Dec

29

 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. Mr. Medvedev and his boss (Mr. Putin) will have to spend another quarter of the reserve fund Russian corporations. According to the FT, as the Russian economy is starring into a deep abyss and Russians suddenly start waking up to realization that almighty Mrs. Oil and Mr. Natural Gas were responsible for (temporary) resurrection of Mother Russia, 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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