The thought of Russian warships cruising the waters of the Caribbean instinctively revives memories of such Cold War episodes as the Cuban Missile Crisis of 1962.

Russia is sending a heavily armed nuclear-powered cruiser and other ships, aircraft and troops for a joint naval exercise with Venezuela, its first big manoeuvres in the United States’ self-declared backyard since the end of the Cold War.

It is extremely unlikely the deployment will provoke a crisis as dangerous and dramatic as 1962, but it is still an irritant to Washington.

Venezuela under President Hugo Chavez has replaced Fidel Castro’s Cuba as its chief bugbear in Latin America.

Spouting anti-imperialist rhetoric, Chavez has led a socialist revolution aimed at countering a century of U.S. influence — some might say meddling — in the region. He counts as allies leaders such as Bolivia’s Evo Morales as well as many poor people. 

He has backed up his actions with largesse from Venezuela’s oil wealth. Ironically, a lot of those dollars come from the United States. Venezuela is its fifth-largest oil supplier, a trade relationship which has hobbled Washington’s reactions to Chavez’s adventures.

Venezuela has already bought fighter jets, submarines and guns from Russia. And add to the equation Venezuela’s burgeoning friendship with Iran, another bete noire for the Americans.

Chavez seems to enjoy goading the Bush administration almost for the fun of it. He has variously called President George W. Bush a donkey, a drunk, and in a U.N. speech, the Devil.”

The naval exercises with Russia will not be as easy for Washington to brush off as the name-calling.

Relations between Washington and Moscow are tense because of Russia’s intervention in Georgia in August. The Kremlin was angered by the United States’ sending a naval flotilla to the Black Sea to show support for Georgia.

Russian President Dmitry Medvedev even asked how Washington would feel if Russian sent aid vessels to the Caribbean.

During the Cold War, Russian had a substantial military presence in Cuba and was involved behind the scenes in the Central American wars of the 1980s. With the Soviet Union’s collapse, all that ended.

But Russian officials have made it clear recently that Moscow is ready to play a role on the world stage again.

Meanwhile the United States’ Fourth Fleet this year began patrolling Latin American waters for the first time in 50 years, a move that Chavez denounced but that has also concerned moderate countries such as Brazil.

The Venezuela-Russia exercises are due to take place days after the U.S. presidential election - an event that will complicate any response from Washington and at the same time divert world attention.

Once called the “mad dog of the Middle East” by President Ronald Reagan, Libya’s leader Muammar Gaddafi will meet U.S. Secretary of State Condoleezza Rice this week.

Senior State Department official David Welch told reporters he had met Gaddafi — “a person of personality and experience” — several times. 

“We don’t refer to Colonel Gaddafi in those terms today,” said Welch when asked about Reagan’s derogatory reference. 

He anticipated Rice, America’s most senior diplomat, was “quite capable” of meeting with Gaddafi and looking after U.S. interests. 

“She is anticipating this one with great interest,” he said of the upcoming Tripoli encounter. 

No word on whether the meeting — the first between Libya and a U.S. secretary of state since 1953 — will take place in one of Gaddafi’s tents.

The people of South Ossetia and Abkhazia were celebrating on Tuesday after Russian President Dmitry Medvedev signed a decree recognising the independence of the two regions. 

Western leaders responded with harsh words. U.S. President George W. Bush said it increased world tensions and Britain called for “the widest possible coalition against Russian aggression in Georgia,” where the two regions lie. 

But what can the West do to punish Russia or discourage it from any similar acts in the future? 

Military action has never been a realistic option since Russia sent tanks and troops to halt Georgia’s assault on South Ossetia. United Nations sanctions are also out of the question because Russia ihas the right of veto on the U.N. Security Council.

Major powers are also reluctant to do anything that might encourage Moscow to withdraw its help with U.N. sanctions against Iran over its nuclear programme and transit support for NATO forces in Afghanistan. 

Retaliation could involve Russian membership of the big international clubs: excluding Russia from the Group of Eight (G8) top industrial democracies or blocking its bid to join the World Trade Organization (WTO). 

But any action will be carried out with the nagging thought at the back of Western leaders’ minds - Moscow is no longer the economic basket-case of Soviet times and, riding a tide of petrodollars from soaring oil prices, western Europe depends on Russian oil and gas.

Russian leaders have signalled they are not troubled by the Western reaction, partly because the Kremlin sees strong public support at home for its actions in Georgia and in the stand-off with the West, and partly because of the wealth it now has from its natural resources.

When NATO suspended activities with Russia, Moscow responded with a shrug of the shoulders, saying it was also freezing activities with the defence alliance. Moscow also plans to halt visits by senior NATO officials and joint military exercises with the alliance.

The European Union could, in theory, send in peacekeepers or break off talks with Russia over a wide-ranging strategic partnership, or even announce economic sanctions such as curbing existing trade arrangements. Moscow has shown no sign of concern over this - such moves would risk Moscow cutting energy supplies to Europe.

“Nothing scares us, including the prospect of a Cold War, but we don’t want it,” Medvedev said on Monday. “In this situation, everything depends on the position of our partners.”            

Does Russia have the upper hand? Perhaps. But despite the talk about a Cold War, there are also reasons to believe it is not about to start and that conflict can be contained.

Moscow’s confidence and strength rests largely on high prices for energy and other natural resources and it is still a far cry from the military force it was in Soviet times. Moscow also no longer controls large swathes of eastern and central Europe and no longer has the huge influence it once enjoyed in other parts of the world. The Kremlin is also likely to be concerned about investment flows into Russia, which ratings agency Fitch says could be affected by the rising tensions. 

Mikhail Kasyanov, a former Russian prime minister turned Kremlin opponent, was quoted by Interfax news agency as saying Moscow’s decision was “one more step towards the self-isolation of the Russian Federation from the international community.”

But Russian Foreign Minister Sergei Lavrov believes isolation is not looming for Russia: ”I don’t believe this should really be a doomsday scenario. I believe common sense should prevail.” 

The Caucasus tinderbox is alight again. How far will the flames spread this time and what can the outside world - the United States, the European Union, NATO - do to extinguish them?

The strategic significance of this mountainous region stretches back through history.

To the west lies the Black Sea, to the east the Caspian, to the south the Mediterranean, Iran and Turkey.

In the past Alexander the Great, Genghis Khan and the Russian tsars struggled to control its trade routes. Today Russia and the West are competing for influence over its energy pipelines carrying Caspian oil to world markets.

The Caucasus’ blue mountains and fiercely independent people have caught the imagination of Russian writers, Lermontov and Tolstoy. It has created only headaches for political leaders.

Georgia’s pro-Russian breakaway region South Ossetia is the latest battle ground in a long-running conflict.

Will the fighting, involving Russian and Georgian troops end there, or will another of Georgia’s breakaway regions Abkhazia seize the opportunity to press its claim for autonomy?

And what of Chechnya, a thorn in Russia’s side for nearly two centuries. Moscow sent in the troops to bring Chechnya to heel in 1994 and again in 1999. Will it try again to free itself of Moscow’s influence?

And what can the international community do to end the fighting. Dependent on Russian oil and gas, Europe has little or no room for manouevre. The United States has provided vocal backing of Georgian President Mikheil Saakashvili, but he would be misguided to expect more. So who can put out the flames?

Iraq’s leaders have overcome many hurdles in their struggle to rebuild their country after the ouster of Saddam Hussein in 2003.  But agreeing on the fate of the “ethnic tinderbox” of oil-producing Kirkuk is a particularly testing one.

Why has Kirkuk proven to be such an obstacle? For many, settling its fate seems to be an easy task.

The dispute largely revolves around Kurdish demands to incorporate the city into their autonomous northern Iraq region.  Arabs and Turkmens want the city to remain under the control of the Iraqi government as it has always been.

For an outsider the dispute might seem to be an administrative question of who will manage the city but Kirkuk’s fate has taken on national and regional dimensions since U.S.-led forces toppled Saddam. It has fuelled the ethnic conflict between Arabs
and Kurds and drawn in regional powers, especially neighbouring Turkey.

Kurds look at the city inhabited by Arabs, Kurds and Turkmens as their historic capital, while Arabs and Turkmen argue it equally belongs to them.

While Sunnis and Shi’ite Arabs are locked in a power struggle across the country, they are united in rejecting ceding the city to the Kurdish autonomous region.

But Kirkuk is more than a piece of real estate inheritance. The city sits on a sea of “black gold” — Iraq’s biggest oil field, which has become more lucrative with crude prices above $100 a barrel.

From a regional perspective, Ankara opposes Kurdish control of Kirkuk not only out of concern for the rights of fellow Turkmens in Iraq but also because it will bolster its own Kurdish minority’s demands for autonomy.

Watching an independent Kurdistan gradually taking shape across its border, Ankara fears that Kirkuk’s oil could strengthen the autonomous region in the face of a weak central government in Baghdad, and realise Kurdish aspirations for a region-wide Kurdish state, possibly encompassing southern Turkey and parts of Iran and Syria.

After years of trying and failing, Iraqi leaders are trying to reassure friends and foes that they are close to a deal on the future of Kirkuk. But even if parliament adopts a compromise hammered out behind closed doors, it is difficult to see how it will be implemented.

G8 leaders are debating the interconnected themes of climate change, food and fuel. British Prime Minister Gordon Brown has called for less food waste in the rich world. The World Bank has said rising food prices threaten 30 million Africans with poverty. VIP menus at the G8 summit in Japan have been lavish – hairy crab, asparagus, lamb, all manner of vegetables and wild leaves.  And of course regional sake rice wine. Newspapers printed the menu in full. Britain’s The Guardian heaped scorn: “the most powerful bellies in the world were last night compelled to stave off the Hokkaido Hunger by fortifying themselves with an eight-course, 19-dish dinner prepared by 25 chefs.” Is it fair criticism?

Five years after the U.S.-led invasion to topple Saddam Hussein, Iraq is throwing open its oil sector to foreign oil firms  in a way Saudi Arabia, Kuwait and others in the region are reluctant to. Oil Minister Hussain al-Shahristani says no company will have any special privilege.

Some  analysts take a different view. They reckon U.S. and British oil majors are in a strong position to help develop the world’s third-largest oil reserves. Exxon Mobil, Chevron, Royal Dutch Shell and BP head the queue. They have already built up a relationship with Iraq’s oil officials by negotiating short-term technical deals.

Now Iraq is inviting bids for long-term development contracts at its biggest fields, the “backbone of its industry” in the words of Shahristani. He believes Iraq could become the world’s second- or third-biggest oil producing country, rivalling Saudi Arabia and Russia.

Are U.S. and British firms obvious choices as partners because of their expertise? After all, before the U.S.-led invasion Iraq often preferred Russian firms. Or are U.S. and British firms reaping the benefit of their governments’ policies?

China’s surprise decision late on Thursday to slash subsidies on fuel prices has been welcomed as a sign that Beijing is intent on reducing the pace of oil demand growth in the world’s second biggest energy consumer.

That, in theory, should help contain the upward spiral in world oil prices that took crude to a high of nearly $140 a barrel last week. Nine out of 10 analysts polled by Reuters immediately after the news took that line. But there is a contrarian view.

Previously unprofitable refining companies, obliged to sell at prices set by the state, will now be turning enough profit to fully meet transport fuel demand for the first time in weeks. Rationing and queues will be alleviated. Chinese refiners would then need to buy more crude, not less, from world crude markets.

The timing of the decision was a surprise. While other Asian countries had been easing subsidies, Beijing wasn’t expected to move until after the Olympics was safely out of the way, for fear higher prices might cause unrest.

The early decision may demonstrate Beijing’s confidence that it has social cohesion under control — a result of the positive reaction across the country to the government’s handling of the Sichuan earthquake and the Chinese perception of bias in Western media coverage of unrest in Tibet and the run-up to the Olympics.

The timing of the price increase also shows that Beijing is prepared to engage with other world powers on the global inflationary pressures that are threatening to slow Chinese economic growth.

Major oil producing and consuming countries are meeting in Saudi Arabia this weekend to discuss ways to reverse the rise of crude prices — China’s action on fuel prices ahead of the meeting permits Beijing to claim a leadership role in helping control oil prices.