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Russia Economy DA

Russia Economy DA

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06/27/2012

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Uniqueness
A. Russia’s economy is growing fantastically in several areas.
CIA 2008
June 19
th
2008 CIA World Fact book—Russia https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html#Econ
Russia ended 2007 with its ninth straight year of growth, averaging 7% annually since thefinancial crisis of 1998
. Although
 
high oil prices
and a relatively cheap ruble initially
 
drove this growth
,
since2003 consumer demand and, more recently, investment have played a significant role. Over the last six years, fixed capital investments haveaveraged real gains greater than 10% per year and personal incomes have achieved real gains more than 12% per year. During this time,
poverty has declined steadily and the middle class has continued to expand.
 
Russia has alsoimproved its international financial position
since the 1998 financial crisis.
 
The federal budget has runsurpluses since 2001 and ended 2007 with a surplus of about 3% of GDP.
 
Over the past several years,Russia has used its stabilization fund based on oil taxes to prepay all Soviet-era sovereign debt to Paris Club creditors and the IMF. Foreign debtis approximately one-third of GDP. The state component of foreign debt has declined, but commercial debt to foreigners has risen strongly. Oilexport earnings have allowed Russia to increase its foreign reserves from $12 billion in 1999 to some $470 billion at yearend 2007, the thirdlargest reserves in the world.
 
During President PUTIN's first administration, a number of importantreforms were implemented
in the areas of tax, banking, labor, and land codes.
 
These achievements have raisedbusiness and investor confidence in Russia's economic prospects, with foreign directinvestment rising
 
from $14.6 billion in 2005 to approximately $45 billion in 2007. In 2007, Russia's GDP grew 8.1%, led by non-tradable services and goods for the domestic market, as opposed to oil or mineral extraction and exports. Rising inflation returned in the secondhalf of 2007, driven largely by unsterilized capital inflows and by rising food costs, and approached 12% by year-end. In 2006, Russia signed a bilateral market access agreement with the US as a prelude to possible WTO entry, and its companies are involved in global merger andacquisition activity in the oil and gas, metals, and telecom sectors
.
Links
A
.
Saudi Arabia will flood the oil market and sink oil prices if alternative energy is developedEnergy Tech
 
Stocks
, 1/27/
2008
. “Petro-politics Expert Marcel: Saudis Have Oil But Not Enough; OPEC May Flood Market To Hurt New Techs,” http://energytechstocks.com.previewmysite.com/wp/?cat=15&paged=2.
Saudi Arabia still has a lot of oil
; nevertheless, the world doesn’t have enough to meet forecasted demand of roughly 115million barrels a day by 2030, a more than 30% increase over today’s 87 million barrel daily consumption. Shorter term,
 
should OPECmembers feel threatened by new alternative energy technologies, they very well may floodthe market,
temporarily
driving crude prices down in order to make the new technologiesappear financially unattractive
.
That’s the analysis of Valerie Marcel, a Dubai-based petro-politics expert and the author of “Oil Titans: National Oil Companies in the Middle East.” During a lengthy conversation, Marcel, who is an associate fellow at UK-basedChatham House, one of Europe’s leading foreign policy think-tanks, told EnergyTechStocks.com that she wasn’t optimistic that oil shortages can be avoided, despite growing recognition of the problem in major oil-consuming nations. Marcel further said that
 
the Saudi nationaloil company
– Saudi Aramco
– 
appears worried about
 
fuel cell vehicles and other 
 
attempts by the world towean itself off oil, and
 
that
 
should it and other OPEC members feel threatened, they would“play hardball,” flooding the market in an attempt to derail the new technologies.
 
Marcel saidthat after 36 separate interviews with oil company officials, she believes Saudi Arabia probably has about 75 years of reserves remaining atcurrent production rates, and that
 
the Kingdom is capable of raising daily production from around ninemillion barrels a day currently to a sustained 12.5 million per day,
 
which is its plan. At the same time,Marcel said she understands why, given the Kingdom’s self-imposed secrecy surrounding its oil industry, the world keeps asking, “Why shouldwe trust them?”
B. Low oil prices will kill Russia’s economy
Andrea
Peters
, 10/12/
2007
.“Russia: Putin launches electoral bid to retain power,” World Socialist Website,http://www.wsws.org/articles/2007/oct2007/puti-o12.shtml.
 
However,
 
the Russian economy is plagued by serious problems. While investment inmanufacturing and other industries has significantly increased over the past several years,the oil and gas industries are still the linchpin of Russia’s economic boom. This places thecountry in a precarious position, as any decline in energy prices on the world market
,
or challenges to its geopolitical position in the world’s oil producing and transportation areas,
 
would be a significant blow to thecountry’s economy.
Impacts
A. If Russia’s economy is allowed to collapse, drug resistant TB will run unstopped across theglobeScience Daily
, 9/16/
1998
. “Multi Drug Resistant-TB: Russian Economic Collapse Will Lead To Global Spread Of "Ebola With Wings";Institute http://www.sciencedaily.com/releases/1998/09/980916074355.htm. Multi Drug Resistant-TB:
Russian Economic Collapse will Lead to Global Spread of 
 
"Ebola with Wings"Foreign Funds are Needed to Prevent Epidemic Our three nongovernmental organizations are calling for an urgent worldwide campaign to raisethe $100 million needed to prevent the imminent epidemic
 
of multidrug resistant tuberculosis (MDR-TB)
 
in Russia.In our view, this local humanitarian disaster is already a direct global public health threat.
 
Drug-senstive TB is curablethrough proper drug therapy.
 
MDR-TB is
 potentially
much more dangerous, especially becauseTB spreads through the air and can move from patient to patient in its deadly drug-resistant form.
 
MDR-TB has been dubbed "Ebola with wings." Current levels of MDR-TB in Russia are alarming.
 
The
 
looming
economic
 
crisis will exacerbate the problem.
 
It is only a matter of time before MDR-TB of Russian origin becomes adaily reality in other countries worldwide.
 
The
 
current
 
Russian economic crisis will further deplete alreadystrained resources of public medicine. The resulting shortage of anti-TB drugs willinevitably lead to the massive practice of substandard antibiotic treatment of patients withTB, which is the principal cause of MDR-TB. Standard treatment of regular TB consists of a daily regimen of four different antibiotics for six months. When this treatment isincomplete or interrupted, a patient can easily develop MDR-TB and then spread this
 potentially
lethal form of TB to other people.
 
We are particularly concerned about the dire situation in Russian prisons,where systematic underfunding combined with epidemic-prone conditions already has resulted in the generation of nearly 20,000 MDR-TB cases.The number of cases is expected to rise because, under the current conditions, about 100,000 inmates with regular TB are subjected toinappropriate, MDR-causing treatment protocols. Among the civilian population, TB patients undergoing treatment often are required to pay for their own
 
drugs, even in state run hospitals. In
the worsening economic situation,
 
this burden on patients
 
willtranslate into
 
inadequate treatment and, consequently,
 
thousands of new MDR-TB cases
 
 because most people willdiscontinue prescribed treatment as soon as symptoms subside.
An outbreak of MDR TB would threaten everyone on the planet, it is passed along throughnormal daily activities, and no SQ drugs or tests are effective
English People’s Daily 2008
 
Alarming! drug-resistant TB spreads faster than feared February 27, 2008http://english.people.com.cn/90001/90782/6361814.html
Tuberculosis can be relatively easily transmitted from an infected individual to a healthyperson
 
in saliva droplets
 
through coughing, sneezing, singing and other activities. "Multi-drugresistant TB is a threat to every person on the planet
,
" said Mark Harrington, executive director of TreatmentAction Group. "
It's not like HIV, where you are only infected through specific actions. TB is athreat to every person
 
who takes a train or a plane."
 
Experts said new drugs are needed
 
if the outbreak is to becurbed
, along with new diagnostic tests
 
to
 
identify drug-resistant TB strains faster.HIV/
AIDS."
 
Extensions
Saudi Arabia is empirically willing and able to make oil prices sink 
Powell 03
Bill Powell may 12 2002 Fortune Magazine
 
Don't Mess With The Saudis As the U.S. starts rebuilding Iraq's oil industry, it'lllearn one fact fast: Saudi Arabia still runs the show. http://money.cnn.com/magazines/fortune/fortune_archive/2003/05/12/342302/index.htmThis, of course, was not on the agenda at the OPEC meeting in Vienna, but psychology in oil markets will change significantly when Iraqi production is back at respectable levels in several months
.
The Saudis
 
"won't let things get out of hand," says Verleger. "They haveenough clout
that they
can decide to crank up production and encourage people to slow down
.
"The Saudis, in other words, might strangle the baby before it gets too big.
 
They've done it before
(
in the 1980s,
for example,when Nigeria and other OPEC producers cheated on their production quotas,
 
the Saudis flooded the market and droveprices down dramatically
).
A drop in oil prices will collapse Russia’s economy
Satter 03
The National Interest Summer 2003 A Low, Dishonest Decadence: A Letter from Moscow. It is shortsighted to judge Russia's pro-gress by superficial materialist measures--or have we forgotten what the Cold War was really about? David Satter 
 
http://eng.terror99.ru/publica-tions/100.htmThe problems of lawlessness, lack of respect for human life and moral disorientation shadow the visible changes in Moscow that have led
many
 
to
 
describe Russia as a political and economic success. The improved appearance of Moscow (although not the rest of the country) is indisputable, but it is mainly a product of the high price of oil. Every dollar difference in the price of oil translates into roughly $1 bil-lion in budget revenue; a high price for oil has therefore become the key to the govern-ment's ability to balance the budget, pay state employees and repay Russia's foreign debt.If the price should fall
significantly and stay relatively low, as it did in much of the 1980s and 1990s, Russia
 
will beplunged into a severe economic crisis.
 
At that point, the invisible moral factors in Russia's situation will be become criticalto its stability.
The Russian economy has doubled because of oil and is growing at 10% per year
The Economist 08.
Crisis? What oil crisis? June5 2008

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