THE OIL CURSE:

Indeed, the Soviet Union had a similar experience 40 years ago, when a protracted period of rising oil revenues fueled an increasingly assertive foreign policy, which culminated in the 1979 invasion of Afghanistan. Oil prices quadrupled following the first oil embargo in 1973, and the discovery of large reserves in the 1970s underpinned a massive increase in Soviet output. As a result, from 1965 to 1980, the value of Soviet oil production soared by a factor of almost 20.

Burgeoning oil wealth bolstered the regime's credibility - not least by enabling a significant increase in military spending - and rising economic and military strength gave the Soviet Union's geriatric leadership a rejuvenated sense of invulnerability. The invasion of Afghanistan was not merely an improvised response to a local development (a putsch in Kabul); it was also a direct result of this trend.

Putin's reaction to the Euromaidan demonstrations in Ukraine followed a similar pattern. In both cases, a seemingly low-cost opportunity was viewed as yielding a large strategic gain - at least in the short run. Indeed, while the devastating consequences of the Soviet Union's Afghan adventure are now well known, at the time the invasion was viewed as a major defeat for the West.

The Soviet army's retreat in 1988 is usually ascribed to the Afghan insurgency, led by Pakistan-trained mujahedeen with support from the United States. But the decline in oil prices during the 1980s, which cut the value of Soviet output to one-third of its peak level, undoubtedly played a role. Indeed, it led to a period of extreme economic weakness - a key factor in the Soviet Union's dissolution just three years after its withdrawal from Afghanistan.

During the 1990s, Russia was too preoccupied with its own post-Soviet political turmoil to object to EU or NATO enlargement to the east. Nor did it have the wherewithal, as its own production and oil prices continued to decline, hitting a trough of $10 per barrel in 1999-2000.

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