Confident Putin places energy top of leaders' priorities

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The Independent Online

When Vladimir Putin hosts a lavish banquet for G8 leaders tomorrow night, his guests will find it hard not to be bowled over by the splendour of the surroundings.

With its landscaped gardens, fountains and graceful channels that run out to the sea, Petrodvorets, an imposing 18th century palace, is Russia's Versailles.

Its imperial grandeur (it was designed by Peter the Great) will be laden with symbolism. If the world's political elite needs a reminder that Russia is no longer the basket case it was in the 1990s, Petrodvorets is it.

During the Second World War the Nazis reduced the palace to ruins. Sixty years later it is as good as new - rebuilt and lovingly restored with Russia's oil millions.

Mr Putin has undergone a similar renaissance. When he took over as president from Boris Yeltsin at the end of 1999, he was derided as a dour former KGB officer who wouldn't last. He inherited a country choked with foreign debt that had lost a brutal war in Chechnya and whose standing on the world stage was at its lowest level for 70 years.

But when Mr Putin gets to his feet to make a toast, he will hold forth with the swagger of a man who knows he is holding all the cards. He may not have been able to resurrect the Soviet Union, whose demise he once lamented, but he has created an energy superpower whose voice is again important. And he has placed the issue of energy security at the heart of the summit agenda.

Russia is the world's second biggest oil producer after Saudi Arabia. Europe buys more than a quarter of its gas from Russian suppliers, and Russia's nuclear industry is expanding rapidly - even building power stations for foreign governments, including Iran.

In the run-up to the summit Mr Putin has delighted in reminding the Western media just how energy-rich his country is, while seeking to ease Western concern that the Kremlin may use it as a political weapon. Russia's proven oil and gas reserves are four times greater than the hydrocarbon wealth of the seven other G8 members combined. And with world oil prices so high, Mr Putin's strategy is to build more nuclear power stations so more of the country's oil and gas can be sold abroad. He wants 40 new nuclear reactors to be built to add to the existing 29.

Nor is Russia's "soft" energy power a flash in the pan - it is set to grow exponentially and Western diplomats openly admit that Europe will become more dependent on Russia to keep the lights on with every year.

Gazprom, Russia's state energy behemoth, is building a north European gas pipeline to Germany due for completion in 2010 - and a pipeline that will be the world's longest is being constructed to supply China. Russia's renaissance has forced the West to change its approach - in the past, world leaders didn't think twice about criticising Mr Putin's "democratic" credentials This year, democracy is not even on the official summit agenda.

As a boy, Mr Putin lived in a rat-infested communal apartment in St Petersburg. Tomorrow he will host the world's most powerful leaders in a Tsarist-era palace and demand a level of respect that Russia has not received since the collapse of the Soviet Union in 1991.