ARM WRESTLING WITH RUSSIA

It was a gorgeous spring day in Washington D.C. when I got a call from Dana. The year was 1995. “Hey, Jack, can you come to my office late this afternoon? The Deputy Mayor of St. Petersburg and his entourage will be here and I’d like you in on the meeting.”

Dana Rohrabacher (R-CA) and I had been friends since we were in Youth For Reagan in 1966 (Reagan’s original campaign, for California Governor). After working in the Reagan White House for all 8 years, he got elected to Congress in 1988, and now served on the International Relations Committee.

So Paul Behrends, Dana’s foreign policy staffer at the time, and I sat down with Dana and had a nice talk with the folks who ran a city that only 4 short years before had been Leningrad. So nice, in fact, that at the meeting’s end, Dana suggested we all go over to the Irish Times bar on Capitol Hill and have a beer.

We were into our third round when suddenly, Dana and the Deputy Mayor decide to have an arm wrestling contest [this is not a gag — this actually happened exactly as I am describing it]. As the rest of us looked on in amazed silence, the Deputy Mayor put Dana down in a New York second.

Dana stood up holding his arm, gazed around in bewilderment, and saw me. Not Behrends, the ex-Marine. Me. “Wheeler,” he exclaimed. “You’ve got to defend the honor of your country!” I begged off. “Dana, I am happy. I am having a beer. Don’t do this to me.” But Behrends and everyone else started shouting at me, while the Deputy Mayor stared at me with Russian smugness.

It was his expression that did it, that and the fact that I knew the Russian trick — to try and catch you by surprise and immediately overwhelm you. If you knew it was coming and just held it off, there was usually nothing left behind the initial blitzkrieg. So we lined it up right, I looked into the Deputy Mayor’s eyes with a big smile, took his hit, and down he went.

Startled, he demanded we go once again with the left arm. The result was the same. The Deputy Mayor left the table and up stepped his KGB bodyguard. “Now my turn!” he announced. The guy was huge. But now I was really pumped. The Cold War hadn’t been over for that long. How could I turn down the chance to take on the KGB?

So we clasped hands, I looked into his eyes with a big smile which messed up his mind, and put every ounce of willpower into keeping that smile going as he just about took my arm off. “Good Lord, this guy’s strong,” I thought as I held him off, then slowly, slowly put him down. “Left arm!” he shouted, so we went at it again — but now he was demoralized and went down quickly.

Five years later, Dana and I were having dinner in Georgetown with some friends, and the conversation turned to the recent presidential election in Russia. A light bulb went off in my head. “Dana, you remember that time a few years ago when you got into that arm wrestling match with the Deputy Mayor of St. Petersburg?” I asked. He thought for a second, then said, laughing and rubbing his arm, “Oh, yeah — I remember. And I remember you and him. But what I really remember is that great big KGB bastard. I’ll never forget the look on his face afterwards.”

“I’ll bet you’ve forgotten the name of the Deputy Mayor,” I riposted. “His name?” Dana asked. “Jack, you know how many people I meet. It was years ago. Why should I remember his name?”

“Because, Dana,” I responded, “his name was Putin — Vladimir Vladimirovich Putin, the newly-elected President of Russia.”

[I know this is a Ripley Moment — but believe it or not, this is a true story]

Whatever George Bush saw when he looked into Putin’s eyes, I saw someone who used to be an officer in and now was climbing the ladder of power because of the KGB (for you sticklers, the Russian spy outfit was rechristened the FSB — but it’s the same outfit).

Here’s a thought experiment: Would Germany have ever become a thriving and peaceful democracy if, after World War II, we had tolerated a mausoleum enshrining Hitler in Berlin and an officer of the Gestapo as Germany’s president?

Twelve years after the fall of the Soviet Union, Lenin’s waxy body remains on revered display in Red Square. To this day, not one Communist has been brought to trial or incarcerated for the atrocities of the Gulag. Instead, we see the KGB-ification of Russia under Putin, Russia becoming a Mafiaocracy.

The Soviet Union was in reality a Russian Empire with Marxism-Leninism as its ideological justification. Stripped of that rationale, Russia resorts to its traditional M.O. of gangsterism. While the Chechens continue to be wiped out, Georgia and other ex-Soviet Republics bullied, and Ukraine corrupted, you take your life in your hands if you try to do business in Russia with anyone not with a KGB-approved mafia (krysha or “roof” in Russian). One bottom line: there is much, much less economic freedom or rule of law in Russia than there is in China.

But what about Russia’s booming stock and bond markets? Moody’s now rates Russian debt as investment grade. The Russian RTS stock index is up almost 80% for the year. Russian GDP is growing at 6%. So what about Putin’s gangsters — it’s still a good place to make money now, right?

Don’t even go there. Russia’s economy is built on permafrost. Once the permafrost melts, the economy sinks. Russia’s economy is a one-trick pony, dependent entirely on oil and gas. Russia now produces as much oil as Saudi Arabia, over 8 ½ million barrels a day (5 million for export), and is a major exporter of natural gas.

We’ve been here before, back in the 1970s. Russia — then the Soviet Union — was producing more oil than Saudi back then and cash flush with skyrocketing oil prices. Once oil prices crashed in the early 80s, the Soviet economy got flushed down the toilet.

There is only one thing that can sustain the current oil prices that are sustaining the Russian economy, and prevent them from plummeting: continuing the destabilization of Iraq and the sabotaging of Iraqi oil pipelines. The same circumstances apply to the Saudi economy as well.

Last month in Moscow, Mr. Putin and Saudi ruler Abdullah, together with their respective oil ministers, signed an agreement of cooperation on joint ventures for oil and gas exploration and production. That was the public agreement. In the shadows were the Russian and Saudi military intelligence folks agreeing on how best to block as much Iraqi exported oil as possible.

The key background fact here is that Iraq has more oil than Russia and Saudi Arabia combined (perhaps as much as 600 billion barrels), and its extraction costs are much lower than either. Once Iraq stabilizes and becomes a reliable supply of several million barrels a day to the world, oil prices will head below $20. This means economic disaster for the Russians and the Saudis and they will do just about anything to prevent it.

For President Bush to learn who is financing and enabling the Baathist guerrilla war in Iraq and infiltrating pipeline saboteurs across the Saudi and Syrian borders, one place he could look would be in the eyes of Mr. Putin. This time when he looks, he will see the soul of the KGB.