Asian energy demand. Russia has the oil, gas, uranium and other natural resource supplies needed to keep China’s and India’s rapidly expanding economies booming.

For Europe, there are worrying signs that Russia’s Asian trade partners will soon further affect Russia’s reliability as an energy provider.

At a UN conference last November, Gazprom warned that problems with the EU were forcing the company to “look increasingly toward rival markets in Asia” (EUbusiness.com, Nov. 28, 2006). Russia is currently developing large-scale energy-transmission capabilities in the east, which will enable it to send much more of its vital oil and gas reserves to Asia—an event that will increase its leverage over Europe exponentially.

Meanwhile, Russia is actively backing Iran (another major oil producer) by providing it with nuclear-power-generating capacity and by undermining UN sanctions. The Kremlin has also broken ranks with the West and held talks with the terrorist group Hamas. Russia is additionally backing anti-Western governments in Uzbekistan and Kazakhstan, two other strategic energy-producing countries.

A recently leaked confidential study by nato economic experts “warned Russia may be seeking to build a gas cartel including Algeria, Qatar, Libya, the countries of Central Asia and perhaps Iran and cautioned that kind of opec-like near monopoly would strengthen Moscow’s leverage over Europe” (Associated Press, Nov. 27, 2006).

U.S. scholar Marshal Goldman says that “Russia is more powerful now than it ever was during the czarist era or the Soviet era. In the Soviet era there was mutually assured destruction. They had nuclear weapons. We had nuclear weapons. We didn’t use them, because we were worried they would and vice versa. Here you don’t have that kind of restraint” (MosNews.com, Dec. 8, 2006).

As energy expert and author Micheal Klare says, “A new era, where energy has replaced nuclear weapons as the medium of superpower rivalry,” has already arrived. “Vladimir Putin believes that. … And he is moving to accumulate as much energy power as he can” (Associated Press, op. cit.).

It is clear that, in region after region, growing Russian energy clout is reshaping the world. Current events certainly indicate a coming global conflict in which energy supplies will play a central role. But beyond current politics and alliances, trends and statistics, or natural resource demand and distribution, there is a much better indicator of where current events are leading and how world power blocs are developing. For more information, read “Stoking the Engines of Empires” and “The Battleground.”