Bush Leverage With
Russia, Iran, China Falls
As Oil Prices Rise

President George W. Bush, already weakened at home by the soaring cost of oil, is finding that it's also eroding his ability to achieve his foreign-policy goals.

Record-high energy prices are weakening Bush's prospects of assembling an international coalition to counter Iran's nuclear ambitions. They are diminishing his chances of influencing energy-rich nations such as Russia and isolating troublesome ones, including Venezuela and Sudan. And they are straining U.S. economic and diplomatic ties with China, whose oil needs are skyrocketing.

Prices show no signs of abating in the last two-and-a-half years of Bush's presidency, with oil futures hovering near $72 a barrel though the November 2008 presidential election. That's creating a windfall for oil-producing nations that may thwart Bush's goal of promoting democracy and free markets from Asia to the Middle East and halting the spread of nuclear arms.

Bush acknowledged last week that high oil prices have decreased the U.S.'s power to sway events.

Bush called the U.S. dependence on imports a "national-security concern," saying the nation now gets about 60 percent of its oil from overseas, up from 25 percent two decades ago.

While his weakened standing with Americans limits his ability to marshal support for his policies at home, energy-producing countries that view oil as political and diplomatic currency are emboldened, recognizing that the American economy depends largely on them.

It isn't only oil producers that are ignoring U.S. wishes. China, the world's second-largest consumer of petroleum products behind the U.S., is seeking energy resources wherever it can find them. That include negotiating for investments in nations such as Iran, Nigeria and Sudan, where Bush is seeking to improve human rights and push democracy.

In Iran, the world's second-largest holder of oil an gas reserves, President Mahmoud Ahmadinejad has rejected a UN deadline to suspend the nuclear program. On April 28, the UN's nuclear agency told the Security Council that Iran has enriched uranium and is stonewalling efforts to determine whether the program is intended for the production of nuclear weapons.

"We're in the middle of a new wave of resource nationalism because these countries feel like they don't need any help" from the U.S., says Luis Giusti, who headed Venezuela's state-run oil company before Chavez came to power. "This is a completely different world."

bloomberg.com 5/01/06