US and Russia on verge of deal over oil and missiles

Russia and the United States may be on the verge of a strategic and diplomatic grand bargain over missile defence, oil and Nato, as part of an extraordinary rapprochement made possible by the transformation of the international scene since 11 September.

Russia and the United States may be on the verge of a strategic and diplomatic grand bargain over missile defence, oil and Nato, as part of an extraordinary rapprochement made possible by the transformation of the international scene since 11 September.

The trade-off would have many elements, each offering advantages to both sides. On missile defence, Moscow is sending signals it is ready to accept a modification of the 1972 Anti-Ballistic Missile Treaty, which it had hitherto insisted was the cornerstone of nuclear arms control – but which the White House's cherished anti-missile shield would breach.

In return, America seems ready to embark on massive cuts in its nuclear arsenal, for which Moscow has long been pressing. This in turn would encourage greater co-operation between Nato and Russia, especially in the fight against terrorism, where Russia sees its bloody and thus far unavailing campaign in Chechnya as of a piece with the American offensive against the Taliban in Afghanistan.

The co-operation may not go as far as joint military operations. However, Russia has already gone well beyond anything seen since the Second World War by granting overflight permission for American military operations, and sanctioning the deployment of US troops in Uzbekistan – and perhaps other former Soviet central Asian republics, now independent but still within Moscow's sphere of influence.

In return, Moscow wants – and has apparently been tacitly promised – a softening of official Western criticism of its human rights record in Chechnya, on the basis that this military campaign, however brutal, is part and parcel of the new global struggle against terrorism.

Of greatest potential importance in the long run is central Asian and Russian oil and gas, which constitute an ever more attractive alternative source of supply given the growing fears of political instability in the Gulf, not least in Saudi Arabia, America's biggest source of imported oil.

In the past, political uncertainties in the region, a lack of pipeline capacity and ample world energy supplies have slowed development of the massive central Asian oil and gas fields.

All that may now change – and again to the obvious advantage of both sides: security of supply for America; and a huge economic boost for the impoverished former Soviet states and for Russia, through which many pipelines run.

The prospective deal began to take clearer shape after a meeting in Shanghai between the Secretary of State, Colin Powell, and the Russian Foreign Minister, Igor Ivanov.

This will be followed by a private session between the President, George Bush, and his Russian counterpart, Vladimir Putin, on the sidelines of the Apec summit of Pacific Rim countries in the Chinese city.

Officials caution that the precise framework may not be settled in Shanghai, nor even when President Putin travels to Texas next month. But rarely have the pieces in the jigsaw of improving Russia/US relations appeared to fit so perfectly.

Russian diplomats quoted by the normally reliable Interfax news agency said the summit at President Bush's ranch near Waco – which, before September 11, some in Moscow were publicly doubting would even take place – would now be "of exceptional significance".

General Powell was no less upbeat. "Not only is the Cold War over," he declared in Shanghai, "the post-Cold War period is also over".

American officials travelling with General Powell went even further, talking of an "across the board" change in attitude in the Kremlin towards co-operation with the West.

More even than the renewed talk of a Palestinian state, or the rediscovered friendship between America and Pakistan, or the curious diplomatic ballet being played out between Washington and its former nemesis Iran, the new climate between the one-time superpower rivals is proof of how international relations have been turned upside down by the terrorist attacks in New York, Washington and Pennsylvania.

One startling sign has already come this week, with the closure of Russia's 40-year-old electronic eavesdropping facility at Lourdes, near Havana, and its naval operations at Cam Ranh Bay in Vietnam. Ostensibly the decision to close installations that symbolised the Cold War was to save money for the strapped Russian defence budget. But it also removed a severe irritant in US relations with Moscow.

The moves were instantly hailed by Mr Bush as proof that "the Cold War is over". Now he will use exactly the same argument to promote his missile defence plans, to which he is more, rather than less, committed as a consequence of 11 September.

The ABM treaty was "outdated, antiquated and useless", the President declared last week – and the Russians seem to be edging towards acceptance of that rationale.

One reason for the softening is Mr Putin's domestic political strength, enabling him to override the diehard anti-American mindset of some Russian politicians. But he can also point to the advantages to Russia of a new approach, and to how the unyielding unilateralism of the early Bush administration has also been a casualty of the 11 September atrocities.