The Wounded Bear; Russia’s Economic Crisis

Russia has been having an economic meltdown to make Gordon Brown jealous. The foreign cash reserves, built up and crowed about, have been depleted by over 30% in just a few months.

The economy, based on extraction (i.e. selling mother nature), is in freefall. The budget, set to expand for military use, has been severely undermined. It is set for oil to be $95 a barrel and not $35. Some big changes will need to be made and Putin is pushing his President forward to take the flak. Even the Oily-garchs are out with their beggin’ bowls in Moscow.

Last summer, Russia invaded Georgia, the height of hubris it has proved. Not only did the world shun Russia for its act, but the resource boom failed at the same time. The Rouble has collapsed and continues to do so, the economy may go from 10% growth to 0% or even recession.

There is a dangerous side to this though, as demonstrated by Georgia. Russia is prone to acting out nationalist fantasies; a re-run of Galtieri? The wounded Bear is also very unpredictable. It may make for an interesting challenge to the new US foreign policy. Ukraine beware.

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