Conventional wisdom holds that the OPEC oil cartel has the world in its grasp. It can manipulate prices by tinkering with supplies. Last month OPEC released a new study on world oil demand that seemed to signal the cartel was readying to tighten the taps because higher prices were slaking the world's thirst for oil. The American Petroleum Institute released fresh data showing that demand for oil products in the United States (the world's largest market) dropped a whopping 3 percent from the year earlier. The news about lower demand has caused oil prices to fall a bit, and all eyes are on OPEC's wizards to tighten supplies.

But the conventional wisdom is mostly wrong. OPEC (which stands for the Organization of the Petroleum Exporting Countries) is no wizard. For the most part, its actions lag behind fundamental changes in oil supply and demand rather than lead them. OPEC looks like a masterful cartel when, in fact, it is mainly just riding the waves.

It is hard to figure out exactly what goes on behind's OPEC's closed doors, but glimpses are possible by probing what the cartel members say about prices and how they set quotas. Over the last five years, OPEC members have announced ever-higher price goals only after the market had already delivered those high prices. As the market has soared, OPEC has followed. Only in the last few months has Saudi Arabia suggested that the cartel would be better off if prices reversed because high prices would encourage the world's big oil consumers to wean themselves from oil. It proffered $125 a barrel. The markets shrugged and kept on rising until real facts about slowing demand revealed that fundamentals were changing.

OPEC also sets quotas so that each member knows its role. Throughout its history, OPEC has faced the difficult task of holding the cartel in the face of strong incentives by each member to cheat. Today's oil market makes that job easy because nearly every member, except Saudi Arabia, is producing at full capacity. OPEC, more or less, has nothing to do.

In fact, the last time OPEC made a major adjustment to its quotas—September 2007—it jiggered them to reflect what its members were already pumping. Algeria got a big boost because it was already supplying nearly 50 percent more than its quota. Kuwait, Libya and Qatar also got boosts that aligned their OPEC quotas with existing reality. OPEC also set, for the first time, a quota on Angola's output. Since then, Angola has attracted a steady stream of new production projects, which makes it inevitable that OPEC will adjust Angola's quota to reflect the new reality. (Iraq has no quota; it has troubles enough without pretending to align its oil output to OPEC strictures.)

Nigeria and Venezuela got haircuts because their political troubles meant they were already producing far less than their quotas. Indonesia also cut its quota and a few months later left OPEC because it realized that as a big oil user it actually had more in common with oil importers than its fellow OPEC members. These changes in quotas were reflections of political realities that OPEC doesn't control.

Today's oil cartel, even more than in the past, is really about Saudi Arabia. But Saudi Arabia also is no wizard at the controls of the world market. The Saudis can adjust their output a bit since they control nearly all of spare capacity in the world market. (Earlier this month they pledged another 200,000 barrels per day to dampen pressure from the United States and other governments that are reeling from high oil prices. But that move was more symbolic than real as the markets were already expecting the new supplies.)

Saudi Arabia is on the front lines of the new reality in world oil supply. It is proving much harder and more costly to bring on more supplies. The Saudis have an ambitious plan to increase output about one third over the coming decade, but they are finding that will be a stretch. Their fellow OPEC members are in a similar situation, and those hard facts also produce high oil prices. In fact, the Middle East members of OPEC are, today, producing at just the same level as they were three decades ago because none of them invested much in finding and producing new supplies. High prices into the future reflect these fundamental facts rather than the assumption that OPEC is a masterful cartel.

Conventional wisdom holds that because OPEC is raking in more cash than ever, it has never been stronger than it is today. In fact, OPEC has rarely been weaker. It is the accidental beneficiary of forces that have caused today's high prices, and it will be nearly as powerless when prices come down.

The real solutions to today's high oil prices require more attention to demand. Blaming OPEC, while good political theater, won't have much impact. Legislation now working its way through the U.S. Congress would actually attempt to break up the oil cartel. Such schemes won't work, and the political effort would be better spent on policies that redouble the nation's efficiency, producing more oil from diverse sources here at home, and in finding ways to move beyond oil altogether.

Every day, the United States burns through 20.7 million barrels of oil. China, the world's second largest consumer, uses about 6.9 million barrels a day. Although the United States is the third leading oil producer in the world (behind Saudi Arabia and Russia), its appetite is so enormous that it overwhelms the country's production capacity. Its known reserves, about 21 billion barrels, would supply only enough to keep the country running at full speed for about three years.

So when STANFORD gathered five faculty members to talk about the implications of U.S. dependency on foreign oil, we expected grave declarations of alarm. But their concern did not square with the growing chorus of citizens and elected officials about why reducing this dependency is so important.

On the next five pages, faculty from political science, economics, law and engineering explain why the debate about energy security is missing the point, and what they think needs to be done.

STANFORD: How would you frame the issue of dependency on foreign oil? What should we be concerned about?

David Victor: The problem is not dependence per se. In fact, dependence on a world market produces enormous benefits, such as lower prices. Nor is the problem that energy's essential role in the economy means that dependence must be avoided. The real problem is that energy - oil, especially - doesn't operate according to normal market principles. Something like 75 percent of the reserves of oil and gas are controlled by companies that are either wholly owned or in effect controlled by governments, and there's enormous variation in how those companies perform. Some of them are just a disaster, like [Mexico's state-owned oil company] Pemex, and others can work at world standards, like Saudi Aramco or Brazils Petrobrás. Some of these governments, such as Venezuela, use oil revenues for political purposes that undermine U.S. influence. High prices do not automatically generate new supply or conservation, partly because suppliers can drop prices to undercut commercial investment in alternatives. Second, we have what has become known as "the resource curse." There'sa lot of evidence that the presence of huge windfalls in poorly governed places makes governance even worse. Revenue that accrues to oil-exporting governments is particularly prone to being misspent, often in ways that work against U.S. interests.

Scott Sagan: I agree that calling the problem "energy dependence" and therefore seeking energy independence is the wrong way to think about this problem. Talking about energy independence feeds the xenophobic impulse that occurs all too easily in American politics. And it suggests to other countries that they should seek independence rather than a more cooperative approach. I see very negative consequences politically in the signal that attitude sends. Think about the current nuclear crisis with Iran. Iran claims that it needs independent uranium enrichment capabilities to have "energy sovereignty." Such uranium enrichment production could be used, however, for civilian nuclear power or for making a bomb, creating enormous nuclear weapons proliferation problems. We're feeding into that kind of thinking when we use the same language about independence when referring to oil. And it produces uncooperative effects elsewhere. The Chinese, for example, cut a deal with Sudan as a means of creating energy security for themselves. It inhibits efforts of the international community to encourage that government to behave responsibly.

John Weyant: There is a distinction between dependence, meaning how much of the oil the United States consumes is imported, and vulnerability, meaning how at risk our economy and our social order are to oil-supply disruptions. That vulnerability is defined by how much of the total supply of oil in the world market comes from unreliable sources. So you have to look at oil supply on a global scale, not just in the United States. It's the instability of the supply that affects price.

Victor: I like John's term "vulnerability," and it leads us to various kinds of actions to reduce our vulnerability to the market rather than trying to make us completely independent. One of them has been around since the '70s - building and coordinating strategic stockpiles so that they are supplied into a single world market. Traditionally that could be done by the major Western countries because they were the major oil consumers. One of the big challenges for policy makers today is how to get India and China to think about the operation of this world market in the same market-based way that we think about it, and to get them to build up those stockpiles and coordinate them with our own. There's some evidence that that kind of coordination can reduce our vulnerability.

Weyant: There's this fallacy among the public that if we don't import so much oil, other oil-exporting countries are going to be hurt and we will be unaffected if oil supplies are cut off. But these countries are sometimes major trading partners of allies, and asking those allies to take a hit on our behalf just leads to other economic problems. If the economies in China and Europe and Japan, who are all major trading partners, go down, it affects how much they can buy from us. It's another reason we can't be xenophobic and just look inward on an issue like this. You get these international trade flows outside the energy sector that could be pretty devastating.

STANFORD: Last summer we saw crude oil prices hit $70 a barrel and gas prices went well above $3 per gallon nationwide. That momentarily changed consumer behavior, and reduced demand. Are high prices a good thing?

Michael May: The key factor in normalizing market conditions is assuring the market that high prices are here to stay. Major oil companies like Exxon and bp have been putting their money to other uses than exploration. They have been buying back shares and increasing returns to stockholders because that's the way Wall Street drives them. That might change if prices stayed high. It probably won't be $70 a barrel, but even $50 a barrel as a base price is almost twice the historic average. The extent to which investors become convinced that that's going to be the future average will have some bearing as to how much money they spend on exploration. Toyota and General Motors and others can make hybrids or much more efficient cars, but it takes billons of dollars of investment, and if the price of gasoline goes down, they have less incentive. When gas is cheap, driving an SUV is not such a big deal.

Victor: The reason some of these companies are buying back the shares is not just because of Wall Street but because they don't have a lot of truly attractive opportunities for investing in new production. Most of the oil reserves are either legally off limits for the Western oil companies or international oil companies generally, or they're de facto off limits because they're in places where it's so hard to do business. Although the public is seized by the high price of energy, the major energy companies are seized by concerns that prices are going to decline sharply. If there is a recession, which would dampen demand for energy, or the capacity to produce oil around the world improves, then prices will decline. It has happened in the past. That fear really retards a lot of investment because these investments have a very long capital lifetime, and you need to protect them against low prices over an incredibly long time horizon.

Michael McFaul: It's very important to understand that oil companies owned and operated by governments are not necessarily profit-maximization entities. Take Gazprom, the gas company of Russia. It is closely aligned with state interests, so profit isn't its only motivation. It will use its money for strategic purposes as defined by Vladimir Putin, not as defined by the shareholders of Gazprom. For instance, early in 2006, Gazprom cut off gas supplies to Ukraine, mostly for geopolitical reasons. Why is Hezbollah so well armed? Because of Iran, which uses oil revenue for strategic purposes; it is not used for investing in a company or investing in the market per se. This is part of the problem of the "resource curse" David referred to. If oil is discovered in a country before democratic institutions are in place, the probability of that country becoming democratic is very low. In countries where the state does not rely on the taxation of its citizens for its revenues, it doesn't have to listen to what its citizens want to do with that money. So instead of building roads or schools or doing things that taxpayers would demand of them, they use their money in ways that threaten the security of other countries, and, ultimately, their own.

Victor: It's important that we not overstate the extent to which users of energy are going to respond automatically to high prices, and the personal vehicle is a great example. Fuel accounts for about 20 percent of the total cost of operating a vehicle. Traditionally it's only been 10 or 15 percent, but we are much wealthier today than we were three decades ago when we had the [first OPEC oil embargo]. I think that helps explain a lot of the sluggishness in response in the marketplace. People are buying smaller, more fuel-efficient cars, but that trend will only go so far because there are other factors that determine what kinds of vehicles people purchase. In the United States and most advanced industrialized countries, most oil is used for transportation, where oil products have no rival. It is hard to switch. In most of the rest of the world, oil gets used for a variety of other purposes, including generating electricity. Those markets are probably going to be more responsive to the high price of oil because they're going to have opportunities to switch to other fuels. The United States used a lot of oil to generate electricity in the early 1970s and when that first oil shock came along, essentially all of that disappeared from our market. That's part of the reason why the U.S. energy system responded fairly quickly to the first oil shock, and why changes in behavior are harder to discern in the current crisis. There is no easy substitute for gasoline.

May: If we generally agree that high oil prices, on the whole, are a good thing because they cause investment in more production and more efficient uses of oil, then it would follow that the rapid growth in consumption in China is also a good thing and we should welcome it, right?

Victor: I disagree with that. In effect what we have right now is a "tax" that's been applied to the oil market due to the various dysfunctions of the way it operates and to unexpectedly high demand in the United States and China. The revenue from that tax is accruing to the producers, and if we think about how to get out of the mess here, then what we want to do is in effect apply a tax to the oil products. If we raise the price of these products to reflect the real total cost of our vulnerability to the world oil market, those companies have an incentive to go off and look for alternatives.

May: So you're saying the same thing: that high oil prices, whether from this tax or otherwise, are a good thing.

Weyant: It depends significantly on who is collecting the tax.

McFaul: Yes, the fundamental question is how the money is being spent. If I had high confidence that the money was going to reinvestment, then I could agree that high prices are good, but that's not what is happening. The Soviet Union's most dangerous adventures in the Third World correlated with the high oil prices in the 1970s. You can see the direct effect. And when the prices came down, the Soviet Union collapsed. The same is true with Iran today. They are being very aggressive in the region - in Iraq, in Lebanon, in Afghanistan - trying to become the Middle East hegemon. This would not be happening if they didn't have all these clients - Hezbollah, Hamas, their friends in Iraq - that they can support with millions of dollars. Going back a few decades, where did Osama bin Laden come from? Where did support for the Taliban come from? It came from this tax that David is talking about. If we're talking about security issues and oil, this is much more serious than supply disruption to the United States.

Victor: I agree with Mike 100 percent. If you look at where the revenues are going from Iran, Venezuela and so on, there's a long list of folks who are doing things that are contrary to our interests with the money that ultimately is coming out of the pockets of American consumers. Dealing with that is job one.

STANFORD: So how would you counsel American policy makers? What needs to happen to reduce our vulnerability over the long term?

Sagan: The vulnerabilities we have today should provide an incentive to make some critical investments and to change our thinking, but we're not really doing that. I was quite surprised at how much I agreed with one aspect of the second Bush inaugural address. [He said] let's start talking about our addiction to oil and all the problems associated with that, but I've been completely disappointed with the lack of follow-through. And part of the problem is this notion of energy independence. We need diversity in our research and development spending across the board, on a variety of technologies. We're going to produce energy security to a large degree by finding cooperative solutions that are efficient and secure for many countries working together. We need to see our national security as being very dependent on others and that's not entirely a bad thing.

Victor: There is one cluster of technology that's going to be exceptionally important - electric vehicles. The all-electric vehicle has been kind of a disaster. We tried to do that in California without much success at all. The new set of pluggable hybrid vehicles, which you plug in at night and charge up, are more promising. If such technologies make it feasible to reduce some of the transportation dependence on oil, then markets will be forced to become more "normal" and more responsive. Electric cars and other technologies can help to keep prices lower and ultimately help make the transition completely away from oil over a period of 30 or 50 years.

Weyant: We only think about energy as a nation when prices are high, and so there's a short attention span on the issue. That makes it really hard to sustain a policy that would be rational over the long term. If we're going to have a big R&D program, for example, you need to invest in technologies and sustain the investment over a long time horizon. If you couple this short attention span with our aversion to taxes, at least historically, you end up with policies that are almost designed from the outset to fail. The political tide is turning a little bit so a well-designed tax might be possible. Maybe you don't raise taxes now but you assure that the price of a [hybrid] car won't go below a certain level and that'll help create a little more confidence with the marketplace. If you just focus on research and development without getting the economic incentives right, you come up with all kinds of great gizmos that no one will actually make or use.

McFaul: We've been talking mostly about how to manipulate the market to change people's behavior and I think that's quite right. I can't tell you how many people I saw come out of a Palo Alto theater after seeing Al Gore's movie [An Inconvenient Truth] and jump into their gas-guzzling machines. I would like to tax those machines; use economic tools to change people's behavior in a way the movie didn't. This has to become a public policy issue. It's not right now. Think about the way the market for cigarettes worked in this country 50 years ago, and think of how it is structured now. We have not just taxes but regulation - they can't be advertised on television - and a national campaign trying to educate people about the health concerns. We need a similar effort on this issue.

Sagan: When you watch the Super Bowl you don't see advertisements for cigarettes, but you do for Hummers. There's no attempt at all to educate people about the relationship between these longer-term problems and what you do individually. And that takes decades.

Victor: One of the acid tests for whether the nation is pursuing a coherent energy policy is our policy on ethanol. Ethanol is important because it is a partial substitute for oil-based gasoline. In this country, almost all of the ethanol that is delivered to the marketplace is made from corn, which is economically inefficient. But we do that because the corn grows in the heartland, such as Iowa - an important state electorally. There have been lots of proposals to, for example, erase the tariff on imported ethanol. Brazil produces ethanol from sugar cane and it's much cheaper and more efficient. But the farm lobby always intervenes and these proposals languish, with the result that the U.S. ethanol industry never faces the rigors of world competition. So long as energy is bouncing around lower on the list of priorities, it will be difficult to have a coherent policy.

Weyant: It would be far better if people were willing to bite the bullet and say this is a problem and it's not going to be painless to solve it, but if we play our cards right it's not going to reduce our standard of living much. Convincing the public is really one thing that might be worth some more effort. It's a cacophony to them.

STANFORD: What is your greatest hope and your worst fear with regard to demand for oil?

Victor: My greatest hope is that inside the Chinese government and inside the Indian government people know that this independence view of the world energy market is completely wrongheaded. Maybe that will create an opportunity for the United States and India and China along with other major oil consumers to collectively manage this issue, and the consequences of doing that will spill over onto other areas of cooperation. My greatest fear, in addition to the things we've already discussed, is that the United States will use the oil issue to beat up on the Chinese and the Indians, and that our relationship with those countries, which is already fragile, will make it harder to work together on other things that also matter.

May: My greatest hope is that the United States, China, India and other major countries work together towards a more hopeful future, including improving the global environment, providing a counterbalance to mischief in the Middle East, and promoting a transition to modernization and away from extremism. My greatest fear is that the little termites who are nibbling at what is currently a somewhat sensible Chinese policy will have their way, either because the country's economy slows down - which it will inevitably - or for some other reason, and we'll wind up fighting each other or destroying each other's capabilities.

McFaul: My greatest sense of optimism comes from this discussion, and about what my colleagues in this discussion said about China, because from the surface it looks like there's a much more pernicious policy of China going its own way. I've learned today that in fact there are very reasonable voices within the Chinese government, and I hope that there will be in my own government. My greatest fear is that there will continue to be politicians who control oil revenues who do things that do not serve international security, and I'm speaking not only of Iran. My nightmarish scenario is that 10 years from now Iran, Iraq and, God forbid, Saudi Arabia are controlled by hostile governments that want to use the revenues that we pay them for their oil to harm us. I give that a low probability, but in terms of things that worry me about our security, it's the instability of those oil-exporting regimes.

Sagan: The hope is that this current crisis will provide the right set of incentives to encourage investment in a diverse set of energy R&D programs across the board, and will encourage cooperation between countries in energy research and development. That would help educate and change the culture of the United States away from a gas-guzzling, governor-in-the-Hummer culture. The fear is that this will become yet one more excuse to move to a more xenophobic policy that discourages cooperative international policies.

Weyant: Remember David Stockman, the erstwhile head of the Office of Management and Budget? I ran into him in Washington and he literally said to me, "Don't worry about oil security and disruptions or any of that stuff. We've got battleships to take care of this problem." That shocked me to no end, and my response was "Do you really want to be in that position, where that's your only option?" Your whole response is "We're best in the battleship field and you shouldn't mess with us?" This type of attitude is what worries me the most.

Sagan: We were earlier talking about the resource curse, and this strikes me as an example of the hegemon's curse. To not take the necessary steps on economic policies or energy policies because you think you've got a military backup solution. If our military strength causes us to be passive or uncooperative on the economic or energy front, it will have a boomerang effect that will really hurt us.

A FASHIONABLE NOTION

The concept of sustainable development first emerged from academic seminar rooms two decades ago, thanks to a best-selling report called Our Common Future. Put together by the World Commission on Environment and Development, the report argued that boosting the economy, protecting natural resources, and ensuring social justice are not conflicting but interwoven and complementary goals.

A healthful environment, the theory goes, provides the economy with essential natural resources. A thriving economy, in turn, allows society to invest in environmental protection and avoid injustices such as extreme poverty. And maintaining justice, by promoting freedom of opportunity and political participation, for example, ensures that natural resources are well managed and economic gains allocated fairly. Civilizations that have ignored these connections have suffered: consider the Easter Islanders, who by denuding their forests triggered a spiral of economic difficulties and strife that eventually led to their civilization's collapse.

Yet even as sustainable development has become conventional wisdom over the past two decades, something has gone horribly wrong. Because the concept stresses the interconnection of everything, it has been vulnerable to distortion by woolly thinking and has become a magnet for special interest groups. Human rights watchdogs, large chemical companies, small island nations, green architects, and nuclear power plant operators have attached themselves to the fashionable notion only to subvert it for their own ends. Instead of bringing together nature, the economy, and social justice, sustainable development has spawned overspecialized and largely meaningless checklists and targets. Particularly harmful has been a series of consensus-driven UN summits that have yielded broad and incoherent documents and policies. Sustainable development, the compass that was designed to show the way to just and viable economics, now swings in all directions.

This deterioration was probably unavoidable. But the slide matters, and not only because sustainable development has become a cover for inaction and a black hole for resources; it is also a wasted opportunity. The concept has gained such a powerful following over the past two decades that if it recovered its original meaning, it could become a guiding force for governments, firms, and nongovernmental organizations (NGOs). fixing this mess requires understanding how it came to be and recalibrating the compass so that it can reliably point in a single direction again.

THE PRICE OF FAME

One way to trace the slide of sustainable development is to follow the idea's degradation through the UN. After all, its earliest high-profile proponent, the World Commission on Environment and Development, headed by then Norwegian Prime Minister Gro Brundtland, operated under a UN mandate. The UN General Assembly and the UN Secretariat were always at the forefront in championing Brundtland's vision. And today, the conferences, commissions, and task forces that constitute the sustainable development apparatus all find their focus within the UN system. What happens there is worth observing -- not because the UN is solely responsible for what has gone wrong, but because the organization reflects the aspirations and flaws of the players that are.

The trouble began at the 1992 Earth Summit in Rio de Janeiro, which involved more than 100 heads of state, 170 governments, 2,400 representatives from NGOs, and nearly 10,000 journalists. The attention generated by the meeting kindled demand for more conferences. The result was a decade of summits, with one held almost every year, that covered a range of topics, including demographics (in 1994), the rights and roles of women (in 1995), social development (in 1995), and the expansion of urban habitats (in 1996). Most of these gatherings, the culminations of arduous negotiations, produced two documents: a detailed action plan for insiders and a crisper statement of principles for outsiders. At Rio, these were called, respectively, Agenda 21 and the Rio Declaration.

Action plans tend to be sprawling documents that offer something for everyone. They are crafted through a consensus process in which the easiest way for special interests to get what they want is to agree with everyone else. The result is often an incoherent and costly wish list. The secretariat of the Rio summit estimated that implementing Agenda 21 might cost $600 billion a year in new spending, of which $125 billion would have to come as foreign assistance from the industrialized countries. Since then, summit negotiators have not even bothered to tally the costs of their plans. And in the meantime, the international community has continued to behave like a child crafting his dream order of Christmas presents out of the Bible-size FAO Schwarz catalog.

Statements of principles have not had much effect either. The documents are usually drafted in lawyers' false poetry: they are meant to inspire without offending any specific interest group. Principle 2 of the Rio Declaration, for example, purported to offer a fresh interpretation of the conflict between a nation's sovereignty and its international responsibilities: "States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction." Nobody really knows what the sentence means. Advocates for sovereignty (especially in developing countries) claim that it endorses sovereign freedom of action, whereas advocates for environmental responsibility (notably ngos from rich industrialized nations) claim that it establishes international duties.

The Rio process, moreover, bred a set of new institutions. Two new secretariats were created to oversee the implementation of two new treaties, one on climate change, the other on biological diversity. Summit participants also set up the Commission on Sustainable Development (CSD), which holds an elaborately prepared meeting every year and is charged with the impossible task of monitoring the implementation of the Agenda 21 commitments. The CSD, in particular, has accomplished very little.

DELUSIONS OF GRANDEUR

Governments and the UN system have also marginalized sustainable development by failing to articulate serious objectives and coherent strategies for its implementation. Agenda 21 embraced every goal offered up in anticipation of the Rio summit, but it set no specific priorities or targets, making it impossible to mobilize support for any strategy or to measure progress. At the 2002 World Summit on Sustainable Development, the process reached its lowest point with a sprawling and incoherent plan. Participants endorsed eight broad Millennium Development Goals (MDGS) -- including the eradication of extreme poverty, the provision of universal primary education, and the assurance of equality for women -- that had been crafted at the UN's Millennium Summit two years earlier. Since then, the UN Secretariat has parsed these broad objectives into 18 specific targets and 48 indicators. But the MDGS are already losing traction because governments have limited power to directly affect these outcomes. Most of the world is closer to meeting the MDGS now than it was a decade ago, but that is largely because human welfare has generally been improving. (The most striking exceptions are found in the many African countries that score worse today on most measures of human welfare.)

The MDGS, targets, and indicators do not constitute a strategy that informs the actions of governments, companies, and NGOS. Most of what the MDGS envision is beyond the power of any enterprise to deliver. Consider, for instance, the efforts that would be needed to meet the mdg to "develop a global partnership for development." The indicators designed to measure compliance with this goal include some activities that governments do control, such as the amount of untied official development assistance (ODA) they offer, which, in the right settings, can help alleviate poverty. But they also include special targets for ODA to small island nations and landlocked states that serve no strategic purpose -- reflecting these nations' special ability to manipulate UN commitments to their narrow advantage. And regarding the indicators on which progress has been most remarkable -- access to phone services, computers, and the Internet -- advances have been the fortuitous byproduct of technological development and have often reflected the accidental wisdom of governments' decisions to let the market work on its own.

The trouble with sustainable development and the MDGS is that they reflect a diplomatic process that has devoted too much effort to lengthening the international community's wish list and not enough to articulating and ranking the types of practical measures that are the hallmark of serious policymaking. Governments might have wondered whether any given dollar in aid would be best invested in water treatment, poverty alleviation, or structural adjustment, or if it would be better to treat the causes of underdevelopment, such as corruption, or its symptoms, such as inadequate health care. Yet these crucial questions were left unanswered -- and often even unasked.

THE POVERTY PRIORITY

The only way to fix the mess with sustainable development is to return to Brundtland's fundamentals. Sustainable development must be viewed afresh, as a framework for every aspect of governance rather than as a special interest. It can be revived by following four courses of action: making a priority of alleviating poverty, dropping the environmental bias that has hijacked the entire movement, favoring local decisions over global ambitions, and tapping into new technologies to spur sustainable growth.

First, and most fundamental, progress on sustainable development requires more success with economic development, in particular poverty alleviation; the other two prongs of sustainability, environmental protection and social justice, will lack force until basic living standards are improved. Development experts do not know exactly which policies best boost development, and without a well-accepted theory, many have tended to embrace grand schemes, such as the MDGS, that are politically unrealistic and unlikely to deliver results. But these uncertainties should not mask a growing canon of good sense about the policies that offer the best chances for eradicating poverty. One place to start is with some of the careful studies conducted over the last decade, especially those done by the World Bank. They show that a few key institutional factors -- such as fiscal discipline, openness to market competition, strong investment in education, political freedom, and low levels of corruption -- largely explain why some countries flourish while others wither. The breadth of consensus on these points is reflected in the comprehensive 2005 Human Development Report by the UN Development Program (UNDP), which endorses a similar institutional focus for alleviating poverty.

Yet very few of these factors, such as openness to competition or investment in primary education, appear among the MDG indicators. Equally vital levers for development -- including anticorruption measures, the protection of private property, and the containment of civic strife -- do not appear, because the soft-spined corps of believers in sustainable development has been unwilling to advocate policies that some view as intrusions into national sovereignty. Getting serious about sustainable development requires redrawing the lines of sovereignty; if sustainable development is a universal concept, then governments have a universal responsibility to promote it.

In the United States, some of this advice is already being put into practice through the Millennium Challenge Corporation (mcc), a governmental organization whose origins lie in President George W. Bush's promise to provide new development assistance to the countries that can best use the money. The plan was to offer a $5 billion annual increase in development assistance by fy2006. Unfortunately, as with so many of this administration's bold projects, progress on the idea is being hobbled by halfhearted implementation and perennial underfunding -- the partial result of a budget crunch brought on by unsound tax policies and the ballooning cost of the Iraq war. The mcc has run into trouble implementing its funding strategy. Countries with the best conditions for making effective use of mcc money are those best able to attract private investment on their own. On the other hand, countries with conditions that are least conducive to development -- and thus the least eligible for mcc aid -- are also likely to be the poorest and those in the greatest need of a hand. This Catch-22 most affects Africa, which includes, according to the UNDP's most recent tally, 14 of the 18 countries in the world whose human development has regressed since 1990. The United States has voluntarily increased foreign aid by $8 billion since 2000 and is the largest single supplier of aid to Africa. Other donors have also redoubled their efforts in Africa. But on most of the continent, governments have no viable plan to ensure economic growth, and sustainable development remains far from reach.

GREEN WITH ENVY

It is also necessary to challenge the environmental bias that has dominated the sustainable development agenda. From the outset of the Brundtland commission's work, developing countries have rightly feared that the developed world's concern about the environment would overshadow their interest in development. They insisted that the Rio summit be called the UN Conference on Environment and Development, but diplomats from the industrialized countries (even the conference's secretary-general, Canadian Maurice Strong) nonetheless referred to it informally as the Earth Summit. The two treaties signed in Rio, the UN Framework Convention on Climate Change and the UN Convention on Biological Diversity, mostly reflected the environmental priorities of the industrialized world. A treaty on protecting the world's forests was also considered. The developing countries, rich in forests and wary of intrusion, organized to kill it, but because nothing really dies in the diplomatic world, the stillborn convention has been resurrected as a set of new principles and institutions known as the UN Forum on Forests. So far, the forum has had little effect on forests -- except to further deplete them by generating a prodigious number of documents.

The tactical success of environmentalists, especially well-organized multinational NGOs based in industrialized countries, in moving their issues to the top of the sustainable development agenda is unhealthy -- even for environmentalism. Easy pickings in the UN have distracted environmentalists from the more urgent need to articulate ways in which they can contribute to the other pillars of sustainability: development and social justice. And this lapse has alienated them from an important base of potential partners in the developing world. Notably, the 2004 report of the high-level UN panel (which included Brundtland) convened by UN Secretary-General Kofi Annan to articulate new visions for world security was strikingly thin on environmental matters -- evidence that such issues have not sufficiently permeated mainstream policymaking in much of the world.

After being hoodwinked at Rio, the developing countries made sure that the 2002 World Summit on Sustainable Development did not include the word "environment" in its title. Nonetheless, the multinational environmental lobby has continued to score tactical victories in many areas that the industrialized states control, especially funding. The Global Environment Facility (GEF), which was created in 1991 to provide funds for the then nascent sustainable development apparatus, now finances projects in six areas: climate change, biodiversity, pollution in international waters, land degradation, ozone depletion, and persistent organic pollutants. These areas largely match the leading environmental priorities of diplomats from the industrialized nations, not the most pressing concerns of the states that GEF funds were intended to address. Climate change and biodiversity are top priorities for most industrialized countries and also, therefore, for the GEF: the two issues alone consume two-thirds of the GEF's resources. However, these concerns are disconnected from the real developmental priorities of the poorest populations in developing countries. In the area of climate change, for example, the GEF's funding strategy is to push for the development of technologies such as solar and wind-generated energy, which emit no carbon dioxide, a leading cause of climate change. These are darlings of environmentalists in the North, who claim that these exotic technologies, although currently expensive, will become cheaper with time. That argument is of dubious relevance to the 1.6 billion people who lack electricity today. For them, real progress usually comes in the form of less sexy but more cost-effective options, such as diesel generators and grid extensions.

THINK LOCAL

The third step toward recovering sustainable development is remembering that the theory works only if it is approached as a hardheaded calculation about tradeoffs, rather than as an amalgam of sacrosanct principles. The cocktail-party version of sustainable development gleams with promises of harmony and globalism: economic growth, environmental protection, and social justice can be achieved fully and simultaneously; because the ecosystems and economies of nations are interdependent, the problems they face require global solutions. In fact, however, the concept has practical relevance only if it can accommodate local preferences and capabilities. Cocktail-party visions of sustainability properly laud the benefits of electricity, for example, as a cure for darkness and a substitute for costly candles. Yet the diesel generators that bring electric lighting to the most remote areas are, in some respects, a paragon of unsustainability: diesel, which is derived from oil, is an exhaustible and polluting resource. Poor communities love diesel-generated electricity nonetheless: it has brought them television, high-quality lighting, and refrigeration, which were unavailable before. Similarly, whenever multinational environmentalists have sought to ban DDT worldwide, developing countries have resisted, wisely pointing out that the pesticide is crucial to controlling mosquitoes and other disease carriers in poor regions such as West Africa.

The last decade of UN summits propagated the myth that sustainable development can promote international harmony through "global action plans" and "universal principles." In fact, providing sustainability is a highly political activity governed by interests and resources that vary widely from one place to another. Advocating MDGS that apply equally to Latin America (where reaching them is fortuitously at hand) and Africa (where development is largely stagnant) makes little sense. The only way to craft serious goals is from the bottom up, focusing on responsible systems of government rather than disconnected global processes to do most of the work. But this approach, although pragmatic, is less satisfying ideologically and more demanding -- and therefore ignored by cocktail-party globalists.

The current disconnect between global ambitions and local realities helps explain why efforts to curb climate change, for example, have achieved so little. Although the problem's effects are inherently global, its causes are resolutely local. In most of the world, including many developing countries, domestic authorities choose what energy system to use, and because they decide how much fossil fuel to consume, they effectively control emissions of carbon dioxide. Globalists in industrialized countries are clamoring for "engaging" the governments of developing countries by pressing them to accept caps on emissions. But every major developing country has rejected the demand as an unfair limit on their development, leaving reform at an impasse.

So how can countries be compelled to enforce policies that deviate from their immediate interests in order to pursue the global good? Partly by allowing them to interpret the mandates of international agreements according to their local priorities. Take, for instance, Beijing, Shanghai, and Guangzhou -- three of China's most rapidly growing cities -- which are all struggling with local air pollution. To cut down on noxious emissions, they have (at least) two options. They can either move power plants and heavy industry outside their borders and import the goods and electricity they need, or they can change their primary fuel from coal to natural gas or nuclear energy, both of which are much cleaner. Although either solution would provide China's cities with the energy they need, each one has its drawbacks. Whereas the first would do little to curb China's total effluent of carbon dioxide -- the country as a whole would still burn prodigious amounts of coal -- the second would force Chinese officials to rely more heavily on a less carbon-intensive fuel (gas) that they have little experience using and would have to import in large quantities. To convince Chinese officials to adopt the second strategy even though it seems less favorable to them, the international community could offer a package of measures, including assurances to secure China's gas supplies and agreements to share related technology. In other words, industrialized Western countries could align their objective to slow global warming with China's domestic interests.

The primacy of local interests applies to highly industrialized countries as well. In Europe, governments are implementing the Kyoto Protocol on climate change by customizing it to local and regional needs: they are creating an emissions-trading system that lets individual companies trade credits for their carbon dioxide emissions, thus allowing greater flexibility in meeting the treaty's targets. Meanwhile, governments elsewhere are also developing their own locally tailored trading systems. The authors of the Kyoto Protocol envisioned a single global trading system with a single global price. But such a uniform system is not being implemented because the institutions that allocate credits, monitor compliance, and enforce agreements operate mainly at the local and national levels. Instead, a host of emissions-trading systems are emerging from the bottom up. (The United States, meanwhile, has refused to ratify the agreement for the compelling reason that it cannot satisfy the treaty's core commitment to bring down U.S. emissions of greenhouse gases to an average of seven percent below 1990 levels between 2008 and 2012. Although abandoning the protocol was a wise decision, Washington has not offered any credible plan to manage emissions in the United States.)

TECH SAVVY

Any serious effort at sustainable development will also need to harness the technologies that most affect economic growth and mediate the consequences of growth for the environment. Unfortunately, the sustainable development apparatus has been strikingly ineffective on technological matters. The only technological area in which governments have set specific goals is "technology transfer," the handing over of hardware to developing countries -- a gesture often espoused in UN talks but rarely witnessed in the field. Such goals are largely pointless anyway because most technologies spread through markets rather than thanks to transfers between governments.

Some efforts to harness technological progress for the benefit of sustainable development are under way. They include a long-overdue attempt to promote innovation in areas that matter to very poor countries -- such as developing a vaccine for malaria -- but that have been overlooked by private firms that normally focus their efforts on creating products to combat the diseases of wealthier consumers.

Governments have found it particularly difficult to set credible policies for the development and application of technologies that have long commercial lives. The problem is especially acute for investors in energy infrastructures who are contemplating new technologies that might help address the problem of climate change. In Europe, where the rules on emissions trading are in flux, utility companies have been wary of building new power plants in the absence of greater fiscal certainty, increasing the risk of severe electricity shortages. And in the United States, where there is no meaningful federal policy on greenhouse gas emissions, investors in long-term energy assets such as power plants (the single greatest emitters of carbon dioxide) must make multibillion-dollar commitments without knowing what regulatory regime may exist in the future. A few years ago, this problem was not particularly serious because nearly all new power plants in the United States were fired with natural gas. But today, natural gas costs five times what it did in the 1990s, there are no new gas plants under construction, existing plants are running at only 30 percent of capacity, and dozens of new coal plants are being designed. Unless the U.S. government soon announces a credible plan for the future regulation of emissions, utilities will invest in conventional coal-fired power plants. Within a few years, the country could be saddled with far more carbon dioxide emissions as a result of these plants than if the government had given investors a reason to fund less carbon-intensive sources of energy.

Governments and companies must find ways to keep sometimes tyrannical public opinions from blocking the development and use of certain essential new technologies. Today, there is latent public discomfort regarding carbon sequestration, a technology that entails injecting deep underground large volumes of carbon dioxide that would otherwise go into the atmosphere. Elements of the technology are already widely used in oil and gas operations, but carbon dioxide injection projects are under way at only two facilities in the world. This fix holds the promise of an elegant engineering feat, but the technology is not without danger. There are risks of leaks, some potentially catastrophic, and some countries (notably the United States) still lack adequate regulatory regimes for controlling underground disposal. The industry would do well to keep early demonstration projects at remote and especially safe sites in order to quiet public alarmism.

Worries that even ill-advised public resistance could stymie such worthy projects are not far-fetched: other promising technologies have run afoul of misguided opinions and poor regulatory policies. Across Europe, for example, public opposition to genetically engineered foods has prompted regulations to keep some of those foods off the market despite growing evidence that they are good for both consumers and the environment. Some of the key technologies for controlling carbon dioxide pollution may face a similar fate. Nuclear power, for example, is probably favored as a low-carbon means of generating electricity. Yet in many countries, it remains politically untenable.

BACK TO THE FUTURE

Despite its beginnings as a powerful animating concept, over the last two decades sustainable development has become meaningless. It has fallen prey to a collection of special interest groups that have both hollowed out the concept and lost track of what they can best do to implement it. When it has been applied, the theory has often distorted the real priorities of development.

Fixing the concept will require going back to its origins, and especially stressing the integration of economic and ecological systems while leaving it up to competent local institutions to decide how to set and pursue their own priorities. Advocates for sustainable development should not promote false universal goals. Because local needs and interests will necessarily vary, sustainable development must be redefined repeatedly, from the bottom up, wherever it is to be put into practice. Sustainable development can have worldwide relevance and appeal, but only if its original purpose of helping the poor live better, healthier, and fairer lives on their own terms is restored.

STANFORD -- With oil prices heading toward $50 a barrel, what would happen if the markets really blew?

Ever since the late 1970s, Washington's answer to such an event has relied on oil stockpiled mainly by the federal government, to be released if market instability warranted it. Today, the U.S. Strategic Petroleum Reserve contains 666 million barrels -- nearly 65 days of imports -- worth nearly $30 billion at current prices. Our industrialized allies have similar stocks, India has started one and China, whose oil imports are rising rapidly, is expected to create a reserve soon. Through the International Energy Agency in Paris, the major oil importers have agreed, in principle, to coordinate their stockpiles.

Unfortunately, reserves in the United States and most democracies are nearly feckless as a policy instrument. The legislation that created the U.S. reserve gave the power to buy and sell stocks to a federal agency, now the Department of Energy, that, in effect, passes the decision on to the president. White House control automatically converts every key decision into a highly political act.

In July 2000, President Clinton's order to transfer some strategic reserves to fill a newly created Northeast Home Heating Oil Reserve had obvious political implications for Al Gore's presidential bid. In 1996, Congress required the sale of more than $220 million of stockpiled oil to help pay down the budget deficit, another political move, though one that, in hindsight, looked wise when oil prices tanked two years later.

The uncertainty of reliable production in Russia and Iraq, coupled with the general threat of new terrorist attacks, makes for many worrisome scenarios. But a cloud of political suspicion would hang over any management decision. If President Bush released stockpiled oil to stabilize prices in an election year, no matter how justified his action, he surely would be accused of political pandering. And if he rightly refused to release oil because speculative trading doesn't meet the standard of "severe energy supply interruption," as called for in the 1975 legislation setting up the Strategic Petroleum Reserve, would he face charges that he was rewarding his oil buddies with record profits?

One way to take the politics out of governing the Strategic Petroleum Reserve would be to mechanize decision-making, such as by setting a price trigger for sales and fills. President Reagan's Council of Economic Advisors, among others, considered this option and wisely demurred. In the 1980s, the international spot market for oil was not fully developed; prices were mainly driven by opaque long-term contracts, not market dynamics. Price triggers act similarly to price controls, increasing the risk of creating true scarcities in oil supply. Such automatic triggers would have smoothed small gyrations in the oil market but failed when most needed to dampen large price swings.

There's a better way: independent management of the strategic reserve. In contrast to an automatic mechanism, an independent authority would be able to detect subtle economic and political shifts that determine our true vulnerability to oil shocks. More important, such an authority would depoliticize Strategic Petroleum Reserve decision-making, which would enable us to use the stockpile for its originally intended purpose of providing a credible bulwark against the most severe chaos in oil markets.

The president could create an independent board to manage the reserve within existing legislation, but that would not completely remove a political taint. New legislation would better accomplish the job. Congress and the president should look to the Federal Reserve as a model. The Strategic Petroleum Reserve needs its own resources, with politicians supplying broad guidelines for action and periodic review rather than direct control. Such a change would not only affect the United States but would also require remaking the International Energy Agency into something closer to a central bankers' forum.

New management for America's oil reserve would spark new thinking about the optimal size and operation of strategic stocks. Until now, most public debate has focused on the reserve's size. The International Energy Agency suggests that its member countries keep a petroleum stockpile roughly equivalent to 90 days of domestic consumption. In truth, the optimal size of strategic reserves is not a single quantity but depends on political and economic conditions. A competent independent authority would make it possible to carry a smaller stockpile -- at lower cost. Because today's oil prices are formed in highly liquid markets, the standard of "severe supply interruption" is largely meaningless. The better standard is our willingness to absorb price shocks. For that there is no simple answer, yet independent economic authorities can make the wisest choices.

More than 30 years after our first oil shock, the Strategic Petroleum Reserve still wears polyester and bell-bottoms. A dose of market reform and political independence can bring its fashion up to date and create a truly useful tool for protecting the U.S. economy.

America's farm lobbyists have long been pressing their government to launch a formal trade dispute against the European Union's ban on genetically modified crops. This week they got their way, as the US and more than a dozen allies started proceedings within the World Trade Organisation.

For US farmers - the world's top planters of GM crops - the case is a welcome chance to crack open a lucrative market. But the case may ultimately do their country more harm than good.

Now is a particularly bad time to embark on a dispute that will inflame anti-Americanism in Europe. In the broader, already deteriorating relationship with continental Europe, the US has much more important issues at stake, notably reviving the Doha round on trade and mending diplomatic relationships strained by the Iraq war. Moreover, a close look at the options reveals that each of the plausible outcomes from a dispute would leave the US worse off than before.

First, the US could pay the political costs of launching an inflammatory dispute and then lose. Most press accounts compare this case with one of the first disputes ever handled by the WTO: the EU's ban on beef that had been produced using hormones. The EU lost because its ban had no basis in science and in "comparable" areas of food policy it had adopted much less strict rules - a telltale sign that the ban was a protectionist gambit.

On the surface, the cases appear similar. Although the science on the health risks of GM food is contested, essentially all the credible evidence shows that these foods are safe, which would seem to indict the EU ban. But in critical ways the cases differ. Across the board, the EU is tightening food safety regulations in ways that seem irrational by standard cost/benefit tests but, crucially, are broadly non-discriminatory and consistent - the key tests for whether a trade ban is legitimate. Moreover, the GM ban is a temporary measure - unlike the permanent ban on beef hormones - and trade rules allow more flexibility for countries that implement temporary measures when they can claim the science is uncertain.

Second, the EU could change its rules in the middle of the dispute. For several years, EU bureaucrats have been designing a new set of standards that would "reopen" Europe's markets to GM foods if traders complied with onerous tracing and labelling requirements. This shift would make it harder for the US to win because trade laws are tolerant of labels that allow consumers to make the final choice. While the US might respond by dropping the suit, it would be more likely to redirect the dispute against the tracing and labelling rules. In the past, hotly contested trade disputes have usually taken on a myopic life of their own. Each side digs in and the political damage spreads.

Third is the most likely (and worst) outcome: the US could win. The victory would be Pyrrhic because the issues are fundamentally ones of morality and technology - they must be settled in the courts of consumer opinion. On this score, the beef hormones case is instructive. Even today, hormone-treated beef is no more able to find European consumers than it was before the US won its case; and the years of legal wrangling have led to counter-sanctions that have harmed a wide variety of unrelated products and industries. The antagonism over GM foods appears to be unfolding in much the same way.

A better strategy would have been to stay the course that US policy has followed ever since the controversy over GM crops broke out in the late 1990s. Time is on America's side because the technology is already proving itself in the marketplace and European opponents will find themselves increasingly isolated.

But now that Washington has pulled the trigger, what can be done? The greatest danger is that both sides of the Atlantic slide into a tit-for-tat retaliation. But a trade war will cause untold harm to an alliance already in stress and make it harder to rejuvenate the soggy world economy. Cooler heads must prevail.

In Europe, the critical need is to reform the moratorium on GM foods. Frustration over its inability to get the import ban lifted is what pushed Washington to this desperate act. In the US, serious movement in Europe must be seized as pretence to rescind the WTO case before the antagonisms of hearings, judgment, appeal and retaliation unfold.

STANFORD, California - The Bush administration wisely backed away this month from formally challenging Europe's ban on genetically modified foods. It made no sense to antagonize Europeans over the food they eat when they are pivotal to more weighty matters, such as a new resolution on Iraq.

Still, Washington's threat that it would file a case against the European Union at the World Trade Organization had palpable benefits. Even the countries with the most hostile policies on engineered food - France and Germany among them - took steps toward allowing the European Union to work on replacing the blanket ban with a new system for tracing and labeling engineered food.

But the decision to back off also means that American farmers are still denied access to the lucrative European market. European consumers still pay more for food than they should. And developing countries that could most benefit from engineered crops are still frightened that losing their "engineering-free" status will make it impossible to export food to Europe.

Yet the science on food safety is as certain as it ever gets: There is no known danger from eating engineered food.

Having backed down, the Bush administration will find it hard to make the threat of going to the trade organization credible again and to continue the momentum toward removing Europe's ban. But even harder for the administration will be keeping domestic politics at bay.

The biggest threat to the success of the U.S. strategy on engineered foods is in the American heartland, which is angling for a fight with Europe over the ban as the 2004 elections approach. Senator Charles Grassley of Iowa called the decision to defer a trade dispute "the usual snobbery" of a State Department "more concerned about international sensitivities than the American farmer." Two tactics should guide the effort to open Europe's markets. One is to let the Europeans lead their own reform.

The engineered foods available to consumers today mainly benefit farmers who can grow them at lower cost. These foods look and taste the same as their traditional counterparts. For rich consumers in Europe willing to pay a bit more, it is easy to focus on hypothetical risks and shun these products. But the next generation of engineered foods, already nearing the marketplace, will have healthful benefits for consumers - fruits that contain cancer-fighting lycopene, for instance - and this will make it harder for European countries to bar all these foods.

During the furor last summer over Zambia's rejection of genetically modified corn, prominent European politicians were forced to declare that these foods were safe - a blatant contradiction of Europe's own policies.

The other tactic is outreach to the developing world. In the poorest nations, agriculture provides the livelihood of most of the population, and agricultural research proves that genetic engineering can make crops that poor farmers grow both healthier and more productive.

Yet research on engineered crops and support for farmers who grow them lack money, not only in U.S. agricultural development and extension programs but also at the international agricultural research centers that were the engine of the first green revolution. In the last decade American support for international agricultural research has declined considerably.

An American program that would finance agricultural research on novel uses for genetically modified crops in developing countries would help those countries and could eventually help open European markets.

An American-led effort to pry open those markets would backfire. But one led by a developing country could succeed, as Europe considers the moral issues posed by barring food from a country which needs to sell its crops to survive. So far, few developing countries (South Africa is one exception) allow commercial planting of engineered crops. The United States needs to overcome the fears of the developing nations by growing such crops there and demonstrating how they could transform agriculture.

Since the Iron Curtain came crashing down, American and Russian diplomats have been searching for a special relationship between their countries to replace Cold War animosity.

Security matters have not yielded much. On issues such as the expansion of Nato, stabilising Yugoslavia and the war in Chechnya, the two have sought each other's tolerance more than co-operation. Nor have the two nations developed much economic interaction, as a result of Russia's weak institutions and faltering economy. Thus, by default, "energy" has become the new special topic in Russian-American relations.

This enthusiasm is misplaced, however. A collapse of oil prices in the aftermath of an invasion of Iraq may soon lay bare the countries' divergent interests. Russia needs high oil prices to keep its economy afloat, whereas US policy would be largely unaffected by falling energy costs. Moreover, cheerleaders of a new Russian-American oil partnership fail to understand that there is not much the two can do to influence the global energy market or even investment in Russia's oil sector. The focus on oil has also eclipsed another area in which US and Russian common interests could run deeper: nuclear power. Joint efforts to develop new technologies for generating nuclear power and managing nuclear waste could result in a huge payoff for both countries. These issues, which are the keys to keeping nuclear power viable, are formally on the Russian-American political agenda, but little has been done to tap the potential for co -operation. Given Russia's scientific talent and the urgent need to reinvigorate nuclear non-proliferation programmes, a relatively minor commitment of diplomatic and financial resources could deliver significant long-term benefits to the United States.

On the surface, energy co-operation seems a wise choice. Russia is rich in hydrocarbons and the US wants them. Oil and gas account for two-fifths of Russian exports. Last year, Russia reclaimed its status, last held in the late 1980s, as the world's top oil producer. Its oil output this year is expected to top eight million barrels per day and is on track to rise further. Russian oil firms also made their first shipments to US markets last year - some symbolically purchased as part of US efforts to augment its strategic petroleum reserve. In addition, four Russian oil companies are preparing a new, large port in Murmansk as part of a plan to supply more than 10 per cent of total US oil imports within a decade.

Meanwhile, the US remains the world's largest consumer and importer of oil. This year, it will import about 60 per cent of the oil it burns, and the US Energy Information Administration expects foreign dependence will rise to about 70 per cent by 2010, and continue inching upwards thereafter. Although the US economy is much less sensitive to fluctuations in oil prices than it was three decades ago, diversification and stability in world oil markets are a constant worry.

War jitters and political divisions cast a long shadow over the Persian Gulf, source of one-quarter of the world's oil. In Nigeria, the largest African oil exporter, sectarian violence periodically not only interrupts oil operations but also sent Miss World contestants packing last year. A scheme by Latin America's top producer, Venezuela, to pump up its share of world production helped trigger a collapse in world oil prices in the late 1990s and ushered in the leftist government of President Hugo Chavez. Last year, labour strikes aimed at unseating Mr Chavez shut Venezuela's ports and helped raise prices to more than US$ 30 (HK$ 234) a barrel. Next to these players, Russia is a paragon of stability.

The aftermath of a war in Iraq would probably provide a first test for the shallow new Russian-American partnership. Most attention on Russian interests in Iraq has focused on two issues: Iraq's lingering Soviet-era debt, variously measured at US$ 7 billion to US$ 12 billion, and the dominant position of Russian companies in controlling leases for several Iraqi oilfields. Both are red herrings. No company that has signed lease deals with Saddam Hussein's government could believe those rights are secure. Russia's top oil company, Lukoil, knew that when it met Iraqi opposition leaders in an attempt to hedge its bets for possible regime change. (Saddam's discovery of those contacts proved the point: he cancelled, then later reinstated, Lukoil's interests in the massive Western Kurna field.)

Russian officials have pressed the US to guarantee the existing contracts, but officials have wisely demurred. There would be no faster way to confirm Arab suspicions that regime change is merely a cover for taking control of Iraq's oil than by awarding the jewels before a new government is known and seated.

Of course, the impact of a war on world oil supply and price is hard to predict. A long war and a tortuous rebuilding process could deprive the market of Iraqi crude oil (about two million barrels a day, last year). Damage to nearby fields in Kuwait and Saudi Arabia could make oil even more scarce. And already tight inventories and continued troubles in Venezuela could deliver a "perfect storm" of soaring oil prices.

The most plausible scenario, however, is bad news for Russia: a brief war, quickly followed by increased Iraqi exports, along with a clear policy of releasing oil from America's reserves to deter speculators. A more lasting Russian-American energy agenda would focus on subjects beyond the current, fleeting common interest in oil. To find an area in which dialogue can truly make a difference, Russia and the US should look to the subject that occupied much of their effort in the 1990s, but that both sides neglected too quickly: nuclear power.

With the end of the Cold War, the two nations created a multi-billion-dollar programme to sequester Russia's prodigious quantities of fissile material and nuclear technology. The goal was to prevent these "loose nukes" from falling into the hands of terrorists or hostile states.

The Co-operative Threat Reduction programme also included funds to employ Russian scientists through joint research projects and academic exchanges.

Inevitably, it has failed to meet all its goals. In a country where central control has broken down and scientific salaries have evaporated, it is difficult to halt the departure of every nuclear resource. Nor is it surprising that US appropriators have failed to deliver the billions of dollars promised for the collective endeavour. Other priorities have constantly intervened, and Russia's uneven record in complying with arms control agreements has made appropriation of funds a perpetual congressional battle. Various good ideas for reinvigorating the programme have gone without funding and bureaucratic attention - even in the post-September 11 political environment, in which practically any idea for fighting terrorism can get money.

Russia has opened nuclear waste encapsulation and storage facilities near Krasnoyarsk, raising the possibility of creating an international storage site for nuclear waste. This topic has long been taboo, but it is an essential issue to raise if the global nuclear power industry is to move beyond the inefficiencies of small-scale nuclear waste management.

Russia should also be brought into worldwide efforts to design new nuclear reactors. The global nuclear research community, under US leadership, has outlined comprehensive and implementable plans for the next generation of fission reactors. The Russian nuclear programme is one of the world's leaders in handling the materials necessary for new reactor designs. Yet Russia is not currently a member of the US government-led Generation IV International Forum, one of the main vehicles for international co-operation on fission reactors and their fuel cycles. Top US priorities must include integrating Russia into that effort, endorsing Russia's relationships with other key nuclear innovators (such as Japan), and delivering on the promise made at last summer's G8 meeting of leaders of the world's biggest economies - to help Russia secure its nuclear materials.

For opponents of nuclear power, no plan will be acceptable. But the emerging recognition that global warming is a real threat demands that nations develop serious, environmentally friendly energy alternatives. Of all the major options available today, only nuclear power and hydroelectricity offer usable energy with essentially zero emissions of greenhouse gases.

Neither government should be naive about the sustainability of this endeavour. Russia is not an ideal partner because its borders have been a sieve for nuclear know-how and because its nuclear managers are suspected of abetting the outflow. Thus, plans for nuclear waste storage, for example, must ensure that they render the waste a minimal threat for proliferation. The US must also be more mindful of Russian sensitivity to co-operation on matters that, to date, have been military secrets.

Another difficult issue that both nations must confront is Russia's relationship with Iran. A perennial thorn in ties, Russia's nuclear co -operation with officials in Tehran owes much not just to Iranian money but to the complex relationship between the two countries over drilling and export routes for Caspian oil. This link to Iran cannot be wished away, as it is rooted in Russia's very geography. Any sustainable nuclear partnership between the US and Russia must develop a political strategy to handle this reality.

The world, including the US, needs the option of viable nuclear power. Yet Russia's talented scientists and nuclear resources sit idle, ready for action.