A parable of petro-power

In case it isn't obvious, America is losing its clout in the world. The reason: high oil prices. You see it not just in our dependence on volatile Middle East energy, or the way Iran is thumbing its nose at us. There's a growing galaxy of places where the US used to matter but doesn't much anymore.

Consider Russia, and an affair involving a guy named William Browder. Outside Wall Street, you've probably never heard of him. But he's America's biggest player in the new Russia the founder and CEO of Hermitage Capital, the largest foreign investment fund in the country, worth about $4 billion. For more than a decade he has pulled Western capital into Russia, sparking development and cleaning up Russian companies for listing on the world's stock exchanges, pulling them into the modern financial age.

By rights, you would think President Vladimir Putin would award him a medal. But no. Six months ago, as Browder was returning from a trip home, he was turned back at Moscow airport. His visa had been revoked.

Why? The answer says a lot about Russia today. But it says just as much about how America's global standing is eroding.

As Browder told me on a recent pass through New York, he at first assumed it was all a big mistake. "Why ban me? I've never done anything wrong," he said.

In fact, he has. By his own description, Browder is the leading shareholder rights activist in Russia an outspoken fighter for transparency and Western-style corporate governance in a place where corruption among industry honchos and high government officials is endemic.

After clashes with the folks who run the national electric company, the national gas company, several major state oil companies and a clutch of banks with ties to the Kremlin, there's no shortage of enemies who would like to see him gone.

Browder's situation is hardly unique.

"This happens all the time," he says. Indeed. Just ask Frank Neuman, a business man from Long Island who spent 14 years building up a thriving furniture trade as a purveyor of lifestyles to Russia's new rich.

Last year he called me from Moscow's Sheremetevo airport. His visa, too, had mysteriously been pulled. Meanwhile, armed men entered his stores and seized them at gunpoint. Newman spent nearly $100,000 trying to get his papers back and find out who was behind the snatch.

No qualms

The trail led to officials at the uppermost reaches of Russia's Interior Ministry who evidently know what they want and have no qualms about taking it, especially from foreigners.

What's significant here is that even someone with Browder's immense clout is essentially powerless to fight back. With a Rolodex as long as his arm, he's pushed his case at the highest levels.

British Foreign Minister Jack Straw brought it up three times with his Russian counterpart, Sergei Lavrov. Prime Minister Tony Blair directed his chief G8 sherpa, preparing for the upcoming summit in St Petersburg, to raise the issue again. Browder has toured the chancelleries and ministries of Berlin and Brussels.

Just last week he was in Washington meeting senators, congressmen and senior officials at the State Department and National Security Council. Unquestionably, he says, the matter has gone all the way to Putin to no avail.

As Browder explains it, Putin has two goals. He wants Russia to grow economically, ideally achieving the level of Portugal in ten years or so. And he wants to survive.

High oil prices are key. They both propel Russia's boom and help keep the political barons who surround Putin happy. These are the infamous siloviki, the secret police types who run the Kremlin and government ministries and thus exercise considerable independent power of their own. Because there is little division between the state and big business these days, particularly in energy and natural resource industries, someone as inconvenient as Browder poses a threat. If they want him gone, there is little Putin can do.

Nor does he much care, also thanks to oil. Half a decade ago, prices were nearly two-thirds lower. Foreign investment was then Russia's life-blood, and the West could press demands. Witness the IMF deals, democratic reforms and nuclear accords sought by previous US administrations.

Today, awash in soaring energy revenues, the Russians don't need foreigners any more. "Seventy dollar oil means that no body can tell them to do anything," says Browder. It's no coincidence that Putin's autocratic rise coincides with oil's revival.

Whether it's refusing to cooperate on Iran, or rolling back democracy at home, Russia is no longer beholden to anyone.

The broader reality is that rising oil wealth makes nasty regimes even nastier.

Libya, Algeria, Nigeria, Venezuela and (again) Iran come to mind. Browder considers Russia to be "the least bad of these bad places," his own troubles aside. It helps to remember, he says, what brought the Cold War to an end. Ronald Reagan gets his due. So does people power in Eastern Europe, not to mention the inherent weakness of communist totalitarianism. But the ultimate whammy for the Soviet empire was that oil fell below $10. Not coincidentally, some would say, that also marked the acme of American power.

Michael Meyer is the Europe and Middle East editor for Newsweek International and a member of Benador Associates.