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Extraction of raw materials including oil and gas was

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Unformatted text preview: rly March to his third term as president of Russia, many saw it as the inauguration of a 21rst-century czar who would continue to rule for a long time. But financial markets are signaling something else completely, punishing Russia for Putin’s re-election and sending a strong message that investors will no longer tolerate Putin’s way of doing business. Financial markets are making a clear statement to Putin: Not this time. Since Putin was re-elected in early March, the Russian Trading System Index of Russian stocks has fallen by nearly 30%. During that same period, the ruble has been devalued by 15% against the U.S. dollar, sinking to its lowest level since the depths of the global financial crisis in 2009. Investors are simply stampeding out of Russia, which has seen $42 billion in capital outflows in the first four months of 2012. Last week even BP said it wanted out of Russia, indicating it was ready to walk away from its nine-year Russian joint venture, TNK-BP, the largest foreign investment in Russia’s oil industry. BP announced it would pursue a sale of its ownership in TNK-BP even though it represents one-quarter of BP’s reserves. The June Market Disaster Nathan Vardi Nathan Vardi Forbes Staff With oil prices collapsing to an eight-month low, Putin is also losing his most important crutch, the one that allowed him to take credit for the increasing living standards of many Russians. “You can see that step by step the market is losing confidence in Putin,” a macro hedge fund manager told me recently. “ At this level of crude, the Russian budget is a disaster.” [____] Structural factors make Russian economic decline likely Forbes 2012 (7/22/2012, Russia: Pass Or Play?, http://www.forbes.com/sites/kenrapoza/2012/07/22/russia-passor-play/) Yet, Russia is not known as being a shareholder friendly place. It ranks as one of the most corrupt emerging markets in the world, on par with countries in Africa, and the worst out of the big four emerging markets. Demographics are not favorable either. It’s a middle aged society that’s not growing in population, on balance. It’s not very immigrant friendly either, so the hordes of people from poorer Commonwealth of Independent States countries, think places like the “stans” — Turkmenistan, Uzbekistan — are not immigrating in any significant numbers to Russia to make up for a stable to declining population. 5|Page Russian Oil DA Affirmative BDL No Internal Link – Oil Decline Won’t Hurt Russia’s Economy [____] [____] Oil price decline will not destroy the Russian economy because Russia has reserves RT Online, 2012 (June 4, http://rt.com/business/news/russia-oil-down-reserves-940/) Russia is capable of promptly reacting to any changes in oil prices, as well as any shocks from the euro zone, trumpeted President Vladimir Putin. But experts say the length of the crisis will have a lot to do with how much effect it will have. The effect of falling oil prices would be limited, with just contributions to Ru...
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