Yeah, we’ll jump right on that. As Ed Morrissey says, maybe exploiting ridiculously high oil prices to rebuild a Russian empire isn’t such a great idea.
Russia would come under crippling financial pressure and may need to raise money externally if oil languishes at an average of $30 a barrel over the next two years, the World Bank predicted Friday.
The bleak scenario would mark a rapid unraveling of Russia’s oil-fueled economic gains over the past eight years, during which time the government has paid down most of its foreign debt and built up a vast stockpile of international reserves.
“If oil prices in 2009 and 2010 average $30 a barrel, that would be a nightmare scenario for a global economy,” Zeljko Bogetic, the World Bank’s chief economist in Russia told investors on Friday. “The pressures on the current account and public finances in Russia would quickly rise to a point where the financing constraint would become so sharp that it’s possible even to envisage Russia’s return from a creditor to international organisations to (that of) a borrower.”
At $50 a barrel, Russia could drain much of its reserve funds and run budgetary deficits, but would not face a “meltdown” scenario, said Bogetic.
Yeah, no sympathy here. As we hear this, Russia has three warships en route to Cuba; Vladimir Putin is pushing legislation that would charge critics of the Kremlin with treason; and Georgia is still recovering from that little excursion Russia decided to make into undisputed territory. Moscow (and Caracas) can go pound sand.
The nightmare scenario is supposedly at the $30 mark. Oil futures are trading at $33.87 as I post this.
by Stephan Tawney on Fri, Dec 19, 2008