The fate of the Russian economy, the dynamics of the new Russian élite and the outcome of the country's still-uncertain post-communist transition are related in no small measure to Russia's vast oil and gas resources. Energy is a key factor in President Vladmir Putin's diplomacy - whether with Iran and Iraq, former Soviet republics or the EU. Energy is also an important subtext in US-Russian relations, both as a source of cooperation and, in some respects, of tension. The West needs to recognise Russia's real strategic concerns, and to distinguish between Russia working to protect the transport of a vital export commodity and Russia refusing to renounce its 'imperial past'. The challenge to Western diplomacy is how to accommodate legitimate Russian interests without jeopardising US and NATO interests.