Russia, re-emerging super power or economic basket case?

Discussion in 'Current Affairs, News and Analysis' started by Ord_Sgt, Oct 27, 2008.

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  1. Ord_Sgt

    Ord_Sgt RIP

    It's beginning to look like all that throwing its weight around recently is returning to bite them in the arrse. Foreign investors are running for the hills because of a lack of trust, theres no significant domestic capital to step in and the oil industry is not all it was hyped to be.

    Full article in the Telegraph.
     
  2. Nah, I wouldn't worry too much, Ord_Sgt. :wink:
     
  3. Hmmmm!

    I suspect recent events in Georgia have almost nothing to do with Russia's current financial and economic woes. Europe will still be buying oil and gas from Russia, but at a lower price and a slightly lower output due to the economy. Georgia hasn't changed a thing!

    Indian Finance minister was on the World Service a week back explaining how there had been a massive flight of finance OUT of India even though it is still a booming economy and rich pickings were to be made. The reason given made a huge amount of sense, the global credit crunch has caused people to grab back whatever cash they can to improve their liquidity. I have no doubt the very same is occuring in Russia.

    Then add to the pot the falling gas and oil prices, and a major slow down in the world economy, and Russia is in for some stormy weather.
     
  4. Undoubtedly. But all this "basket case" predictions remind me of wistful thinking and an attempt to lift up one's spirits with a thought "Oh, look, our neighbour lost his dog! Ha-ha!"
     
  5. It depends on what the phrase "basket case" means. Zimbabwe is a 'true' basket case and that level of degeneration is not going to hit Russia.

    Nevertheless, the Russian public are really going to feel the squeeze in the coming months far more than the rest of Europe and that is mainly due to the recent past policies of the government and state run companies such as Gazprom. Like the banks, Russia has pursued a short-term, maximum profit strategy over recent years. Now they're going to hurt. The big boys won't suffer, but the poor proles will.
     
  6. No non-Russian is going to invest long-term in Russia after what happened to BP's investments there. All Russia has is 'hot-money' short-term investment, which (as they've just found out) can be pulled out very quickly indeed.
     
  7. So that’s economic problems on top of their declining population, low birth rate and rampant ill health.

    Quite a super power you got there Putin old boy.
     
  8. No one will come out of this crisis smelling of roses, but when a bus crushed Russia had its seat-belt on: "The Stabilization fund of the Russian Federation ("the Fund") was established on January 1, 2004 as a part of the federal budget to balance the federal budget at the time of when oil price falls below a cut-off price, currently set up at $27 per barrel.1

    Furthermore the Fund is to serve as an important tool for absorbing excessive liquidity, reducing inflationary pressure and insulating the economy from volatility of raw material export earnings." Much of this fund consists of money made by sell of oil and gas.

    "The Fund assets are currently invested in the following currency composition:

    US dollars - 45 %;
    Euro - 45 %;
    GB pounds - 10 %." http://www1.minfin.ru/en/stabfund/about/
     

  9. Yep, as I said: "Our neighbour lost his dog! Ha-ha!" which made Gust.Avrakotos feel much better about demographic problems of Europe where indigenous population is on decrease and newcomers from Asia and Africa are having a much higher birth rate...

    http://www.usatoday.com/news/world/2008-04-05-russia-baby-boom_N.htm
     
  10. Sadly that is nothing but Anglo-American wishful thinking - on both accounts.
     
  11. So?
     
  12. Ord_Sgt

    Ord_Sgt RIP

    Sorry I didn't mean Georgia, rather as AndyPipkin alluded to, the bullying of companies to get more out of previously agreed contracts has seen foreign investment scoot.

    The fall in price and revenue of oil, combined with the 'hot money' legging it all made a whole lot worse by the 'credit crunch' has rather put the brakes on Russia's recent expansionist plans though.
     
  13. So? Immigrants always have more children for a few generations when it is second or third world peoples coming to a first world nation, this is very different to Russia's problem.

    This 'baby boom' mentioned is a fallacy. Russia’s population has been declining for decades, and will continue to do so unless the general population starts to see some benefit from all this oil and gas money.

    The only reason you can even suggest a 'boom' is the current crop reaching child bearing age are the last children born in the 'good times'. They will create a spike in the birth rate for 5 or so years, but this will not change the downward trend in Russia's population.

    Behind the Bluster, Russia Is Collapsing
     
  14. Ord_Sgt

    Ord_Sgt RIP

    Thats quite a sobering report Gust.Avrakotos. I found this line shocking According to U.N. figures, the average life expectancy for a Russian man is 59 years -- putting the country at about 166th place in the world longevity sweepstakes, one notch above Gambia.
     
  15. Tell me about it.

    I don’t want people to think I dislike Russia, I am just well aware the country has massive social problems and I fear they are not far from another downfall of some kind.

    Regarding the birth rate:
    ..sucks to be them!