Terror Defense No Al Qaida Terror

No collapse

The rapid depreciation of the ruble, despite a dramatic – and seemingly desperate – late-night interest-rate hike by the Central Bank of Russia (CBR) last month, has raised the specter of Russia’s economic meltdown in 1998. Indeed, the West has sought to animate that specter in its ongoing confrontation with Russian President Vladimir Putin. But, though Russia’s economy is undoubtedly in trouble, a full-blown collapse is unlikely.¶ Oil and gas account for more than 60% of Russia’s exports; other primary commodities make up much of the rest. Given this, the recent sharp decline in world oil prices obviously represents a major shock – large enough, when combined with the effect of increasingly strict Western sanctions – to provoke a sizeable recession. To make matters worse, commodity prices are expected to remain low for some time. In that case, the income loss would become much more than a temporary setback.¶ But Russia is no economic basket-case-in-waiting – at least not yet. The situation today is very different from that in 1998, when Russia was running twin fiscal and current-account deficits. Russia needed to borrow, and it was borrowing heavily in foreign currency. This meant that as the ruble depreciated, Russia’s debts rose. Eventually, default became inevitable.¶ By contrast, in recent years, Russia has enjoyed a sizeable budget surplus, and public debt is below 20% of GDP. It is true that income from oil and gas, which represents the bulk of government revenues, has been halved when measured in dollars. But the Russian currency has fallen by about the same percentage, meaning that the government’s income in rubles remains approximately unchanged.¶ Similarly, Russia’s current-account balance has been mostly in surplus in recent years. Gross public and private external debt is below 40% of GDP, and much of it is denominated in rubles. The sharp fall in export income is rapidly changing the situation, but Russia is starting from a comfortable position. To panic would be premature.¶

Russia Econ won’t collapse – oil companies are fine and prices will be back up within the year

Pillalamarri 2-26 [Akhilesh Pillalamarri is an assistant editor at The National Interest. “Oil Prices Collapsed. Russia Won't.”, 2-26-15, http://nationalinterest.org/feature/oil-prices-collapsed-russia-wont-12328, msm]

While global oil prices have collapsed, Russia most certainly will not. In fact, it may even emerge stronger from the current supply glut.¶ That was one of the major points that emerged from a panel discussion hosted by the Center for the National Interest on February 24, 2015. The discussion, entitled Russia’s Energy Sector and the Oil Price Collapse, featured three energy experts including Dr. Tatiana Mitrova, the head of the Oil and Gas Department at the Energy Research Institute at the Russian Academy of Sciences.¶ Mitrova did not seem particularly worried about the impact of sanctions or falling oil prices on the Russian economy, noting that major Russian energy companies such as Gazprom and Rosneft have large reserves and government support.¶ Exports are another factor that will mitigate the pain Gazprom and Russian oil exporters feel from the drop in prices. Indeed, Mitrova pointed out that the sharp devaluation of the ruble relative to the dollar in recent months will make exports increasingly lucrative to Russian energy exporters. That’s because revenues from energy exports are denominated in U.S. dollars while many of their costs—such as labor—will still be in rubles.¶ Furthermore, companies like Rosneft are not hugely affected by lower prices because of the way Russia taxes the oil industry. Specifically, as others have pointed out, in Russia “the per-barrel tax rate decreases as oil prices fall, shifting most of the upside/downside due to changes in the oil price from the oil producers to the state.” Consequently, according to Mitrova, it does not matter greatly to oil companies if prices are $50 or $100 a barrel.¶ Russia’s gas industry is a different story, however. According to Mitrova, Russia is experiencing a “huge gas glut” with a current excess of about “110-140 billion cubic meters of gas.” Because there is not enough domestic demand for all this gas— and only Gazprom is currently allowed to export gas— the situation is becoming “tough” for Russian gas companies, especially smaller enterprises. In fact, Mitrova said there is already a “price war” amongst Russian gas companies for the domestic market.¶ While not challenging most of her assessment of the current state of the Russian energy market, the other two panelists—Frank Verrastro, Senior Vice President for Energy and Geopolitics at the Center for Strategic and International Studies (CSIS), and Charles Ebinger, a Senior Fellow in the Energy and Climate Initiative at the Brookings Institution—did depart from Mitrova when it came to how quickly global energy markets will recover.¶ According to Mitrova, there is a “major expectation” among Russian analysts and politicians that the price of oil will recover soon “because no one is happy with lower prices.” In fact, she suggested that the general feeling in Russia is that prices will be back up in the $80 per-barrel range by the end of this year.¶ Ebinger and Verrastro both disagreed, arguing that low prices are here to stay for a while. Ebinger, in particular, argued that it is “very hard to see the upside for petroleum demand that would drive prices back up.”¶ To illustrate this point, Ebinger pointed to the numerous fundamental changes taking place in consumer markets, including greater energy efficiency, demand topping out in much of the developed world and a reduction in subsidies among some of the larger emerging markets like India and Indonesia. Even in China—which, along with India, is expected to anchor demand growth in the coming decades—automobile demand is slowing.¶ As a result, Ebinger expects that the oil market “will test the upper thirties” before all is said and done, and that “it will be a long, long time before we see eighty plus dollars in the market.”¶ Verrastro agreed with Ebinger’s outlook on the oil market. “We could be in this [depressed market] a good, long time,” Verrastro said. “Certainly for 2015... and some people think into 2016.” Ebinger and Verrastro did disagree on why oil markets will eventually recover. Whereas Ebinger felt that renewed global economic growth would be the “catalyst” that revived oil markets, Verrastro argued that eventually supply will catch up to reduced demand, driving prices back up.

No collapse – Russian economy is resilient

Jin 14 [Yang Jin is an associate research fellow at the Institute of Russian, Eastern European & Central Asian Studies at the Chinese Academy of Social Sciences, “Russian economy won’t collapse, but slowdown and adjustment inevitable”, 12-24-14, http://www.globaltimes.cn/content/898511.shtml, msm]

Over the past week, the whole world has been fixed on the state of the Russian ruble. Last Tuesday, the ruble declined dramatically, even though the Central Bank of Russia had increased its key interest rate to 17 percent. This has revived memories of Russia's 1998 economic crisis. Then how should we perceive the weakening ruble and its potential impact?¶ The decline of ruble this time is the result of the accumulated slowdown of the Russian economy in the past few years. Since the 2008 global financial crisis, the Russian economy has experienced an obvious trend of decline. Although the economy revived occasionally, it stayed lukewarm. In 2013, the growth rate was only 1.5 percent.¶ Meanwhile, since the Ukrainian crisis, Russia's hardline foreign policy has escalated economic sanctions imposed by Western countries, adding more difficulties to the already gloomy situation. The recent plummeting oil prices also dealt a heavy blow to the situation, shaking the market's confidence toward the ruble. These are the most direct and important cause for the ruble's steep fall. This shows the recent ruble crisis, which is the outcome of both internal and external factors, is unlike the 1998 economic crisis. Given the incomplete internal economic structure and the external antagonism, the current crisis is unavoidable.¶ For how long the devaluation of the ruble continues is determined by what financial policies the Russian government will carry out and what solutions could be decided between Russia and the West over the Ukrainian crisis. Russia, which has long suffered from economic sanctions, can hardly retain the stability of its currency.¶ Despite the fact that the weakening ruble has almost broken the bottom line the Russian market can bear, it doesn't necessarily mean the Russian economy will collapse. Even though Russia is experiencing an economic winter, it can still hold on. First, Russia is a big power. Its vast territory and rich resources give it a tenacious power to endure economic difficulties. History proves that rich resources can push the Russian economy back to the right track.¶ Although the economic structure is yet to improve and Russia is overdependent on international energy prices, Russia, after 23 years of economic development since the dissolution of the Soviet Union, has accumulated considerable foreign exchange reserves and become richer. The public can bear a short-term economic slowdown, which is totally different from the situation in the 1990s.¶ The current crisis, partly stemming from Western sanctions, is characterized by rivalry between Russia and the West. Traditionally, when the Russian people meet hardline adversaries, they will become more determined. Educated with a sense of patriotism, the public has the determination to resist the pressure.¶ The Russian government is adjusting its foreign policies. On the one hand, it aims to seek new diplomatic breakthroughs. Emerging economies such as China, India and Iran are among the highlights of its diplomacy. On the other hand, it is also seeking the proper moment to adjust its policies toward the West, including its stance on the Ukrainian crisis. The West has the same intention, too. Such adjustments will help ease the economic climate.¶ The current ruble crisis shows the Russian economy is facing the most severe test and the possibility that the ruble continues to decline cannot be excluded. But from a long-term perspective, the Russian economy will not collapse.

Not Key To Global Econ

Russia not key to the global economy

RO 14 [Sam is deputy editor of Business Insider. He has been published on Forbes, DealBreaker, and The Fiscal Times. He was an equity analyst for the Forbes Special Situation Survey and Forbes Growth Investor equity newsletters. “Russia Is Puny”, 8-11-14, http://www.businessinsider.com/russias-small-global-economic-footprint-2014-8, msm]

Russia's recent activities have captured the attention of the world.¶ Its role in destabilizing Ukraine has earned it economic sanctions from the U.S. and the European Union. And Russia has returned fire with economic sanctions of its own, including sweeping bans on food imports from the West.¶ While these sanctions are likely to affect Russia and some of its trading partners materially, they are also likely to have a surprisingly small impact on the global economy as a whole.¶ "In principle, the size of Russia’s economy — less than 3% of global GDP — suggests a limited impact on the global economy," writes Barclays' Christian Keller.¶ Keller offered this eyeopening chart (see below) of how Russia fits into the bigger picture. As you can see, Russia accounts for less than 2% of the world's imports. The financial industry's exposure to Russia is also quite small.¶ Relative to the U.S. and other developed economies, the EU has much more at risk. And it certainly doesn't help the EU that its economic recovery story has been falling apart.¶ Still, the EU's exposure to Russia is small. Exports to Russia account for less than 3% of total exports. Even food exports to Russia account for just a fraction of a percent of total exports.¶ "By themselves, Russia-related sanctions should not have much impact on the global economy," Keller said.¶ Having said that, Keller warns that an "escalating tit-for-tat trade war" would certainly make things worse.¶ Yes, the state of relations between Russia and the rest of the world is not good. But it isn't the end of the world.

China Solves

China intervenes

China Times 14 [12-21-14, “China won't sit by idly if Russian economy collapses: ex-official”, http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20141221000039&cid=1101, msm]

China is not likely to simply sit by and watch if Russia's economy collapses as a result of the serious depreciation of its currency, a former economic leader was quoted as saying Friday.¶ Long Yongtu, former deputy minister of foreign trade and economic cooperation, said at a Beijing forum that China "should adopt some aggressive measures" as the ruble has nosedived about 60% against the US dollar since the beginning of the year. "When Russia is facing massive difficulties, (China should) show moral strength and economic support," he said according to a report by China News Service.¶ Beijing is obligated to help its northern neighbor both from a strategic perspective and out of concern for the wellbeing of the Russian people, he said without elaborating on any specific measures.¶ On a new round of sanctions that the US and other countries are preparing to take against Russia over its role in the Ukraine conflict, Long decried trying to solve political disputes through economic sanctions, cautioning that the result of doing so means everyone will suffer.¶ The 71-year-old, now secretary-general of the annual Boao Forum for Asia, is the first former or incumbent Chinese official to make public remarks about China's attitude toward what many fear is an impending crisis for Russia.¶ The two countries established a strategic and cooperative partnership in 1996, which in 2013 then-president Hu Jintao upgraded to an "all-encompassing one" that now sits at the head of all bilateral partnerships China has fostered.

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