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Oil – pawn in a political game

   Oil plays dominant role in the world economy last half century. All the up and down trends of oil price have political and economical impacts. Winter 1979 high price on oil and fast-growing production of oil in Western Siberia gave former Soviet Union fabulous revenues.

Lack of expertise in taking political and economical decisions, as well as invasion to Afganistan culminated in financial and further in territorial collaps of USSR. In 1985 oil price fell to $30 a barrel and considered to have contibuted to the fall of Soviet Union. Gorbachev started economy restructuring, well-known as Perestrojka and convergence with the West. Falling of oil prices became a magic wand possible to make Soviet Union more friendly to the West and more democratic, as in its foreign as in inner policy.

   It is not a secret that in command economy oil and gas revenues accounted for 67% of all exports. After the end of USSR and transition to market economy oil and gas remained basis of all state revenues of Russian Federation. September 2001 became a chance for Mr. Putin to get closer to NATO and ally to America, as you remember nominal price of oil that year was $23 a barrel.

   Growth of oil prices was always proportional to growth of Russia’s military aggression. In 2008 Russia invaded Georgia and its relationship with America deteriorated, as oil prices at level $105 a barrel made MR. Putin self-confident. Next fall to $67 a barrel made Russia more friendly to America again and Barack Obama’s attempted “reset” was accepted. The last two years oil was over $100 a barrel and Russia stepped its aggressive stance (invasion of Eastern Ukraine and annexation of Crimea). The war in Ukraine is a Putin’s compensation for oil price falling. Russia’s presence in Syria (oil-rich region) is the next flexing of its military muscle. Oil depths and Russia’s military escalation continue its contest and we have all chances to see “next 1974 story” and slap on the West as well as fatal for USSR 1985.