December 29, 2008 | Posted by Vitaliy Katsenelson

Expect Tensions with Russia

Russia’s economy is deteriorating at a very fast pace. The Stabilization fund – a giant $450 billion savings account – has been depleted by a quarter since September as Russia tried to defend its currency. Despite that attempt, the ruble still declined.

Russian companies are facing $170 billion of debt rollover next year. Since the rest of the world is not willing to finance companies in stable political regime, getting financing for Russian companies will be a problem (times have changed). Mr. Medvedev and his boss (Mr. Putin) will have to spend another quarter of the reserve to fund Russian corporations. According to FT as the Russian economy is staring into a deep abyss and Russians suddenly start waking up to realization that almighty Mrs. Oil and Mr. Natural Gas were responsible for (the temporary) resurrection of Mother Russia, and not Mr. Putin, people are already whispering for Mr. Putin’s resignation.

Mr. Medvedev and his boss (Mr. Putin) will have to spend another quarter of the reserve to fund Russian corporations. According to as the Russian economy is staring into a deep abyss and Russians suddenly start waking up to realization that almighty Mrs. Oil and Mr. Natural Gas were responsible for (the temporary) resurrection of Mother Russia, and not Mr. Putin, people are already whispering for Mr. Putin’s resignation.

These whispers will magnify as things get worse. But what concerns me is the likely response. I visited Russia in September for the first time since I left in 1991, and even though at the time Russia was still prospering (and economic crisis was weeks away) I still felt this broad anti-American attitude. Now that things are getting worse every minute, Mr. Putin will likely redirect the attention and shift the blame to – you guessed it – the United of States, the mother of all evil. The United States will be responsible for the global crisis, for manipulating oil markets, and anything bad that happens in Russia, the US will be the culprit. I don’t think this brings the US to war with Russia, but the relationship with Russia will likely get a lot worse.

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BP

I’d be interested to get your perspective on this article from today’s WSJ

http://online.wsj.com/article/SB123051100709638419.html?mod=todays_us_page_one
David Hodge

This is why I tell people to forget about ‘America’s standing in the world’ or ‘world opinion of Americans’, because we gain nothing from trying to get the rest of the world to be our buddies. If we are trustworthy to our allies, that is the best we can do, and it will be a far sight better than their experience with the Russians.

So far as WSJ, I note that Mr. Panarin is a former KGB analyst and wants control of Alaskan oil! I also note that California is as likely to be under ‘Mexican influence’ as Texas, as well as that Utah and California have very little in common. Contrast Panarin’s hubris with cold reality:

http://www.iht.com/articles/2008/12/30/business/30gazprom.php

Expect Tensions with Russia

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