An Islamic revolution is going on in the Middle East. Iran (1979) was a quantum leap. So is the Taliban victory this year in Afghanistan. The establishment of an Islamic Republic in Dagestan marks another stage. The West is affected by its need for oil, cultural clash and now through the threat Dagestan poses to Russia's unity. Franz Schurmann, co-founder of PNS and professor emeritus of history and sociology at UC Berkeley, has been writing on oil and Islam for many years.

Why should any American care about Dagestan?

The simplest answer to this question is a counter-question: do you care about the bull market?

If you don't then forget about Dagestan. If you do then learning something about Dagestan may help your financial planning. It may also broaden your choices of pathways into the future.

Assuming you do care then consider that Dagestan could be the tremor that brings down the Russian Federation (RF). In August 1991 a small tremor, Gorbachev's kidnapping, brought down the Soviet Union a month later.

Vladimir Putin, the latest of several Russian prime ministers -- labeled a "KGB spy" by the U.S. press -- was rushed into office by an unprecedented number of worried Duma MP's. The rush is because parliamentary elections are scheduled for December. The worry is that Dagestan could be their third "Vietnam" (after Afghanistan and Chechnya). If over the next weeks Putin too fails then a military coup could occur. That will end Russian democracy and possibly the RF itself.

Dagestan is one of the smaller republics making up the RF. It has only two million people and borders Chechnya to the west. In its high mountain west Islamic fundamentalist rebels have established an Islamic Republic. The rebels are Dagestani fundamentalists but include in their ranks mujahideen from all over the Islamic world: Chechens, Arabs, Africans, Pakistanis. The Russian press has even reported small bands of Russian and Ukrainians -- presumably Christian -- fighting with the rebels.

The mainstream Islamic world is a huge swath over the eastern hemisphere: from West Africa deep into Central and Southeast Asia. It has rapidly growing pockets in Europe and the Americas. Rough estimates say the world has some billion Muslims, one-sixth of the human race.

Everywhere in that world the Islamic revival is creating tremors. Here are some bigger ones: Nigeria, Algeria, Sudan, Turkey, Palestine, Iran, Afghanistan, Pakistan, Indonesia ... and all over the former Soviet Union. All of them either have lots of oil and natural gas or have existing or planned pipelines for transporting those fossil fuels to the industrial countries.

Fossil fuels are to the world economy what blood is to the human body. It is so vital that since the 1920's it has been quietly monopolized and dictatorially administered. Since the mid-1970's world oil prices were supposed to remain within a ceiling of US$20 and a floor of US$10 a barrel.

While the conventional wisdom dates the bull market from 1990 there are good grounds for believing it began around August 1982. Stock price charts show a rising and ever steeper slope from that date on, though punctuated by a few thin spikes.

During these last 17 years oil prices remained within the $20-$10 range. A few years ago, however, they began to drop until, earlier this summer, they went below the $10 floor. Alarms went off in the corridors of oil power. And soon enough prices began to rise. Now they have pierced through the $20 ceiling and, once again, the alarm bells are sounding.

Not surprisingly Fed chief Greenspan has been saying that maybe interest rates will have to be raised to fight inflation. This will depress stock prices. Of course, directly or indirectly that's going to effect every one's financial planning.

A major oil pipeline goes through Chechnya. And Dagestan is close by. But those fighting and dying for the new Islamic Republic are not doing it for oil.

They are from a branch of purist Islam, called Wahhabi, whose members believe that God refuses to recognize human races, nations or tribes. He sees only one division in the entire human race: between believers and non-believers.

Their aim is to bring about a revolution based on Wahhabi teachings all over the world. Wahhabism already has strong roots in many of the oil producing countries, especially on the Asian continent.

If Wahhabism triumphs in Dagestan it will generate revolutionary waves that will wash over many countries. America's financial pains are then going to be even worse.

Around this time exactly 50 years ago a panic came over the U.S. and its worldwide allies. Some called it a vast "Communist world conspiracy." The reason for the panic was the imminent proclamation (on October 1, 1949) of the Chinese People's Republic. Suddenly maps showed a good part of the world -- stretching from the Korean peninsula deep into divided Germany -- in blood red colors.

Ideologically Communism and Wahhabism are at opposite poles. Yet both are revolutionary. In 1960, at a gathering of some 86 Communist parties from all over the world, Soviet leader Khrushchev said "we shall bury capitalism." The Dagestani revolutionaries would put it differently: "we shall bury the Western way of life." Their victorious cousins in Taliban-ruled Afghanistan have already started implementing that program.