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Unformatted text preview: or by sound public policy, which is the preferable path and the one Elhefnawy advocates. 16 Oil DDW 2012 1
Russia 1NC 17
Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Decreases in oil pricing shocks the Russian economy and stunts growth
Rapoza 4/3/12 [Kenneth Rapoza, Contributor to forbes Covering Brazil, Russia, India & China.
Russia, awash in oil and natural gas. It’s the reason why the economy has a budget surplus, and for some it is the reason
why Vladimir Putin and United Russia are still in power. Follow the rising price of oil over the last seven years and you
will see the rising GDP of the Russian economy right along with it. It’s national icon, Gazprom, is a multi-billion dollar,
football sponsoring natural gas behemoth. The biggest in the world. And companies like it, from Rosneft to the privately
held Lukoil oil are bad news for the Russians in the not-so-distant future. Combined they and others in the oil and gas biz
account for 75% of Russia’s exports. “Economic growth will promptly fall to two or three percent a year in case of further
dominance of the raw materials and fuel sector in the economy as it is now,” Russian Development Minister Elvira
Nabiullina told a forum in Moscow on Tuesday. The country’s economic development may get stuck at the level of Japan
she warned, something no decent developing nation would wish on their worst enemy . Japan is lucky if it grows 1% a year
on average over the course of a five year stretch. Russia’s economy grew 4.3% last year, and is forecast by the government
to grow at 3.7% if Urals oil price averages are $100 per barrel. She warned that a fall in GDP growth rates by 0.7-1.7% will
cause “a rapid loss of (Russia’s) share of the global market and, what is most important, will reduce opportunities for
increasing incomes and living standards.” As an investment story, Russia is known as an oil and gas play. Like the country
or not, where oil goes, Russia’s economy will go right along with it. That’s great when Brent crude and its accompanying
cheaper oil, Urals, is well over $80 a barrel. High oil prices is helping finance the new skyline of Moscow. Across from the
Moscow River, near where Stalin built his great architectural works in honor of the Russian peoples’ success in World War
II, are shiny silver and gold skyscrapers with Sberbank and VTB Capital logos on them. Moscow wants to be a miniFrankfurt. Better yet, bigger than Frankfurt. It wants to be one of the biggest financial markets in the emerging world.
Brazil and China have it beat. Russia’s one trick pony economy is why. Last October, Alexei Kudrin, then Finance Minister
of Russia, said that the economy would be okay if Urals priced at $60. Below that and you get budget deficits and credit
contraction. That’s no way to build for the future, especially in Moscow, which at first glance is aching to modern...
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This note was uploaded on 01/30/2013 for the course ECON 101 taught by Professor Burke during the Spring '13 term at Southern Arkansas University.
- Spring '13
- The American