Oil Disad Final - Scholars

Gonzaga Debate Institute 2008 1
Scholars Russia/ Saudi Arabia Oil DA
Oil Disads – Russia/Saudi Arabia

Index...............................................................................................................................................................................1
***General Oil UQ***...................................................................................................................................................5
Oil Disads – Russia/Saudi Arabia...................................................................................................................................1
***General Oil UQ***...................................................................................................................................................5
UQ – Oil Prices  (1/2).................................................................................................................................................6
UQ – Oil Prices  (2/2).................................................................................................................................................7
UQ – A2: Speculation (1/2)............................................................................................................................................8
UQ – A2: Demand /Supply ....................................................................................................................................10
UQ – A2- Supply and Demand Doesn’t Affect Prices..................................................................................................11
UQ – A2: Dollar Driving Oil Prices..............................................................................................................................12
UQ – A2: Price Gouging (1/2)......................................................................................................................................13
UQ – A2: Demand Already Declining..........................................................................................................................15
UQ – A2: World Econ Hurts Russia..............................................................................................................................16
***General Oil Links***..............................................................................................................................................17
Link- Investment T/O (1/4)...........................................................................................................................................18
Link- Alt Energy=Lower Prices....................................................................................................................................22
Link- Alt Energy Reduces Demand (1/2)......................................................................................................................23
Link- Ethanol=Lower Prices.........................................................................................................................................25
Link- Biofuels= Lower Prices.......................................................................................................................................26
Link- Hydrogen=Investments.......................................................................................................................................27
Link- Hydrogen Reduces Demand................................................................................................................................28
***General Prices/Investment Internals***.................................................................................................................29
I/L- Investment K/T Market Stability...........................................................................................................................30
I/L- Investment K/T Prices............................................................................................................................................31
I/L – Investment T/F Fast..............................................................................................................................................32
I/L – Prices Sensitive to Supply and Demand (1/2)......................................................................................................33
I/L – Investor Volatility.................................................................................................................................................35
I/L – Price Volatility (1/2).............................................................................................................................................36
I/L – Market Speculative...............................................................................................................................................38
I/L – Prices Speculative (1/3)........................................................................................................................................39
I/L – Perception K/T Prices...........................................................................................................................................43
I/L – Prices K/T Investment..........................................................................................................................................44
I/L – Investment K ME Oil...........................................................................................................................................45
***A2: High Oil Prices Bad***...................................................................................................................................46
A2: High Oil Prices Bad – A2: Offshore Drilling.........................................................................................................47
A2: High Oil Prices Bad – A2: World Econ – No Impact.............................................................................................48
A2: High Oil Prices Bad – A2: World Econ: No $200 Barrels ....................................................................................49
A2: High Oil Prices Bad – A2: Inflation (1/2)..............................................................................................................50
A2: High Oil Prices Bad – A2: Inflation (2/2)..............................................................................................................51
A2: High Oil Prices Bad – Inflation – Down................................................................................................................52
A2: High Oil Prices Bad – A2: Pipelines......................................................................................................................53
A2: High Oil Prices Bad – A2: Food Prices – No Link................................................................................................54
A2: High Oil Prices Bad – A2: Food Prices – Prices Low ..........................................................................................55
A2: High Oil Prices Bad – A2: Corruption...................................................................................................................56
A2: High Oil Prices Bad – A2: U.S.-China Oil War.....................................................................................................57
A2: High Oil Prices Bad – A2: U.S.-China Oil War.....................................................................................................58
A2: High Oil Prices Bad – A2: Democracy – Global Democracy Up..........................................................................59
A2: High Oil Prices Bad – A2: Democracy .................................................................................................................60
A2: High Oil Prices Bad – A2: Democracy- Terrorism................................................................................................61
A2: High Oil Prices Bad – A2: Leadership – A2: Impacts...........................................................................................62
A2: High Oil Prices Bad – A2: Leadership – A2: Links (1/2)......................................................................................63
A2: High Oil Prices Bad – A2: Leadership – A2: Links (2/2)......................................................................................64
A2: High Oil Prices Bad – A2: Species – Turn: Oil Increases Species........................................................................65
A2: High Oil Prices Bad – A2: Species Loss................................................................................................................66
A2: High Oil Prices Bad – A2: Species Loss................................................................................................................67
A2: High Oil Prices Bad – A2: Species Loss – NW Bad..............................................................................................68
***Russian Oil Disad***..............................................................................................................................................69
1NC Shell- Russia (1/2)................................................................................................................................................70
***Russia UQ***.........................................................................................................................................................72
UQ – Russian Econ  (1/3).........................................................................................................................................73
UQ – A2: Inflation........................................................................................................................................................76
UQ – A2: Ruble Weak...................................................................................................................................................77
UQ – A2: Unemployment/Population .......................................................................................................................78
UQ – Investment High..................................................................................................................................................80
UQ – A2: Investments Already Low.............................................................................................................................81
UQ – A2: Not Enough Oil.............................................................................................................................................82
UQ – A2: Resilience – Oil Key.....................................................................................................................................83
***Russia Internals – Key to Econ***.........................................................................................................................84
I/L – Oil Key to Russian Economy (1/4)......................................................................................................................85
I/L – Exports Key..........................................................................................................................................................89
***Russia Internals – Investment***...........................................................................................................................91
I/L – Investment K/T Growth (1/2)...............................................................................................................................92
I/L – Investment K/T Exploration (1/2)........................................................................................................................94
I/L – Investment K/T Infrastructure..............................................................................................................................96
I/L – Investment K/T Technology.................................................................................................................................97
I/L – A2: Investors Won’t Invest (1/2)..........................................................................................................................98
I/L – A2: Investments too Risky.................................................................................................................................100
I/L – A2: Taxes Prevent Investments..........................................................................................................................101
I/L – A2: Russia Doesn’t Need Investments...............................................................................................................102
I/L – Prices K/T Investment........................................................................................................................................103
I/L – Foreign Investment Key.....................................................................................................................................104
I/L – Investments Increase Production........................................................................................................................105
A2: No Link: Dollar k Oil Prices................................................................................................................................106
***A2: Russia Internal Link Turns***.......................................................................................................................107
A2: Dutch Disease – Diversification Up.....................................................................................................................108
***Russian Oil – Impacts***.....................................................................................................................................109
Impact – Nuclear War (1/2).........................................................................................................................................110
Impact – Democracy ..................................................................................................................................................112
Impact – World Econ...................................................................................................................................................113
Impact – Nationalism (1/3).........................................................................................................................................114
Impact – Nationalism – Risk High..............................................................................................................................117
Impact – Nationalism – A2: Medvedev Checks (1/2).................................................................................................119
Impact – Nationalism – A2: Medvedev=Puppet.........................................................................................................121
Impact – Brain Drain – Links.....................................................................................................................................122
Impact – Brain Drain – Possible.................................................................................................................................123
Impact – Brain Drain=Nuclear Terrorism...................................................................................................................124
Impact – Brain Drain: Nuclear Terrorism – Impact....................................................................................................125
Impact – Brain Drain Hurts Leadership......................................................................................................................126
Impact – Brain Drain=Prolif.......................................................................................................................................127
Impact – Prolif ...........................................................................................................................................................128
Impact – Prolif ...........................................................................................................................................................129
Impact – Prolif – NW..................................................................................................................................................130
Impact – A2: Econ Growth  Prolif (1/2).................................................................................................................132
Impact – A2: Econ Growth  Prolif (2/2).................................................................................................................133
Impact – A2: AT: Corruption/Bureaucracy.................................................................................................................134
Impact – A2: Econ Growth  Crime ........................................................................................................................135
***Saudi Arabian Oil Disad***.................................................................................................................................136
1NC Shell- Saudi Arabia (1/2)....................................................................................................................................137
***Saudi UQ***.........................................................................................................................................................139
UQ – Saudi Econ ...................................................................................................................................................140
UQ – A2: Saudi Inflation............................................................................................................................................141
UQ – Investment High................................................................................................................................................142
UQ – A2: Not Enough Oil (1/2)..................................................................................................................................143
***Saudi Internals – Oil Key***................................................................................................................................145
I/L –Oil Key to Saudi Economy (1/2).........................................................................................................................146
I/L –Oil Key to Saudi Economy (2/2).........................................................................................................................147
***Saudi Internals – Investment***...........................................................................................................................148
Links – Alt Energy......................................................................................................................................................149
I/L – Investment K/T Meeting Demand (1/2).............................................................................................................150
I/L – Investment K/T Market Stability/Econ..............................................................................................................152
I/L – Investment K/T Averting Energy Crisis.............................................................................................................153
I/L – Investment K/T Competitiveness ......................................................................................................................154
I/L – Investment K/T Maintenance/Expansion...........................................................................................................155
I/L – Prices K/T Investment........................................................................................................................................156
I/L – Demand K/T Investment....................................................................................................................................157
I/L – A2: Investors Won’t Invest.................................................................................................................................158
I/L – A2: Won’t Accept Investments...........................................................................................................................159
***A2: Saudi I/L Turns***.........................................................................................................................................160
A2: Saudi Dutch Disease – No Link...........................................................................................................................161
A2: Saudi Dutch Disease – Diversification Now........................................................................................................162
***Saudi Impacts***..................................................................................................................................................163
Impact – Coup ............................................................................................................................................................164
Impact – Coup.............................................................................................................................................................165
Impact – Coup – Saudi Instability (1/2)..................................................................................................................166
Impact – Coup= ME Instability..................................................................................................................................168
Impact – Coup=Nuclear Terrorism.............................................................................................................................169
Impact – Coup=WMDs...............................................................................................................................................170
Impact – Coup Escalates.............................................................................................................................................171
Impact – Coup=Prolif..................................................................................................................................................172
Impact – Coup=Global Oil Shocks.............................................................................................................................173
Impact – ME Stability General...................................................................................................................................174
Impact – Coup – Arms Deal: Key to Relations...........................................................................................................175
Impact – Coup – Arms Deal: US-Saudi Relations Fragile..........................................................................................176
Impact – Coup – Arms Deal: US-Saudi Relations .................................................................................................177
Impact – Coup – Arms Deal: Saudi-US Relations = Nuke War w/ Iran..................................................................178
Impact – Coup – Arms Deal: Saudi Relations K/T solve terrorism............................................................................179
Impact – Coup – Arms Deal: Terrorism – WOT Succeeding......................................................................................180
Impact – Coup – Arms Deal: Terrorism – WOT Succeeding......................................................................................181
Impact – Coup – Arms Deal: Saudi Relations K/T Leadership..................................................................................182
A2: Impact Turn – Hrts...............................................................................................................................................183
***Aff Generic Oil Disad – UQ/Links***.................................................................................................................184
N-UQ – Alt Energy Up...............................................................................................................................................185
N-UQ – Oil Prices (1/2)...........................................................................................................................................186
UQ OW’s the Link – Bull Market...............................................................................................................................188
N/L – Prices not Determined by Supply and Demand................................................................................................190
N/L – Dollar................................................................................................................................................................191
N/L – Gouging............................................................................................................................................................192
N/L – No Trade Off.....................................................................................................................................................193
***High Oil Bad General***.....................................................................................................................................194
High Prices Bad – Econ..............................................................................................................................................195
High Prices Bad – Econ – Xt Links............................................................................................................................196
High Prices Bad – Econ – Xt Impacts – Comparative Declines.................................................................................197
High Prices Bad – Poverty (1/2).................................................................................................................................198
High Prices Bad – Poverty (1/2).................................................................................................................................199
High Prices Bad – Food Prices – Link........................................................................................................................201
High Prices Bad – Food Prices – Prices High (1/2)....................................................................................................202
High Prices Bad – Food Prices – Prices High (1/2)....................................................................................................203
High Prices Bad – Food Prices – Hunger...................................................................................................................204
High Prices Bad – Corruption/Hrts.............................................................................................................................205
High Prices Bad – Corruption/Hrts – Econ Impact.....................................................................................................207
High Prices Bad – Inflation – Links............................................................................................................................208
High Prices Bad – Inflation – Links............................................................................................................................209
High Prices Bad – Inflation – High.............................................................................................................................210
High Prices Bad – Inflation Up...................................................................................................................................211
High Prices Bad – Democracy....................................................................................................................................212
High Prices Bad – Democracy – Xt Link...................................................................................................................213
High Prices Bad – Democracy – Xt Impact................................................................................................................215
High Prices Bad – Democracy – Global Democracy Down.......................................................................................216
High Prices Bad – Leadership.....................................................................................................................................219
High Prices Bad – Leadership.....................................................................................................................................220
High Prices Bad – China ............................................................................................................................................221
High Prices Bad – Xt China – Leadership..................................................................................................................222
High Prices Bad – Environment – Marine Species.....................................................................................................223
High Prices Bad – Environment – Arctic Tundra.......................................................................................................224
High Prices Bad – Environment – Arctic Tundra – Xt Link.......................................................................................225
High Prices Bad – Environment – Offshore Drilling..................................................................................................226
High Prices Bad – Environment – Wetlands...............................................................................................................227
High Prices Bad – Environment – Coral Reefs...........................................................................................................228
High Prices Bad – Environment – Coral Reefs – Xt Impact (1/2)..............................................................................229
High Prices Bad – Environment – Pipelines...............................................................................................................231
***Russian Oil Disad Answers***.............................................................................................................................235
N-UQ – Russian Econ (1/3).....................................................................................................................................236
N-UQ – Production Down..........................................................................................................................................240
N-UQ – Investment Down (1/4).................................................................................................................................241
UQ OW’s the Link .....................................................................................................................................................245
No I/L – Oil Not Key..................................................................................................................................................247
No I/L – Russian Econ Resilient.................................................................................................................................248
I/L Turn – Brink Card – Both Inflation and Dutch Disease........................................................................................249
I/L Turn – Oil Bad – Russian Dutch Disease..............................................................................................................250
I/L Turn – Oil Bad – Russian Dutch Disease – Link Xt (1/2).....................................................................................251
I/L Turn – Oil Bad – Russian Dutch Disease – Impact – Investment.........................................................................253
I/L Turn – Oil Bad – Russian Dutch Disease – Impact – Moral Hazard.....................................................................254
I/L Turn – Oil Bad – Russian Inflation.......................................................................................................................255
I/L Turn – Oil Bad – Russian Inflation Up .................................................................................................................256
I/L Turn – Oil Bad – Russian Inflation – I/L...............................................................................................................257
A2: Impact – Nationalism – A2: No Growth  Nationalism ....................................................................................259
A2: Impact – Nationalism – Nationalism Up (1/2).....................................................................................................260
A2: Impact – Nationalism – A2: Medvedev Checks...................................................................................................262
Impact Turn – Oil = Organized Crime........................................................................................................................263
Impact Turn – Organized Crime – Impact: Econ........................................................................................................264
Impact Turn – Organized Crime = Prolif....................................................................................................................265
Impact Turn – Leadership – Link: Oil = Russian Power............................................................................................266
Impact Turn – Leadership – Link: Oil = Russian Power............................................................................................267
***Saudi Arabian Oil Disad Answers***...................................................................................................................268
N/IL – Investments Don’t Help Economy..................................................................................................................269
N-UQ – Investment Down..........................................................................................................................................270
N-UQ – Production Down (1/2)..................................................................................................................................275
A2: Impact – Coup – Instability Up (1/2)...................................................................................................................277
A2: Impact – Coup – Instability Up (2/2)...................................................................................................................278
A2: Impact – Coup – Saudi-US Relations ...............................................................................................................279
A2: Impact – Coup – A2: Saudi Arms Race...............................................................................................................280
A2: Impact – Coup – Saudi-US Relations Resilient...................................................................................................281
A2: Impact – Coup – WOT Failing.............................................................................................................................282
A2: Impact – Middle East Stability – Alt Cause.........................................................................................................283
***General Oil UQ***

UQ – Oil Prices  (1/2)

Oil prices reach record levels due to speculation
Xinhua June 29, 2008
http://news.xinhuanet.com/english/2008-06/29/content_8456576.htm
Oil prices broke the 140 U.S. dollars level for the first time this week, with August crude surging near 143
dollars a barrel on both New York Mercantile Exchange (NYMEX) and ICE Futures Exchange in London. While oil has gained more
than 40 percent this year, more and more people now shift their focus onto the role of speculators in the price
hike. But is it all because of speculation? Many believe so. A report the U.S. Congress released Monday showed that, in January 2000, 37
percent of the NYMEX crude futures contracts were held by speculative traders; but in April 2008, the
number has soared to 71 percent. Meanwhile, the proportion of contracts held by commercial traders greatly declined. The U.S.
Commodity Futures Trading Committee (CFTC) revealed in May that it began investigating potential price manipulations in the oil trading
market in December 2007. The early findings show that since the sub-prime mortgage crisis large amount of speculation fund has turned to buy
commodities like crude as a hedge against inflation.
Oil prices , commodity investment prooves

AME June 28, 2008
http://www.ameinfo.com/161763.html
A plunge in the global equities markets has sent more investors into commodities, bringing oil prices to a
record above $142 a barrel on Friday, according to reports from agencies. August delivery of US light crude went up 70
cents at $140.34 a barrel by 1514 GMT, while London Brent rose to 33 cents at $140.16, off a record high of $142.13.
Oil prices , supply and demand proove

Associated Press June 25, 206
http://www.forbes.com/feeds/ap/2008/06/25/ap5152923.html
Billionaire Warren Buffett says he believes supply and demand, not market speculation, is what's driving oil prices to
new heights. Oil futures fell Wednesday after the Energy Department said the nation's supplies of fuel and oil were larger than expected last
week, but prices remain above $130 a barrel. Buffett told CNBC in a live interview that today's prices reflect a lack of oil
in the world. Some people have suggested that curbing speculation in oil contracts could dramatically lower the price of oil. And at least nine
bills proposing limits on that oil speculation have been introduced in Congress in recent weeks.
Oil prices , supply and demand proove

The New York Times June 25, 2006
http://www.nytimes.com/2008/06/25/business/25oil.html?em&ex=1214539200&en=f2d72d37a6d29845&ei=5087%
0A
Mr. Yergin is the chairman of Cambridge Energy Research Associates, a consulting firm, and the Pulitzer Prize-winning author of “The Prize,” an
authoritative history of the oil business. He will speak on Wednesday before the Joint Economic Committee, headed by Senator Charles E.
Schumer, Democrat of New York. Mr. Yergin said the market is relentlessly bidding up oil prices in response to deep-
seated fears that the growth in demand will keep outpacing the growth in oil supplies in coming years. “There is a
shortage psychology in the financial markets and that is reflected in the price of oil,” Mr. Yergin said in the interview.
“You are seeing a lot of people who have never invested in commodities who are now piling into the market. But calling it speculation is way too
simplistic.” What role financial institutions — pension funds, mutual funds, and hedge funds, among others — are playing in driving up the price
of oil to nearly $140 a barrel remains a key question. Regulators in Washington have acknowledged that they do not have enough information on
speculative trading in commodity markets. Even though the evidence is incomplete, speculators have nonetheless become prime targets for
legislative action. Gasoline prices now average $4.07 a gallon, up more than $1 a gallon in the past year, according to AAA, the automobile
group. The price of oil — the main reason behind the run-up in gasoline prices — has doubled in the past year, settling Tuesday at
$137 a barrel on the New York Mercantile Exchange, up 26 cents.
UQ – Oil Prices  (2/2)

Oil prices will remain high in the squo
Wolf 08 (Martin, The Financial Times [http://www.ft.com/cms/s/0/219fcbde-2108-11dd-a0e6-
000077b07658.html?nclick_check=1] The market sets high oil prices to tell us what to do/ May 13, 2008)
The price spikes of the 1970s were followed by big absolute falls in demand and output (see chart). This
was partly because of the recessions and partly because of rising efficiency. Both forces should work again
this time, but to a much smaller extent. The slowdown in the US economy is indeed likely to be
significant. Slowdowns will also occur in western Europe and Japan and even in the emerging world. But the
latter will still grow rapidly. Overall, the world economy – and so world oil demand – is likely to continue
to grow reasonably briskly. Similarly, the improved efficiency of use of petroleum, as people switch to
more efficient vehicles, notably in north America (where the room for doing so is so large), will be offset by
the rising tide of demand for motorised transport in the world’s fast-growing emerging countries. On balance,
it is quite unlikely that aggregate demand for oil will collapse, as it did after the two previous price
spikes, just as it is unlikely that massive net new oil supplies will come on stream in the near future. This
does not mean that prices will remain as high as they are today for the indefinite future: such stability
is improbable. But it means we should expect a sustained period of relatively high prices even if “peak
oil” theorists are proved wrong. If proved right, this would be true in spades.
UQ – A2: Speculation (1/2)

Speculation is a myth- supply and demand determines oil prices
Elliot 08 (Emily, The Lincoln County News [http://www.mainelincolncountynews.com/index.cfm?ID=32537]
Crude Oil Speculation not Driving/ June 18, 2008)
Gasoline prices are higher than ever before, and expected to keep going up. The price of crude oil on the
commodities market keeps breaking records; it closed at $134 a barrel on June 16. Ralph Hassenpflug lives
in Bristol and has been a commodities investor for 23 years. He received his bachelor's degree in Economics
and Psychology from the University of Tours in France. "Speculators and investors driving up prices is an
age old myth," Hassenpflug said. "Wherever there is a buyer in the market, there must be a seller. They
both must agree on the price. Just the fact that I want to buy something will not raise prices. "If we
decided to invest in tomatoes, so we went and bought all the tomatoes from the local grocery stores
every day for a week. In a week we may have driven the price up, but it was because we reduced the
supply of tomatoes in the local area. Once we've bought them, we will need to sell them to get our money
back. Now if we try to sell all the tomatoes at the same time, the price would immediately drop because the
market would be flooded. This is a good parallel to the futures market."
Supply and demand key to oil prices-not speculation

Goldstein 08 (Steve, Market Watch [http://www.marketwatch.com/news/story/oil-prices-not-driven-
speculation/story.aspx?guid=%7B47E2DE16-C310-40F3-AC67-040BB9BDD437%7D] Oil prices not driven by
speculation, Bank of England says/ May 21, 2008)
The 13% rise in Brent crude oil in sterling terms during April wasn't driven by speculation, the Bank
of England said in minutes from the last interest-rate meeting. "According to the Bank's market contacts,
speculative purchases did not seem to be the prime cause of the recent increases in the oil price. More
fundamental demand and supply factors had probably been at the root of its steep rise during recent
months, and there remained considerable uncertainty about the oil price outlook," it said. Because there was
little prospect of a significant rise in supply over the next two to three years, oil prices might take longer than
that to fall back.
Speculation isn’t driving oil prices

Wolf 08 (Martin, The Financial Times [http://www.ft.com/cms/s/0/219fcbde-2108-11dd-a0e6-
000077b07658.html?nclick_check=1] The market sets high oil prices to tell us what to do/ May 13, 2008)
This is not to argue that speculation has played no role in recent rises in prices. But it is hard to believe
it has been a really big one. True, the dollar price has risen sharply, but that is partly the result of the
decline in the dollar’s relative value (see chart). As I have argued before, if speculation were raising
prices above the warranted level, one would expect to see inventories piling up rapidly, as supply
exceeds the rate at which oil is burned. Yet there is no evidence of such a spike in inventories, as
Goldman Sachs and the IMF point out.
Speculation not responsible for high oil prices

Ryan 08 (Missy, Reuters [http://www.reuters.com/article/idUSWBT00919620080620] Oil prices not driven by
speculation: Pickens/ June 19, 2008)
Soaring crude oil prices are not being driven by speculative trading, billionaire oil investor T. Boone
Pickens said on Tuesday. Asked about the role of institutional investors in high prices, Pickens told
reporters on Capitol Hill that he does not "agree that that has anything to do with oil prices ... It's a
global market. It doesn't have anything to do with traders on Wall Street or any place else." Pickens,
who heads BP Capital hedge fund with more than $4 billion under management, also said that increased
oversight of oil markets by the U.S. Commodity Futures Trading Commission (CFTC) represents "a waste of
time."
UQ – A2: Speculation (2/2)

Speculation doesn’t drive oil prices- supply and demand does
EU 08 (European Union, Press Release [http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/421]
Commission's / EU's response to the high oil and food prices/ June 19, 2008)
Although financial markets have recently become more active in the commodities markets, and this
may make prices more volatile, there is no conclusive evidence of a speculative impact on prices, as
stocks are stable around normal level and there are currently no signs of high inventories or hoarding.
Other factors can explain the ongoing price rises, in particular the strong increase in demand from
emerging economies, including the oil-producing countries themselves, which has not been matched by an
increase in supply. Given very low elasticity of supply and demand to price changes in the short run,
small disturbances can lead to sharp fluctuations in prices. The Commission will continue to monitor
closely developments in commodity-related financial markets.
Speculators are scapegoats- supply and demand drive oil prices

Elliot 08 (Emily, The Lincoln County News [http://www.mainelincolncountynews.com/index.cfm?ID=32537]
Crude Oil Speculation not Driving/ June 18, 2008)
Speculators, if they are getting into the market now, are buying short, because they expect prices to fall soon, he
said. "There are not as many speculators in the crude market as there were a year ago. I stopped investing in
crude oil when it hit $80 a barrel," said Hassenpflug. Greater volatility in the market creates more risk, which
drives speculators out, he said. "People stay away because the swings in prices are so huge, you can win or lose
thousands in a single day," Hassenpflug said. "Politicians often like to throw the speculators to the lions,
because it's easiest. If you really want to know why prices are so high, politicians have made many mistakes over
the years," said Hassenpflug. The high fuel prices are due to a lack of supply, because OPEC decided not to
produce to their maximum capacity, Hassenpflug said. That creates an artificial shortage, which causes prices to
become inflated, he said.
UQ – A2: Demand /Supply 

US demand does not affect oil prices, global demand is 
Khaleej Times Online June 26, 2008
http://www.khaleejtimes.com/DisplayArticleNew.asp?col=&section=opinion&xfile=data/opinion/2008/June/opinion
_June105.xml
Expectations ranged from very high to highly skceptical this weekend in Jeddah when producing and consuming nations meet at the invitation of
King Abdullah of Saudi Arabia. A volatile cocktail of record demand, a low dollar and high speculation is keeping oil
prices stubbornly high, despite a second offer from the Kingdom to boost production by another 200,000 barrels a day. This will
reportedly add more than a half million barrels of new production to Saudi Arabia's daily output in the next month. In the overall scheme of
things it is not much since there is a record demand of nearly 87 million barrels a day despite the downturn in the
United States.
US oil supply is , and demand from developing nations is 

Associated Press June 25, 2008
http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD91H1VA01
Expectations of diminishing U.S. oil supplies and concerns about high fuel costs lessening demand in
America kept prices within a narrow band Wednesday, with crude up only slightly over previous closing levels. "The
concerns about demand destruction are real — in particular in the U.S.," said Victor Shum, an energy analyst with Purvin & Gertz in
Singapore. "The market is holding its breath, waiting for the U.S. inventory report." Light, sweet crude for August delivery
was up 37 cents at $137.37 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. The contract on
Tuesday rose 26 cents to settle at $137.00 a barrel. In a weekly report Tuesday, MasterCard's SpendingPulse survey found that demand
for gasoline in the U.S. fell 2.7 percent last week compared to the same week last year, and is off by an average of 3.6 percent over the
last four weeks compared to the same period in 2007. A series of recent reports from the U.S. Energy and Transportation departments has
offered concrete evidence American consumers are driving less in response to high prices. But demand in developing nations
like China, which last week hiked state-set fuel prices, remains strong. "Oil pricing will ease
significantly only if the developing markets also show demand easing, and so far we haven't seen that,"
Shum said. Data from the U.S. Energy Information Administration are expected to show U.S. crude oil inventories falling by
1.7 million barrels last week, according to a survey of analysts by energy research firm Platts.
Increasing supply does not decrease oil prices

Automotive Fleet June 23, 2008
http://www.automotive-fleet.com/Channel/Fuel-Management/News/Story/2008/06/Oil-
Prices-Rise-Despite-Saudi-Meeting.aspx
A Saudi Arabia-hosted emergency energy summit meeting over the weekend, aimed at addressing
consumer nations' concerns over skyrocketing oil prices, has failed to provide near-term relief. Saudi
Arabia announced a modest production increase of 200,000 barrels a day and an expansion of output capacity if
needed in the future, the Associated Press reported. But Monday, June 23, light, sweet crude for August delivery rose
$2.29 to $137.65 a barrel on the New York Mercantile Exchange. Saudi Arabia is the only oil-exporting nation with the ability to
significantly boost production quickly. Many market experts had hoped for a bigger increase, AP reported. The United States and other
nations argue that oil production has not kept pace with increasing demand, especially from China, India and the Middle East.
UQ – A2- Supply and Demand Doesn’t Affect Prices

Empirically, supply and demand is key to oil prices
Cohen 08 (Dave, Assocation for the Study of Peak Oil & Gas [http://www.aspo-
usa.com/index.php?Itemid=91&id=334&option=com_content&task=view] The Saudis Are Blowing Smoke Again/
March 12, 2008
No doubt some of the recent price rise is due to investors flocking into commodities, which are viewed
as a safe haven in the sagging financial markets. Some of the price rise is also due to the rapidly deflating
dollar. Despite these financial considerations, most of the oil price results from a fundamental
disequilibrium between supply and demand in the oil markets. How did we get into this current mess?
One reason for the current price shock is that Saudi Arabia1 scaled-back crude production by 1
million barrels per day (b/d) between September, 2005 and February, 2007 to 8.6 million b/d. Only since
September, 2007 has the Kingdom started to increase production, which currently sits at 9.2 million b/d in
February, 2008 according to Mr. Ali al-Naimi, Saudi Arabia's oil minister. The OPEC basket price was
$99.16 on March 7th. The longer-term basket price trend is shown in the graph (left) which shows a rise of
about 360% since 2002. Saudi Arabia is pumping less oil and making more money, despite the falling value
of the dollar. If you want to point to a single factor that has contributed the most to oil's steep price rise
since the 1st quarter of 2007, you needn't look further than this—the Saudis and the other OPEC
countries kept oil off the market that winter to prevent an irrational price slide below $50/barrel just
as production in the OECD nations continued its steep decline and other countries, like Russia,
struggled to maintain production levels or put small new increments on-stream. Global supply fell further
short of demand with each passing month and the volatile oil price has gone up ever since.
Oil prices are driven by supply and demand

Halligan 08 (Liam, The Telegraph
[http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/15/ccliam115.xml] High oil prices are based
on fundamentals not speculative bubbles/ June 16, 2008)
I don't wish to be rude. Al-Naimi knows a lot more about oil than me. But "fundamentals" are very much
driving the market. And even if we do see more Saudi oil in the coming months, it's unlikely to lower
the price of crude. Oil prices have now risen seven-fold since 2001. Having surged 40 per cent since
January, crude has already notched up 28 record highs this year. Even after falling slightly last week, oil
still stands above $134. And a drop isn't expected soon, with crude for delivery later this year close to $135.
Anyone wanting to understand what's happening should peruse BP's excellent Annual Statistical Review of
World Energy, published last week. It shows the "fundamental" problem - oil demand running ahead of
supply. And that gap is far more likely to widen than to close. In 2007, the review shows, global oil
demand was 85.2m barrels a day, up from 84.2m the year before. Global production, meanwhile, fell
from 81.7m barrels daily, to 81.5m. So, global oil use is accelerating just as production is coming down.
Such price-boosting trends will almost certainly continue. On the consumption side - as is well-know -
the relentless demands of China, India, Indonesia and the other "emerging giants" are unlikely to abate
soon. As these countries continue getting richer, their rapid population growth and escalating fuel use per
head will keep global oil demand spiralling upward.
UQ – A2: Dollar Driving Oil Prices

Dollar value and oil prices aren’t correlated
Gaffen 08 (David, The Wall Street Journal [http://blogs.wsj.com/marketbeat/2008/06/11/the-dollar-oil-
relationship/] The Dollar-Oil Relationship/ June 11, 2008
These days when traders see the daily changes of crude oil, more than likely the first factor cited is
whatever the dollar happens to be doing on that particular day. Some have made reference to a “short
the dollar, long commodities” trade in the market, and indeed last week’s frenzied rise in oil prices seemed
to be triggered by a rally in the euro against the dollar, prompted by comments from European Central Bank
President Jean-Claude Trichet. But as the saying goes, there is a difference between correlation and
causation, and those who are hoping for renewed strength in the dollar in coming months as a way to take
the pressure off of commodity prices may be in for a surprise. The correlation between the euro’s strength
against the dollar and rising crude oil prices has definitely increased — but it has never been
particularly strong. Marc Chandler, head of currency strategy at Brown Brothers Harriman, says that the
weekly percentage change in crude oil was correlated with the change in the euro against the dollar
about 20% of the time for the past five years. That’s not that high — better than a totally random
relationship, but hardly conjoined twins. . But over the past six months, the daily change has correlated
40% of the time, and for the past three months, 57% of the time. So what traders are seeing anecdotally is
indeed true — the dollar’s daily movements against the euro has been at odds with oil’s movements 57% of
the time, a reasonably high level of common movement. Such analysis becomes self-fulfilling at times:
witness Friday’s fall-off in the dollar and the $10.75-rise in crude oil, set off by Mr. Trichet. “Trader
behavior has been…the dollar weakens and crude becomes a dollar hedge of choice,” says Howard
Simons, analyst at Bianco Research LLC. “If you want to fight that trade, they’ll let you, but you’ll lose
money.” But Mr. Chandler says the recent correlation is “a fluke,” saying that while the added volatility
in currency markets may be exacerbating movements in crude oil, investors in the two markets aren’t
necessarily keying off each other. He says worries about U.S. economic growth remain the paramount
concern in the currency markets for those selling dollars, and crude oil continues to rise because of world-
wide demand. That isn’t to say that the relationship won’t exist for a bit longer. Investors have made money
betting against the dollar while betting on oil, and this may continue. Still, that doesn’t mean it means
anything, exactly. “You need to be careful with this,” Mr. Chandler says. “There’s a very strong
correlation between the number of churches in a city and the number of mortuaries, but it doesn’t
mean there’s a causal relationship.”
Dollar value has no correlation with oil prices

Fanney 08 (Robert, Associated Content
[http://www.associatedcontent.com/article/756127/high_oil_prices_caused_by_falling_dollar.html] High Oil Prices
Caused by Falling Dollar? Not so Fast!/ May 8, 2008)
In the past few months, economists and pundits have blamed raging oil prices on a falling value of the
dollar relative to foreign currencies. From a period of December through March, the dollar fell against the
euro and other major currencies as aftershocks of the housing and credit crisis rippled through the US
economy. But today, oil touched $124 dollars a barrel in the face of a rising dollar. According to Nate
Hudgins at The Oil Drum, in the period of time when oil has risen from $106 per barrel to its current
high price, the dollar has rallied from 1.6 to 1.535 dollars per euro. Looking at the price data in this way
lends new clarity for the reasons behind the high price of oil. Such reasons have been well defined by
Peak Oil theorists like Colin Campbell and Kenneth Deffeyes for more than a decade now. But despite
Campbell and Deffeyes sounding the alarm far ahead of the crisis we are in today, it takes the removal of all
other possibilities for energy optimists like CERA's Daniel Yergin to predict $150 oil.
UQ – A2: Price Gouging (1/2)

Oil prices aren’t caused by price gouging
Gaski 08 (John, IndyStar [http://www.indystar.com/apps/pbcs.dll/article?AID=2008805180336] A big cause of the
high price of gasoline/ May 18, 2008)
Here is a test question for you: The next time you find yourself irritated by the price of gasoline, you need to
remind yourself of how much -- or little -- of that nearly $4 per gallon charge is the oil company's
profit. How much is that profit, anyway? As a frame of reference, start with the amount of profit for
government carved out of the purchase price -- roughly 50 cents per gallon from various taxes
imposed. So what do you think the oil company's profit is? (Assume an integrated major oil company that
even owns the filling station, so we don't have to separate producer, refiner and retailer profit. That is, we
identify profit for the whole oil/gasoline industry out of the purchase price.) Would Big Oil make a profit of
60 cents, 70 cents, $1, $1.50? No. Try 25 cents.That is correct. With an industry-wide average net profit
margin on the retail sale price of about 8 percent, the net profit on your gallon of gas is about a quarter,
give or take a penny or two depending on the size of the oil company. (About 3 cents net goes to an
independently owned station, leaving 22 cents for Big Oil, but the total is still a quarter.) An accurate
understanding of oil industry profit levels dramatizes that it is misguided to accuse the oil industry of
price gouging. Beyond the cited 8 percent profit on sales, the industry's return on investment is right at
the average across all of American industry -- about 25 percent. And these profit indices were much
lower during the recent lean years in the oil business. What of ExxonMobil's "obscene" $40 billion total
profit last year? Isn't it natural for the largest corporation to earn the largest profit? Anything other than that
would be a major upset. Moreover, record profits year after year are the natural order of things in business,
reflecting normal growth. Since the first "oil crisis" of the 1970s, there have been numerous major
federal investigations of alleged oil industry price gouging and price collusion. How many times have
the big oil firms been found guilty of gouging or collusion? The answer: never.
Oil industry isn’t price gouging
Yates 08 (Steven, The New American [http://www.thenewamerican.com/node/8481#SlideFrame_1] Why So High?

July 7, 2008)
But what about the profits that large oil companies make? Are they not gouging the public? The API
Primer on oil and natural gas (available for free on the API’s website) contains an analysis suggesting
otherwise. Oil and natural-gas revenues are large; there is no question about that. But so are the
industries themselves, and so are the costs involved in providing fuel to consumers. Oil company
profits allow for reinvestment in facilities, technology, and infrastructure. Reports on oil company
profits can be misleading because they focus exclusively on earnings and don’t take into account the
size of the operations. Earnings alone, therefore, do not tell the whole story. Relative to other major
industries, oil company profits are about average, at 8.3 cents for every dollar of sales, compared to the
chemical industry’s 12.7 cents for every dollar of sales, the computer industry’s 13.7 cents and the
pharmaceutical industry’s 18.4 cents for every dollar of sales.
UQ – A2: Price Gouging (2/2)

Oil companies are not responsible for price gouging
Fischer 08 (Barbara, Journal Sentinel [http://www.jsonline.com/story/index.aspx?id=756359] It's not the oil
companies, stupid/ May 29, 2008)
Contrary to popular belief, oil companies do not control the price of gasoline, nor are they "gouging"
consumers. Nonetheless, they have become whipping posts. After all, someone must be blamed for the
ever-increasing price of oil. In an attempt to rationally discuss the issue, I share the following facts:
According to Energy Information Administration figures from 2007, crude oil makes up about 58% of
what we pay for gas. This consists of finding the crude oil, getting it out of the ground, transporting it
to the refinery, maintaining a reserve capacity of crude oil and profit (back to the evil word "profit"
later). Refining the crude oil makes up another 17%. This consists of producing special blends of gasoline
to meet clean air mandates, transporting the gasoline to the stations and profit. Another 10% is added at the
retail level for operational and marketing costs and profit. And finally, about 15% goes to federal and state
taxes. It is not the fault of oil companies that their product faces what economists refer to as "inelastic"
demand. When the price of gas goes up, we do consume less. However, our reduction falls by a smaller
percentage than the percentage increase in price, leading to increased profits (assuming costs are constant).
This is simply a function of a free market. Punishing oil companies is perverse logic. Slapping on a
windfall profits tax will indeed cause gas consumption to fall (as the tax is passed on to the consumer);
however, beware of the unintended side effects. Lower oil demand will lead to lower oil prices, which in turn
will lead to higher consumption, thereby reducing the incentive to find alternative energy sources. The
ultimate irony is that while oil companies earn about 8 to 10 cents per dollar of sales, the state of
Wisconsin earns 32.9 cents for every gallon of gas sold and the federal government takes another 18
cents. So who is gouging whom? Thus, state and federal government receive more than 50 cents a
gallon for doing nothing. At least oil companies are producing the gas, creating jobs, paying taxes and
searching for alternative sources of fuel. Oil companies spend billions of dollars on alternative fuel sources.
So taxing their profits simply reduces their incentive to continue doing so. We have placed oil companies
between a rock and a hard place. We would not find ourselves in this pickle if we allowed them to drill in
the Arctic National Wildlife Refuge and/or made it easier for them to build more refineries. We demand
lower gas prices, yet we stand in the way of any potential solution. Then we turn around and curse the oil
companies, accusing them of collusion. Not a single investigation has produced any credible evidence of
price gouging, yet we insist oil executives testify in front of Congress for policies created by Congress!
Any time Congress messes with the laws of supply and demand, things get worse.
UQ – A2: Demand Already Declining

Decline in demand from the US is minimal
Cordier and Gross 08 (James and Michael, Optionetics [http://www.optionetics.com/market/articles/19543]
Commodities Roundup: Oil, Boom or Bubble?/ May 19, 2008)
Oil Bears often cite the fact that the US consumer is “cutting back” on gasoline consumption due to
higher prices. While this may be true, the cut back is minimal at best. The latest EIA report shows the
US consuming 9.343 million barrels of gasoline a day, down from last year’s 9.404 figure. That’s a
whopping 0.65 %. Crude oil demand is expected to drop slightly in the US in 2008 by about 190,000 barrels
per day (the US currently consumes over 21 million barrels of oil per day). However, this decrease has been
more than offset by increased demand outside of North America. Chinese demand alone has increased by
400,000 barrels per day in 2008. Overall, global demand for oil is projected to rise 1.2 million barrels per day
in 2008.
UQ – A2: World Econ Hurts Russia

Russia would be insulated from a global economic crisis
RussiaToday.com 1/27/2008 “Is Russia's Economy Recession-proof?”
http://www.russiatoday.ru/business/news/20118
Business leaders and politicians and the jury's still out believe Russia would be affected if the U.S. goes
under. Chairman and CEO of VTB Bank, Andrey Kostin, says the effect on Russia would be minimal.
“I don’t think either Russia's industrial or financial sectors will be very much affected - with the
exception maybe of the stock price of Russian companies,” Kostin said. Merrill Lynch CEO John Thain
says that Russia is insulated from a slowdown in the U.S. “Because of the energy sector and the
importance of energy, oil and gas, to the Russian economy. So, I think Russia will do relatively better in
terms of economic growth,” he added. Meanwhile, Finance Minister Aleksey Kudrin is more cautious. He
says Russia hasn’t realized all the consequences of the current crisis yet. However Russia's Finance
minister – who recently paid off its debts to foreign creditors - suggested that the country already has
enough financial reserves to help cushion the impact of the world crisis.
***General Oil Links***

Link- Investment T/O (1/4)

Investments in alternative energy will curtail investments in oil
Blakeway 08 (Darrell, RedOrbit
[http://www.redorbit.com/news/business/1390122/energy_autonomy_getting_serious_about_renewable_energy/]
Energy Autonomy: Getting Serious About Renewable Energy/ May 17, 2008)
This possibility of renewable energy being developed autonomously is very important, Scheer believes,
because there is a natural competition between conventional energy and renewable energy; and
conventional energy businesses enjoy tremendous political and economic influence. Individual CEOs of
conventional energy companies may be personally very sympathetic to the need for renewable energy,
and companies such as BP and Shell may invest in renewable energy subsidiaries as a kind of 'hedge'
against the day when fossil fuels will no longer be available at affordable prices. But the boards of
directors and executives of conventional energy companies must act to protect the interests of their
shareholders. And their shareholders' interest is protected by making sure that the investments made in
conventional energy facilities are recovered through depreciation expense, and a return on their investment,
over the forty or fifty year useful life of such facilities. In Scheer's view, there will never be a time when the
investments in conventional energy facilities are fully depreciated and recovered by investors. If renewable
energy facilities are developed as rapidly as Scheer believes is necessary, shareholders of the supplanted
conventional energy facilities will inevitably bear the cost of their stranded investments. Scheer argues
that this realization motivates conventional energy companies to delay the development of renewable energy
as long as possible, or promote its development very slowly over a long period of time. Scheer says that
renewable energy advocates must recognize that for their efforts to succeed, investments in
conventional energy must be severely curtailed.
Alternative energy investments will tradeoff with investments in the oil industry
Blakeway 08 (Darrell, RedOrbit
[http://www.redorbit.com/news/business/1390122/energy_autonomy_getting_serious_about_renewable_energy/]
Energy Autonomy: Getting Serious About Renewable Energy/ May 17, 2008)
Scheer says that the breakthrough to a renewable energy future cannot happen until enough people break out
of the 'prison' of One- dimensional' thinking about conventional energy. What is required, he believes, is a
new structure of energy usage, which can only come into being alongside the current structure-and
which replaces the latter, step by step, until it finally makes the old system superfluous. Scheer believes
that conventional energy will not ultimately finance a new regime that puts it out of business. Only when
investment decisions for renewable energy are made independently of the conventional energy business
will there be serious economic competition from renewable energy that can facilitate disengagement
from the existing energy institutions.

Making alternative energy cheaper discourages investment in oil
OECD 05+ (Economic Outlook No. 76[http://www.oecd.org/dataoecd/19/6/34080955.pdf] Oil Price
Developments: Drivers, Economic Consequences and Policy Responses/ No Date)
The longer-run supply and demand characteristics of the oil market are thus crucial determinants of
future price trends. First, estimates of the longrun non-OPEC price elasticity of supply vary from a low of
0.1 to a relatively high 0.6. Second, the elasticity of non-OPEC supply may be nonlinear insofar as at a
certain point the oil price would be pushed up sufficiently to encourage investment to promote the
production of (ample) non-conventional oil in other countries or alternative backstop technology, such
as the liquefaction of other plentiful fossil fuels. For example, the cost of extraction of oil from tar sands in
Canada has fallen considerably over past decades, and expectations of a sustained high oil price may
trigger investment in expanding such activity. Third, higher prices induce investment in (non-reversible)
energy-saving technology or substitution between fuels, tending to make the price elasticity of demand
for oil asymmetric.
Renewable energy and oil compete directly for financial resources

Sherbert 08 (Erin, Metro Active [http://www.metroactive.com/metro/02.06.08/cover-0806.html] Inherit the
Wind/ February 6, 2008)
President Bush touted his support for clean energy investment in America during his State of the Union
speech in January. However, he put forward an economic stimulus package that didn't include extension of
the renewable energy tax credits. The Senate Finance Committee attached a one-year extension to the
package, hoping to get support from the full Senate, which is slated to vote on the package soon. "The lack of
extension of the tax credit has already changed our investment plan for 2008," says Julie Blunden,
SunPower's vice president for public policy and corporate communications. "We would love to deploy
technology here, but if we don't have long-term visibility in market development, we will have to go
somewhere else." A vote for renewable energy became a vote against oil companies. It went like this:
Republicans and Democrats both agreed to fund renewable energy, giving tax credits to boost the
young industries. It would cost roughly $800 million in tax credits for solar and $600 billion for wind and
other alternative energy projects over 10 years. But someone would have to pay. To the Democrats, the
answer was simple: Use money from the oil industry tax credits, which are estimated at three times what
renewable energy receives. But that wasn't going to work. President Bush had threatened to veto legislation
that dipped into oil company tax credits. And one vote short of overriding a Republican-led filibuster on the
issue, Congress caved and passed an energy bill that left out solar and wind tax credits. It also made no
mention of renewable energy standards that would have mandated a certain percentage of electricity to come
from renewable energy sources. It's these tax credits that have helped the renewable energy markets prosper
for the last few years, giving homeowners about $2,000 for installing solar, for starters. Commercial projects
get even more generous credits, helping to produce major solar installation projects for companies such as
Google. But these credits are set to expire at the end of 2008, and unless Congress approves some extension
soon, solar and wind power development will slow. "What happened with the energy bill was really tough to
swallow," says Mike Hall, president of Borrego Solar Systems, a Berkeley-based solar company. "Support
for renewable energy will probably have to come at the expense of coal, oil and natural gas. It is hard to
win a political battle against the combined interests of the fossil fuel industries."

Given the opportunity, investors will shift to alternative energy
Margerie 07 (Hard Assets Investors [http://seekingalpha.com/article/46774-a-total-shift-in-the-oil-industry] A
‘Total’ Shift in the Oil Industry/ September 10, 2007)
Oil companies, you see, are a pretty conservative lot. They make gobs of money, and the financial equations
they operate by are fairly straightforward: It costs $X dollars to get oil out of the ground and you can sell it
for $Y dollars. If Y is more than X, you're happy. But because energy prices are so notoriously volatile,
energy companies have learned that they need a cushion between X and Y to make sure they aren't
caught up if the price of oil suddenly plummets. After all, if you started developing a resource that is
profitable at $70/barrel, and the price of oil falls to $30/barrel, you're out of luck. In fact, you're out
billions of dollars: it costs a huge amount of money and takes a huge amount of time for new energy projects
to come online. Because of this, the planning decks - the exploration and development guidelines at the oil
majors - have been slow to adapt to the high price of crude. A few years ago, they were still planning for
$20/barrel oil. In recent years, that's crept up to $35-$45/barrel. But if Margerie's comments are reflective of
the industry, that number could creep significantly higher... and soon. What would that mean? It would mean
all of the marginal projects will soon get a lot more attention. It will mean that oil sands and even oil shale
might finally see their day in the sun. It will mean that big energy companies will start looking into
alternative fuels and strategies, and will look for new ways to do things like liquify natural gas (which
is getting downright cheap these days) and gasify coal.
Federal investments in alternative energy tradeoff with investments in oil

International Energy Agency 05 ([http://www.iea.org/textbase/npsum/etp.pdf] Summary and Policy
Implications/ 2005)
Governments have a major role to play in supporting innovative R&D and in helping new technologies
to surmount some daunting barriers. Government, industry and consumers will have to work hard together
Improved energy efficiency also reduces the need for investing in energy supply
Investing in alternative energy will tradeoff with investments in the oil market
Syed 08 (Raiyan, John Adler for Congress [http://www.adlerforcongress.com/node/19] Adler and Emanuel Outline
Plan to Lower Gas Prices, Create New Jobs and Businesses/ May 29, 2008)
"President Bush once famously acknowledged that America was addicted to oil. But over the last seven
years, President Bush and the Republican Congress have refused to help end that addiction. When the
Democratic Congress took decisive action to invest in alternative energy sources, President Bush and his
Republican rubberstamps tried to block our progress every step of the way," said Chairman Emanuel.
"President Bush and Congressional Republicans have made it clear that their priority is subsidizing the
big oil companies with billions in taxpayer dollars instead of bringing down energy prices for New
Jersey families.

Investments in energy sources are a zero-sum game- the current market proves
Hodge 08 (Nick, Wealth Daily: Independent Investment Analysis and Commentary
[http://www.wealthdaily.com/articles/alternative-energy-investments/1317] How To Turn Record Oil Into Record
Profits/ May 21, 2008)
Beyond consumer behavior and legislation, high oil prices are also causing changes in investors'
strategies. As a sign of the times, Solarfun Power Holdings (NASDAQ: SOLF) was trading nearly five
million more shares than Exxon Mobil (NYSE: XOM) in early trading today. And US Geothermal Incl
(AMEX: HTM) and Quantum Fuel Systems (NASDAQ: QTWW) were among the top 25 big movers
across all exchanges. Naturally, oil stocks responded positively as well. It is, after all, their bread and butter
that is rising in price. But the takeaway here is that high oil means you can take handsome profits from
other energy sectors as well. Who wouldn't want that? You can have your proverbial cake and eat it
too. And Solarfun has been some pretty delicious cake! Since recommending it to my Alternative Energy
Speculator readers in March, we've seen gains in excess of 200%, as the stock soared from under $10 to over
$28. Check it out: Of course, Solarfun isn't the only big alternative energy winner. The portfolio boasts ten
other double-digit winners as well. But we're just getting started. As the price of oil continues to rise, so to
will the bottom line of the Alternative Energy Speculator, which already stands at 26%. The open
positions are only headed higher and new investment recommendations are constantly being added.
Increased availability of alternative energy decreases investments in oil

Bradley, Tanton and Donway 06 (Robert L., Thomas and Roger, Institute for Energy Research
[http://209.85.141.104/search?q=cache:S8oJjXUdOOsJ:www.factsonfuel.org/images/API_Emerging_Energy_Repor
t.pdf+federal+investments+alternative+energy+oil+markets&hl=en&ct=clnk&cd=1&gl=us&client=firefox-a] May
2006)
Lastly, it is important to recognize that aggregate investment levels for each technology are, and should
be, consistent with the development status of that technology. More mature technologies will naturally see
higher levels of investment than technologies earlier in the development cycle. The technologies included
here are at different stages in their development cycle as indicated by relative expenditure. The distribution
of investments can be expected to shift as different technologies mature or market conditions change
Link- Alt Energy=Lower Prices

Alternative energy lowers oil prices
Strand 07 (Jon, The Energy Journal [http://goliath.ecnext.com/coms2/gi_0199-7309937/Technology-treaties-and-
fossil-fuels.html] Technology treaties and fossil-fuels extraction/ October 1, 2007)
Assume that a treaty will lead to increased international funding of technology developments, which in turn
implies a likelihood that a new energy technology will be developed. Assume that the alternative
technology, once developed, implies a constant marginal energy cost, lower than the (assumed constant)
cost of extracting fossil fuels. (3) Fossil fuels will then become redundant once the new technology is
adopted, and no more fossil fuels will be extracted from then on. (4) We assume that the time it takes to
develop such a technology is stochastic, modeled in a very simple way, as exponentially distributed with
constant parameter [lambda](with expected period until development equal to 1/[lambda]). One so far
overlooked implication of such a scenario is that the prospect of developing a new and more efficient energy
technology will affect incentives of fossil-fuel producers to extract and market the resource, in both the short
and the longer run. In the model, dealt with in Sections 2-3 below, we assume that the fossil-fuel market is
competitive on a global scale, there is no market uncertainty, and there is initially a zero probability of
developing an alternative technology replacing fossil fuels. The initial resource price (prior to any technology
treaty) can then be shown to evolve according to the so-called Hotelling rule, whereby the growth rate for the
real resource price (net of extraction cost) equals the real rate of interest, r, in the economy. (5) In Section 2
below we first show that, when the technology treaty is in place, the equilibrium price and extraction
path for the resource will both shift as a result. Along the new price path, the net resource price will grow
at the higher rate r+[lambda]. The entire resource price path shifts down, resulting in a higher volume of
extraction at any given date until the resource is fully extracted, or until the new technology is developed.
Intuitively, when fossil-fuel producers are made aware of an increased likelihood that their resource
may become redundant within a limited future time period, the incentive will be to extract it more
quickly. For a given demand function directed toward fossil fuels, with global fossil-fuel demand a
decreasing function of the price, this must mean a lower market price of fuel
Decreasing the demand for fossil fuels lowers oil prices

Amadeo 08 (Kimberly, The New York Times Company
[http://useconomy.about.com/od/commoditiesmarketfaq/p/high_gas_prices.htm] Why Gas Prices are so High- Why
Gas Prices are Increasing/ May, 2008)
The only real way to lower gas prices is to lower demand for gas and oil over a long period of time. This
would work, since the U.S. consumes 25% of the world's oil. This has increased over the last 20 years,
from 15 million barrels per day (bpd) to 20.7 million bpd. A concerted effort might convince commodities
traders, who have driven up oil prices 25% in the first quarter of 2008, that oil was a bad investment, thus
allowing oil prices to return to pre-bubble levels.
Link- Alt Energy Reduces Demand (1/2)

Alternative energy decreases the demand for oil
Victor 08 (David G- professor of law and Director of Stanford’s Programme on Energy & Sustainable
Development. He is also Adjunct Senior Fellow at the Council on Foreign Relations, NATO Review
[http://www.nato.int/docu/review/2008/05/FS_NEXUS/EN/index.htm] The ‘Energy-Food’ nexus – and how to
tackle it/ 2008)
In oil, western governments are notable for their lack of much leverage on supply, although as big
consumers they could have a large impact on demand. But changing demand requires changing the
way the economy uses energy, and those changes hinge on the innovation and application of new
technologies.

Goldman 08 (Arnold, TAU [http://energy08.tau.ac.il/media/goldman.pdf] Creating a New Energy Culture/ May
21, 2008)
Large scale adoption of solar and other renewable technologies, coupled with the implementation of strong
regulations encouraging the conversion of transportation systems to plug-in hybrid and electric vehicle
technology, will reduce the demand of fossil fuel significantly. The price of fossil fuel would drop to
much lower levels and materially reduce the balance of payment deficit, and economic drain on many
economies. These economic benefits attained by the substitution of renewable energy should find some way
of positively entering into the renewable energy pricing system.

Hesse 07 (Paul, Renewable Energy Forum [http://www.pollutionissues.com/Pl-Re/Renewable-Energy.html]
Renewable Energy, 2007)
Renewable energy is energy that is regenerative or, for all practical purposes, virtually inexhaustible. It
includes solar energy, wind energy, hydropower, biomass (derived from plants), geothermal energy (heat
from the earth), and ocean energy. Renewable energy resources can supply energy for heating and cooling
buildings, electricity generation, heat for industrial processes, and fuels for transportation. The increased use
of renewable energy could reduce the burning of fossil fuels (coal, petroleum, and natural gas),
eliminating associated air-pollution and carbon dioxide emissions, and contributing to national energy
independence and economic and political security.
Alternative energy reduces the demand for oil

Ryden 08 (John, The Global Warming Examiner [http://www.examiner.com/x-325-Global-Warming-
Examiner~y2008m5d27-Fuel-Subsidies-Being-Will-Decrease-Oil-Demand] Foreign Countries Cutting Fuel
Subsidies Will Decrease Oil Demand/ May 27, 2008)
These price increases are important to creating more elasticity in the demand for oil. If governments fix
the price of gasoline at below market levels, when demand increases there and supply remains constant,
the price can only go up. In economic terms, this creates a demand curve that is almost vertical. Small
increases in demand with fixed supply can create huge price increases. By passing through the increased
price to consumers, demand will be reduced and price will find a new equilibrium point at a lower price
point. Could this create a short term top in the price of oil? Longer term, higher oil prices are going to
cause consumers to seek ways to decrease their consumption. Buying smaller cars is one way to decrease
fuel consumption. Consumers are already shunning big pickup trucks and SUVs. It will take time for this
‘demand destruction’ to work its way through the economy. Demand destruction also includes switching
to alternative energy sources over the long term such as natural gas, coal, and electricity for cars. In
economic terms, the short term demand is not very elastic. In the longer term of years, it is much more
elastic. The supply of energy is also not very elastic in the short term, but much more elastic in the long term.
It takes a long time to find and produce oil.
Link- Alt Energy Reduces Demand (2/2)

Renewables reduce the demand for oil
Baker 04 ( Mark, Radio Free Europe [http://www.rferl.org/featuresarticle/2004/06/8a45b713-2c2e-4654-9579-
e7cc4e081637.html] World: Rise In Oil Price Shifts Focus To Use of Renewable Resources/ June 1, 2004)
The timing of a conference this week in Germany to promote the use of alternative energy resources
could not have been better. The four-day conference in the city of Bonn -- called "Renewables 2004" -- was
planned back in 2002 to follow from the World Summit on Sustainable Development held in Johannesburg
that year. The organizers, however, could not have foreseen the recent turmoil on world oil markets that
has seen oil prices shoot to 20-year highs, rising to over $40 a barrel. This run-up in prices has given
renewed urgency to efforts to harness the sun, the wind, and the seas to reduce dependence on oil.
Renewables decrease the demand for oil

EPA 06 (Environmental Protection Service
[http://www.epa.ie/downloads/pubs/other/viewpoints/epa_viewpoint_renewable_energy_sept%2006.pdf] Renewable
Energy/ 2006)
Fossil fuels are non-renewable and supplies are finite. Reserves still exist but are being continually
depleted. For instance, peak oil production is anticipated within this decade, whereas many of the most
accessible coal seams have already been extracted. The development of renewable energy sources would
reduce our reliance on what is a diminishing supply of fossil fuels.
Link- Ethanol=Lower Prices

Ethanol will lower gas prices
Udall 08 (Mark [http://markudall.house.gov/HoR/CO02/...Consumers.htm] Udall Offers Responsible Plan to
Lower Gas Prices, Give Relief to Consumers (Rep. D-CO) May 6, 2008)
Increasing America’s use of renewable energy sources will also help address supply in future years by
providing a more diverse energy portfolio. Cellulosic ethanol has great potential to not only lower our
gas prices, but also our food prices as we move away from corn-based ethanol. Udall has been a strong
supporter of this critical R&D, much of it done in Colorado at the National Renewable Energy Lab.
Link- Biofuels= Lower Prices

Empirically, biofuel production reduces the cost of oil
Batten and Caldwell 08 (Kit and Caldwell, Center for American Progress
[http://www.americanprogress.org/issues/2008/03/energy_diversity.html] Energy Diversity Dividends: Biofuels
Lower Oil Prices/ March 24, 2008)
New commodities market analysis by Merrill Lynch & Co., Inc. proves the point the Center for American
Progress has been making for a while now—that the boom in biofuels production is reducing the cost of
oil around the world. That conclusion may seem improbable given the dramatic run up in oil prices
over the past five years. But the analysis by Merrill commodities market strategist Francisco Blanch (as
reported today by the Wall Street Journal) says that:“Oil and gasoline prices would be about 15 percent
higher if biofuel producers weren't increasing their output. That would put oil at more than $115 a
barrel, instead of the current price of around $102. U.S. gasoline prices would have surged to more
than $3.70 a gallon, compared with an average of a little more than $3.25 today.”
Link- Hydrogen=Investments
Hydrogen power requires large investments
International Energy Agency 05 ([http://www.iea.org/textbase/npsum/etp.pdf] Summary and Policy
Implications/ 2005)
The use of hydrogen from low-carbon or zero-carbon sources in fuel-cell vehicles could practically
decarbonise transport in the long run. But a switch to hydrogen will require huge infrastructure
investments.
Link- Hydrogen Reduces Demand

Hydrogen decreases the demand for oil by 40%
EU 08 (European Union, Press Release
[http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/299&format=HTML&aged=0&language=EN&gui
Language=en] European research shows that hydrogen energy could reduce oil consumption in road transport by
40% by 2050/ February 25, 2008)
The scientific project HyWays funded by the EU's research program has found that introducing hydrogen
into the energy system would reduce the total oil consumption by the road transport sector by 40%
between now and 2050. Substantial barriers have first to be overcome, ranging from economic and
technological to institutional barriers, and actions must be taken as soon as possible. Following a series of
more than 50 workshops the project has produced a Roadmap to analyze the potential impacts on the EU
economy, society and environment of the large-scale introduction of hydrogen in the short- and long- term, as
well as an action plan detailing what needs to be done for this to take place. The report is published as the
Member States are due to give their approval of a new €940m public/private research partnership for the
development of hydrogen and fuel cells.
***General Prices/Investment Internals***

I/L- Investment K/T Market Stability

Now is the time to ensure investments in oil to ensure market stability
Lipsky 08 (John- First Deputy Managing Director of the International Monetary Fund, International Monetary
Fund [http://www.imf.org/external/np/speeches/2008/042108.htm] The Role of Policies to Foster Oil Sector
Investment in a Global Context/ April 22, 2008)
Another important dimension is the need to achieve a stronger supply response to rising prices. This
brings me to the topic of this session-how to foster investment in the oil sector. Policies aimed at improving
investment in the oil sector have taken on new urgency. Oil is a critical input at every stage of the
production and distribution of goods and other commodities. Thus, measures to increase the supply of
oil and improve stability in oil markets should have a salutary effect on other commodity prices as well
as the global economy more broadly.
Investments in oil critical to market stability

Lipsky 08 (John- First Deputy Managing Director of the International Monetary Fund, International Monetary
Fund [http://www.imf.org/external/np/speeches/2008/042108.htm] The Role of Policies to Foster Oil Sector
Investment in a Global Context/ April 22, 2008)
Against this background, increased investment in the oil sector has a crucial role to play in improving
the supply-demand balance and bringing greater stability to the market. In recent years, capital
expenditures have begun to rise more rapidly, as one would have expected, given price developments.
However, research by IMF staff shows that this has translated into only modest increases in capacity.
Specifically, while nominal oil investment grew by about 60 percent during 2002-06, in real terms
investment remained broadly unchanged over this period.
I/L- Investment K/T Prices

Investments key to maintaining higher oil prices
Richter 08 (Paul, Los Angeles Times [http://www.latimes.com/news/nationworld/world/la-na-oil19-
2008jun19,0,5026906.story] Oil crisis fuels blame game/ June 19, 2008)
Among the most frequent new targets are speculators. Oil retailers, oil producers, many Democrats and
even some Republicans say that people who buy oil as an investment are causing much of the price
increase. "These Wall Street traders have pushed the economy to the brink of disaster," said Dan Gilligan,
president of the Petroleum Marketers Assn. of America, a business trade group for gasoline retailers. Exxon
Mobil officials have told lawmakers that more than half the price of a barrel of oil can be attributed to
speculation.
Investments key to maintaining higher oil prices

Greenspan (Alan, Committee on Foreign Relations
[http://foreign.senate.gov/testimony/2006/GreenspanTestimony060607.pdf] Statement of Alan Greenspan President
Greenspan Associates LLC before the Committee on Foreign Relations United States Senate/ June 7, 2006)
The new participants, investors and speculators, to the world’s two trillion dollar-a-year oil market are
hastening the adjustment process that has become so urgent with the virtual elimination of the world
supply buffer. With the demand from the investment community, oil prices have moved up sooner than
they would have otherwise. In addition, there has been a large increase in oil inventories. In response to
higher prices, producers have increased production dramatically and some consumption has been scaled
back. Even though crude oil productive capacity is still inadequate, it too has risen significantly over the past
two years.
I/L – Investment T/F Fast

Volatile oil market scare away investments in oil
Fattouh 07 (Bassam, Oxford Institute for Energy Studies [http://www.oxfordenergy.org/pdfs/WPM32.pdf] The
Drivers of Oil Prices: The Usefulness and Limitations of Non-Structural model, the Demand–Supply Framework
and Informal Approaches/ March 2007)
The behaviour of oil prices has received special attention in the current environment of rapid rises and
marked increase in oil price volatility. It is widely believed that high oil prices can slow economic growth,
cause inflationary pressures and create global imbalances. Volatile oil prices can also increase uncertainty
and discourage much needed investment in the oil sector. High oil prices and tight market conditions have
also raised fears about oil scarcity and concerns about energy security in many oil importing countries.
I/L – Prices Sensitive to Supply and Demand (1/2)

Supply and demand drives prices
Bary 08 (Andrew, The Wall Street Journal
[http://online.barrons.com/article/SB121400286913193263.html?mod=b_hpp_9_0002_b_this_weeks_magazine_ho
me_top&page=sp] Bye, Bubble? The Price of Oil May Be Peaking/ June 23, 2008 )
The supply/demand argument for higher oil prices has some merit. "Name another commodity that
has gone up two-and-a-half times in three-and-a-half years and the world hasn't found a way to make
more of it," says Byron Wien, chief investment strategist at Pequot Capital Management. "The world isn't
finding oil fast enough to replace the 3% to 4% that gets pumped every year."
A small decline in demand will decrease oil prices dramatically

Victor 08 (David G- professor of law and Director of Stanford’s Programme on Energy & Sustainable
Development. He is also Adjunct Senior Fellow at the Council on Foreign Relations, NATO Review
[http://www.nato.int/docu/review/2008/05/FS_NEXUS/EN/index.htm] The ‘Energy-Food’ nexus – and how to
tackle it/ 2008)
That’s why today’s prices are so high: the extra cost of oil doesn’t much affect demand and in some
countries actually impedes supply. Looking globally, the demand and supply curves are nearly vertical in
slope, which is why small shifts magnify into large swings in prices. (Private money amplifies those
fundamental forces, not least because oil and food commodities are now investment vehicles - with other
markets performing so poorly and the outlook for higher commodity prices, these investments have come
rushing in).
Oil prices are sensitive to shifts in supply and demand

In the short run, the low price elasticities of global demand and non-OPEC supply make oil prices highly
sensitive to supply and demand shifts. Price volatility, compounded by geopolitical tensions, raises
uncertainty about underlying price trends may depress oil exploration. OPEC’s excess capacity is
currently the lowest in three decades, providing little cushion to raise supply in the event of unexpected
oil market disruptions.
Oil prices sensitive to shifts in demand

EIA 06 (Energy Information Administration
[http://www.eia.doe.gov/oiaf/aeo/otheranalysis/aeo_2006analysispapers/wop06.html] World Oil Prices in AEO2006/
2006)
Energy market projections are subject to considerable uncertainty, and oil price projections are
particularly uncertain. Small shifts in either oil supply or demand, both of which are relatively
insensitive to price changes in the short to mid-term, can necessitate large movements in oil prices to
restore the balance between supply and demand. To address uncertainty about the oil price projections in
the AEO2006 reference case, two alternative cases posit world oil prices that are consistently higher or lower
than those in the reference case. These high and low price cases should not be construed as representing the
potential range of future oil prices but only as plausible cases given changes in certain key assumptions.
I/L- Prices Sensitive to Supply and Demand (2/2)

The oil market is hypersensitive to US demand
Hostetter 06 (E. Ralph, The Conservative Voice [http://www.theconservativevoice.com/article/11879.html]
Ticking Time Bomb/ January 27, 2006)
Crude oil now is well established as a world market and is hypersensitive to the slightest change in
energy use or production anywhere on the planet. For example, when a severe hurricane strikes the
United States and several drilling platforms in the Gulf of Mexico, and several oil refineries in Louisiana
and Texas are temporarily disabled the price of crude oil on the world market spikes by $10 per barrel.
The United States has a severely cold winter month, and the price goes up $5 per barrel. Or if the month
is excessively mild, the price drops $5 on the world market. Under ordinary circumstances, these very
minor blips in the world oil market would go unnoticed. However, inasmuch as America, the largest oil
importer, has been targeted by the dominant media of the world as the "Great Satan," ordinary
circumstances are out the window. The world dominant media, no friend of the United States, has
positioned itself to exert great influence on the price of oil by the manner in which it hypes a story.
Oil prices are driven by supply and demand

Halligan 08 (Liam, The Telegraph
[http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/15/ccliam115.xml] High oil prices are based
on fundamentals not speculative bubbles/ June 16, 2008)
I don't wish to be rude. Al-Naimi knows a lot more about oil than me. But "fundamentals" are very much
driving the market. And even if we do see more Saudi oil in the coming months, it's unlikely to lower
the price of crude. Oil prices have now risen seven-fold since 2001. Having surged 40 per cent since
January, crude has already notched up 28 record highs this year. Even after falling slightly last week, oil
still stands above $134. And a drop isn't expected soon, with crude for delivery later this year close to $135.
Anyone wanting to understand what's happening should peruse BP's excellent Annual Statistical Review of
World Energy, published last week. It shows the "fundamental" problem - oil demand running ahead of
supply. And that gap is far more likely to widen than to close. In 2007, the review shows, global oil
demand was 85.2m barrels a day, up from 84.2m the year before. Global production, meanwhile, fell
from 81.7m barrels daily, to 81.5m. So, global oil use is accelerating just as production is coming down.
Such price-boosting trends will almost certainly continue. On the consumption side - as is well-know -
the relentless demands of China, India, Indonesia and the other "emerging giants" are unlikely to abate
soon. As these countries continue getting richer, their rapid population growth and escalating fuel use per
head will keep global oil demand spiralling upward.
I/L – Investor Volatility

High oil prices have investors on the edge- they’re ready to make the shift to alternative
energy
2006)
The energy challenge over the next several decades and beyond is to meet ever-growing demand with
affordable, reliable supply, while ensuring environmental protection and quality. Recent years have
witnessed historically high energy prices, a consequence of which has been a slate of new investments
in alternative energy, frontier hydrocarbons and advanced end-use technologies that portend greater
diversity of supply and environmentally friendly energy use in the future. This report summarizes these
emerging technology investments by the U.S. oil and gas industry, other private industries, and the Federal
government over the 2000-2005 time period.
I/L – Price Volatility (1/2)

Oil prices will remain volatile through 2009
Thelwell 08 (Emma, The Telegraph
[http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/24/bcnus124.xml] Misery USA: Housing and
consumer gloom send dollar and stocks sliding/ June 24, 2008)
Alan Greenspan, the former chairman of the Fed, said that the central bank's effort to revive the financial
markets had worked to an extent, but warned that the crisis could persist into next year. He said the US
was "on the brink" of a recession, and said 2009 would be "very sluggish" with a "highly volatile oil
market. "Oil prices continue to inch towards the record high of $139.89 reached earlier this month.
Meanwhile, the dollar fell 0.6pc to $1.5613 per euro and the S&P 500 sank 16pc from its October
record.
Oil prices volatile

Mound 08 (James, Grace Cheng News and Financial Information
[http://www.gracecheng.com/contributor/2008/06/22/likelihood-of-increasing-volatility-in-oil-prices/] Likelihood
Of Increasing Volatility In Oil Prices/ June 23, 2008)
Energies stalled this week as a trend changing inventory report coupled with some profit taking
created a pennant near the highs. Is Israel about to wage war on Iran or are they just flexing their military
might? Technically the market setup a bear move when it broke out of the pennant congestion to the
upside earlier in the week, but the intraday selloff ultimately turned the pattern right back into
consolidation mode. $3 price moves in crude oil should be the daily norm and the likelihood of even
larger price expansion and volatility is very high. Option premiums are through the roof, but only the
foolish would naked sell in this environment. Instead look at long condors or bear spreads with lots of
time to expiration. Straight Dec. 85 puts also could get a solid premium spike on a volatile selloff.
The market is highly volatile

Reese 08 (John, Forbes [http://www.forbes.com/personalfinance/2008/06/12/oneok-natuzzi-bp-pf-guru-
in_jr_0612guruscreen_inl.html?partner=whiteglove_google] Beating Volatility With Wall Street's Best/ June 12,
2008
If you'd been stuck on a deserted island for the past five months and returned home today to check
how the stock market was doing, you might think not a lot had changed. Currently, the Dow Jones
industrial average and the S&P 500 and NASDAQ indexes all sit within a couple percentage points of where
they were in mid-January. Of course, anyone who has had money in the market for the past five months
knows better, having witnessed some of the most significant volatility we've seen in years as oil prices
skyrocketed and the credit and housing crises continued to linger. Just last week, for example, the Dow
jumped about 214 points one day (a gain of close to 2%), only to fall almost 395 points the next (a loss
of more than 3%).
I/L – Price Volatility (2/2)

Price volatility is on the rise due to swings in oil prices
Hanna 05 (David, Platts Insight
[http://www.platts.com/Magazines/Insight/2005/december/d20HF05B1pn11E514533H9_1.xml] Get used to more-
volatile petrochemical prices/ December, 2005)
OVER THE PAST SEVERAL YEARS, THE SINGLE biggest development affecting the global
petrochemicals industry has been the surge in price volatility. Gone are the days of stable, predictable
prices. Prices of petrochemicals have become hypersensitive to swings in crude oil prices, yet—compared
with oil—markets for them remain small and opaque, with the flow of trade concentrated between Middle
East swing producers and the giant consuming center of China. Combined, these factors have
contributed to unprecedented volatility, making the need for risk management more acute. Nonetheless,
the market still exhibits seasonal cycles, making prices fairly predictable on an inter-quarter basis. Prices
typically peak during the spring plant maintenance period (when available supply is constrained) and during
the winter shopping season, and hit a trough during the summer holiday lull. But volatility on a smaller scale
is no longer easy to anticipate. The trend toward greater volatility is undeniable. For example, swings in
the price of ethylene, a barometer for the petrochemical market as a whole, grew from about 5% in
2000 to 9% in 2002 and to 14% in 2004, according to Platts estimates. HoweCBver you measure it, the
result is the same: Volatility is on the rise, and it's here to stay.
I/L – Market Speculative

Price of oil determined by a speculative market
Aissaoui 07 (Ali- Head of Research at the Arab Petroleum Investments Corporation, APICORP’s monthly
Economic Commentary [http://www.mees.com/postedarticles/oped/v50n06-5OD01.htm] Crude Oil Prices: Can
OPEC Keep Stemming The Tide?/ February 5, 2007)
There is currently a highly polarized debate on whether commodity investors, whose involvement in oil
futures markets has increased significantly in recent years, add more to the volatility of prices than to
their levels. This has come out against suggestions that their activity has been a major contributor to the
post-August 2006 downward trend in oil prices, in the same manner as they greatly contributed to their
upsurge before. Futures markets are intended to be used by commercial entities (producers, merchants and
major consumers) for the purpose of hedging against price risks. However, future markets also provide
refuge assets for a smaller portion of investors, including hedge funds, whose objective is to achieve high
returns through the anticipation of price movements. This activity, which is in essence speculative, adds
liquidity to the market and makes it easier for commercial players to hedge their exposure. By betting on
price changes, speculators tend to rush to buy the commodity (take positions) before the price trend
ends, and an even greater rush to sell the commodity (unwind positions) when prices reverse. Obviously, this
aggravates the movement of futures prices and, through time arbitrage transactions, that of spot prices.
Therefore, spot prices end up much higher or much lower than are justified by the market fundamentals. This
simple interpretation allows us to say that speculation may have exacerbated the ongoing episode of
falling oil prices.
Oil prices are based on a speculative market- not actual physical supply and demand
Nader 08 (Ralph, CounterPunch [http://www.counterpunch.org/nader05282008.html] What's Really Driving the
High Price of Oil?/ May 28, 2008)
Last week the price of crude oil reached about $130 a barrel after spiking to $140 briefly. The
immediate cause? Guesses by oil man T. Boone Pickens and Goldman Sachs that the price could go to
$150 and $200 a barrel respectivly in the near future. They were referring to what can be called the hoopla
pricing party on the New York Mercantile Exchange. (NYMEX) Meanwhile, consumers, workers and small
businesses are suffering with the price of gasoline at $4 a gallon and diesel at $4.50 a gallon. Suffering but
not protesting, except for a few demonstrations by independent truckers. A consumer and small business
revolt could be politically powerful. But what would they revolt to achieve? Their government is paralyzed
and is unable to indicate any action if oil goes up to $200 or $400 a barrel. Washington, D.C. is leaving
people defenseless and drawing no marker for when it will take action. Oil was at $50 a barrel in January
2007, then $75 a barrel in August 2007. Now at $130 or so a barrel, it is clear that oil pricing is
speculative activity, having very little to do with physical supply and demand. An essential product—
petroleum—is set by speculators operating on rumor, greed, and fear of wild predictions.
I/L – Prices Speculative (1/3)

Oil prices and market are driven by speculation
Stouffer 08 (Rick, RedOrbit
[http://www.redorbit.com/news/business/1408883/speculators_will_drive_crude_oil_prices_higher_until_demand_c
ollapses/index.html] Speculators Will Drive Crude Oil Prices Higher Until Demand Collapses/ May 30, 2008)
Crude prices are determined by what's known as the futures spot market price determined on major
commodities exchanges like the Nymex. Prices quoted daily are month-ahead, spot market prices.
Contracts between crude suppliers and refiners guarantee delivery -- not price. "Crude oil trades
globally on a daily basis, and there are no long-term contracts," Global Insight's Novak said. "When a
refiner signs a contract, it's signing for volume and delivery, with the price based on the Nymex price.
"Today's soaring Nymex crude prices are driven by speculative trading, the experts say. Speculation
has grown in all commodities because hedge funds, pension funds and other large investors have
moved out of the declining markets such as housing and finance in their search for profitable
investments, Novak said. "The $130 a barrel oil is due to speculation," Novak said. If speculation were
eliminated, she estimates the price of crude could plummet to $75 or $80 a barrel.
Speculation key to oil prices

Stouffer 08 (Rick, RedOrbit
[http://www.redorbit.com/news/business/1408883/speculators_will_drive_crude_oil_prices_higher_until_demand_c
ollapses/index.html] Speculators Will Drive Crude Oil Prices Higher Until Demand Collapses/ May 30, 2008)
"A large number of contracts bought and sold are paper contracts, and so when it's time to match up
contracts to physical product, many contracts are liquidated because speculators want nothing to do
with product," said Tom Skarada, vice president-refining at Warren, Warren County-based United Refining
Co., a privately held, small refiner (70,000 gallons of crude oil per day), who also is a wholesale and retail
gasoline supplier. "One would like to think that supply and demand has a lot to do with pricing, but
there's a lot of psychology involved in the commodities market," said Amy Myers Jaffe, the Wallace S.
Wilson Fellow in Energy Studies at Rice University's Baker Energy Forum, in Houston. "It's like the stock
market. "Jaffe said some people trading in oil have the mindset that prices only can go up; others get
involved because demand keeps growing as developing countries like China and India keep buying oil,
driving up the price. "People who didn't want to buy oil because the price was too high, look around,
see what's happening, and now they will buy," Jaffe said.
Oil prices are controlled by speculation

Engdahl 08 (William, Asia Times Online [http://www.atimes.com/atimes/Global_Economy/JE06Dj07.html]
Speculators knock OPEC off oil-price perch/ May 6, 2008
In June 2006, the senate investigation estimated that of oil traded in futures markets at some $60 a barrel,
about $25 of that was due to pure financial speculation. One analyst estimated in August 2005 that US
oil inventory levels suggested WTI crude prices should be around $25 a barrel, and not $60. That
would mean today that at least $50 to $60 or more of today's $115 a barrel price is due to pure hedge
fund and financial institution speculation. However, given the unchanged equilibrium in global oil
supply and demand over recent months amid the explosive rise in oil futures prices traded on Nymex and
ICE exchanges in New York and London, it is more likely that as much as 60% of the oil price today is
pure speculation. No one knows officially except the tiny handful of energy trading banks in New York
and London, and they certainly aren't talking.

All this is well and official. But how today's oil prices are really determined is done by a process so
opaque only a handful of major oil trading banks, such as Goldman Sachs or Morgan Stanley, have any
idea who is buying and who is selling oil futures or derivative contracts that set physical oil prices in
this strange new world of "paper oil". With the development of unregulated international derivatives
trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in
oil prices. Since the advent of oil futures trading and the two major London and New York oil futures
contracts, control of oil prices has left the Organization of the Petroleum Exporting Countries (OPEC) and
gone to Wall Street. It is a classic case of the "tail that wags the dog". A June 2006 US Senate Permanent
Subcommittee on Investigations report on "The Role of Market Speculation in rising oil and gas prices"
noted, "... there is substantial evidence supporting the conclusion that the large amount of speculation
in the current market has significantly increased prices".
60% of oil price is based on speculation

The price of crude oil today is not made according to any traditional relation of supply to demand. It is
controlled by an elaborate financial market system as well as by the four major Anglo-American oil
companies. As much as 60% of today's crude oil price is pure speculation driven by large trader banks
and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control
of oil and its price. How? First, the role of the international oil exchanges in London and New York is
crucial to the game. Nymex in New York and the Intercontinental Exchange (ICE) Futures in London
today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do
so via oil futures contracts on two grades of crude oil - West Texas Intermediate and North Sea Brent. A third
rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a
daughter of Nymex, with Nymex president James Newsome sitting on the board of DME and most key
personnel British or American citizens.

Oil prices are controlled by speculation
In June 2006, the senate investigation estimated that of oil traded in futures markets at some $60 a barrel,
about $25 of that was due to pure financial speculation. One analyst estimated in August 2005 that US
oil inventory levels suggested WTI crude prices should be around $25 a barrel, and not $60. That
would mean today that at least $50 to $60 or more of today's $115 a barrel price is due to pure hedge
fund and financial institution speculation. However, given the unchanged equilibrium in global oil
supply and demand over recent months amid the explosive rise in oil futures prices traded on Nymex and
ICE exchanges in New York and London, it is more likely that as much as 60% of the oil price today is
pure speculation. No one knows officially except the tiny handful of energy trading banks in New York
and London, and they certainly aren't talking.

All this is well and official. But how today's oil prices are really determined is done by a process so
opaque only a handful of major oil trading banks, such as Goldman Sachs or Morgan Stanley, have any
idea who is buying and who is selling oil futures or derivative contracts that set physical oil prices in
this strange new world of "paper oil". With the development of unregulated international derivatives
trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in
oil prices. Since the advent of oil futures trading and the two major London and New York oil futures
contracts, control of oil prices has left the Organization of the Petroleum Exporting Countries (OPEC) and
gone to Wall Street. It is a classic case of the "tail that wags the dog". A June 2006 US Senate Permanent
Subcommittee on Investigations report on "The Role of Market Speculation in rising oil and gas prices"
noted, "... there is substantial evidence supporting the conclusion that the large amount of speculation
in the current market has significantly increased prices".
60% of oil price is based on speculation

The price of crude oil today is not made according to any traditional relation of supply to demand. It is
controlled by an elaborate financial market system as well as by the four major Anglo-American oil
companies. As much as 60% of today's crude oil price is pure speculation driven by large trader banks
and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control
of oil and its price. How? First, the role of the international oil exchanges in London and New York is
crucial to the game. Nymex in New York and the Intercontinental Exchange (ICE) Futures in London
today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do
so via oil futures contracts on two grades of crude oil - West Texas Intermediate and North Sea Brent. A third
rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a
daughter of Nymex, with Nymex president James Newsome sitting on the board of DME and most key
personnel British or American citizens.
I/L – Perception K/T Prices

Perception is key- oil prices are sensitive to assumptions about the demand for oil
The first two scenarios suggest that oil price projections may be particularly sensitive to assumptions
about the demand for oil. Moderate variations in global growth (½ per cent per annum stronger except in
China, where the variation is 1 per cent) could push the oil price up by an additional $4.50 by 2030
(scenario group 1), while an increase of 0.2 in the income elasticity of oil demand could lead to an oil
price some $13 higher (scenario group 2). In both cases, the magnitude of the shock imposed is plausible;
any GDP growth projections over a 25-year horizon will have significant error bounds associated with them,
and the range of estimates for long-run elasticities of demand with respect to income is sufficiently wide to
suggest that a 0.2 percentage point change relative to the baseline assumption is possible. Although the
scenarios presented in Table IV.2 are for positive shocks to growth and the income elasticity, negative
shocks are equally plausible (with the impact approximated by reversing the signs in Table IV.2). As
discussed in the annex, the model already assumes that the income elasticity of demand has declined since
the 1970s, consistent with falling oil intensity and on-going technological change. But this process could
continue over the next 25 years, resulting in even lower income elasticities.
I/L – Prices K/T Investment

High prices behind investment in oil
Kaplan 07 (Eben, Council of Foreign Relations [http://www.cfr.org/publication/8875/oil_prices.html] Oil Prices/
October 14, 2007)
Economic experts worry if the cost of oil climbs high enough, the rising prices could result in the kind of
global economic disruption associated with the 1973 Arab oil embargo. Slowing world economic growth
historically has slackened demand for oil, causing prices to plummet. So far, the recent rise in oil prices has
not dampened economic growth. “It would take much higher energy costs to cause a global recession,”
says Council Fellow Roger M. Kubarych. In fact, he says, “today's higher energy costs spur considerable
business investment in both the oil and gas industries to expand production, and within industry at
large to make processes more energy-efficient.”
Current prices fuel investment

Jenkins 08 (Holman, The Wall Street Journal
[http://online.wsj.com/article/SB121253600160243157.html?mod=todays_columnists] The Coming Oil Investment
Boom/ June 4, 2008)
But the biggest fools today may be those greenies who are clapping their hands over $135 oil as if this
somehow represents the beginning of the end of fossil fuels. High prices are not the equivalent of carbon
taxes – they will have the opposite effect in the long run, spurring investment and technological
progress to bring vast new resources of fossil energy into production. For instance, turning coal, oil sands
and oil shale into motor fuels, which is cost-effective at half of today's oil price, means massive additional
releases of CO2. It's the worst nightmare of the climate worrywarts.
I/L – Investment K ME Oil

Future oil reserves are concentrated in the Middle East
While global oil reserves are probably relatively ample, their distribution is likely to be increasingly
concentrated on the Middle Eastern members of OPEC, which already account for around two thirds of
global proved reserves. Outside the Middle East, newly discovered resources have tended to become
smaller and more expensive to develop, being increasingly offshore.
Investment key future oil reserves in the Middle East

Against this background, and while oil reserves will probably remain relatively ample, their distribution is
likely to be increasingly concentrated on the Middle Eastern members of OPEC, which already account
for around two-thirds of global proved reserves (Figure IV.4). However, with reserves concentrated in a
limited number of OPEC countries, where investment is not allocated according to market forces,
investment in the energy sector may not be sufficient.
***A2: High Oil Prices Bad***

A2: High Oil Prices Bad – A2: Offshore Drilling

Offshore Drilling Has Minor Effects on Ecosystems
Australian Institute of Petroleum 2007 (“Offshore Oil Drilling”, EARTH SCIENCE AUSTRALIA,
http://earthsci.org/mineral/energy/gasexpl/offshore.html, February 12, 2007)
The fluid is recycled through a circulation system where equipment mounted on the drilling rig separates out
the drill cuttings and allows the clean fluid to be pumped back down the hole. With few exceptions,
Australian wells since 1985 have been drilled using water-based drilling fluids, not oil-based. The ISRC
concluded that "drilling waste discharges have generally been shown to have only minor effects on
water quality and pelagic ecosystems". Evidence collected by the ISRC suggests that acute toxic effects of
drilling fluids on marine organisms are only found at very high concentrations. "Toxic effects on the
biota in the water column from such concentrations would only be present within a few tens of metres
from the point of discharge and only for short times after discharge". As the plume of drilling fluid and
cuttings falls to the seabed, it disperses, with 90 percent of it settling within 100 metres of the platform.
Soluble waste concentrations will have fallen by a factor of 10,000 within 100 metres and suspended
sediment concentrations by a factor of at least 50,000.
Offshore Drilling Safe Due to Advanced Technology

Environment News Service 2008 (“Bush, McCain Would Lift Ban on Offshore Oil Drilling”,
PROTECTING OUR ENVIRONMENT, http://protectingourenvironment.com/bush-mccain-would-lift-ban-
on-offshore-oil-drilling/, June 19, 2008)
Bush says that Offshore oil drilling can now be done safely. “Advances in technology have made it
possible to conduct oil exploration in the Outer Continental Shelf, OCS, that is out of sight, protects coral
reefs and habitats, and protects against oil spills,” he said today. “With these advances - and a dramatic
increase in oil prices - congressional restrictions on OCS exploration have become outdated and
counterproductive.”
Oil Causes Minimal Risks to Most Animals

Nixon 2008 (Robin, Environmental Author at LiveScience.com, “Oil Drilling: Risks and Rewards”,
YAHOO NEWS,
http://fe8.news.re3.yahoo.com/s/livescience/20080625/sc_livescience/oildrillingrisksandrewards, June 25,
2008)
In the wild, most animals quickly flush PAH, a toxin associated with oil wells, from their bodies - which
is why PAH rarely concentrates in the food web and is of minimal risk to humans. The animal's
justifiably panicked immune response to PAH can cause cancer - especially if the animal is exposed
continually by, say, living near an oil platform, explained Short.
No Impact Because of Safe Drilling Wastes

Snyder 2007 (Robert E., World Oil Analyst, “Environmentally Safe Drill Wastes”, bNET,
http://findarticles.com/p/articles/mi_m3159/is_1_223/ai_82137472, January 2007)
A Calgary-based waste handling/disposal company has solved the environmental problems of oil
exploration by creating a complete detoxification system that converts harmful drilling waste into
biodegradable, environmentally friendly matter. The biotreatment process, recently designed and
patented worldwide by Unique Oilfield Technology Services (UNOTEC) is already being used by operators
such as BP Canada and Anderson Exploration, and is promising to "change the face of the energy sector
by making oil exploration as environmentally friendly as possible."
A2: High Oil Prices Bad – A2: World Econ – No Impact

The US’s borrowing frenzy makes economic decline inevitable- we are in a worse position
then we were in the 90’s
Fout 2007 , TheStreet.com Political Correspondent, 6/25/07
(John, Americans Have Deficit Attention Disorder, TheStreet.com, http://www.thestreet.com/newsanalysis/opinion/10364595.html?puc=googlefi, access: 6/28/07)
The economy has not appeared as an issue in this election cycle yet. But I believe it will. When Greenspan lowered interest rates in 2001, he averted any
serious problems caused by the dot-com bubble and 9/11. (There had been seven rate cuts before the attacks.) But a
fair amount of capital
moved into real estate because of low interest rates. Many fear another bubble formed in this market,
and while insufficient time has not passed to determine whether or not it will have a detrimental effect
on the overall economy, I believe it will. The subprime lending bubble will come back to bite us and become a campaign issue. That is
why I think it is a mistake of the media, the politicians in Washington and the presidential candidates not to give our deficit the conversation it needs. I agree
with the argument made by Robert Hormats, a vice president of Goldman Sachs, in The Price of Liberty that the funding of our government obligations will
be critical to our nation's success in the future. (See his April 19 Open Book column here.) Our
nation faces much more difficult
circumstances now than it did in the early 1990s. If we choose not to pursue a sensible strategy,
investors may choose it for us -- by refusing to fund our profligate spending. This scenario concerns us
all. Whether we like it or not, we will be fighting the effects of terrorism for many years The financial
obligations for this struggle will prove severe even if we were to withdraw our troops from Iraq, as suggested
by the bipartisan Iraq Study Group
Recessions are a normal, stabilizing action of the economy.

Michael Cox, Chief Economist for the Dallas FRB, January 9, 2002. INVESTORS BUSINESS DAILY
http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=159054&secure=4503
Recessions are part of the system. Periods of economic slowdown serve a purpose in a capitalist
economy. The pauses allow for time to correct excesses - rising inflation, bloated inventories, excess
capacity, supply bottlenecks and misallocation of resources. Boom times hide the excesses, and they're
wrung out during the down months. In recession an economy reorganizes itself, reallocating resources to
emerge more efficient and productive. Layoffs are traumatic, but labor and other resources are freed for
eventual use in the next wave of enterprises.
A2: High Oil Prices Bad – A2: World Econ: No $200 Barrels
Prices Expected To Stabilize at $120 a Barrel For The Next Two Years
The Associated Press 2008 (“Ahead of the Bell: Deutsche Bank Boosts Oil Target”, CNBC,
http://www.cnbc.com/id/25410070/for/cnbc, June 27, 2008)
NEW YORK - An economist with Deutsche Bank raised his crude price outlook Friday, prompting
revisions to price targets on some of the world's largest oil companies. Adam Sieminski, chief energy
economist for Deutsche Bank, now expects crude prices around the $120 per barrel mark for the next
two years, and prices to stabilize around $100 per barrel by 2010. The new estimates are due to a
delayed reaction of worldwide supply-and-demand elasticities to high prices, and the jump in
exploration and development costs, the bank said. "Unsurprisingly, the revised commodity price deck has
significant impact on future earnings and company valuation," analyst Paul Sankey said in a note to clients.
Sankey boosted his price target on Chevron to $125 from $103 and his 2008 earnings forecast to $12.38 per
share from $9.92 per share. Analysts polled by Thomson Financial expect, on average, earnings of $11.69 per
share for the year. Sankey raised his ConocoPhillips target to $110 from $96 and his 2008 earnings forecast
to $14.63 per share from $10.69 per share. Analysts expect profit of $11.93 for the year. Sankey warned,
however, that "the potential for government change in Washington, D.C., is a major risk for the 'Big 5' oils —
ExxonMobil, Shell, BP, Chevron and ConocoPhillips — particularly in the lead up to this year's election."
A2: High Oil Prices Bad – A2: Inflation (1/2)

No risk of global recession
Kaletsky June 30 (From The Times in June 30, 2008- “Forget the credit crunch, oil is the key to world
recovery” by Anatole Kaletsky: Economic view
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article4237945.ece accessed June 30, 2008)
There seem to be three main anxieties linked to the present bear markets: the fear of recession, the risk
of inflation and the spiralling price of oil. The possibility of a serious US recession, which has dominated
most media and market comment since the credit crunch began in America last summer, is in my view the
least plausible of these threats. Statistics suggest that the US economic slowdown is already at or near its
low-point and the risks of a serious recession are rapidly diminishing. GDP, consumption, industrial
activity and employment have all been consistent with a fairly typical mid-cycle slowdown and none
have fallen sufficiently to signal even a mild recession. In short, the cautiously optimistic assessment of last
week's Federal Reserve communiqué seems to be justified by the statistical facts: “although downside risks
to growth remain, they appear to have diminished somewhat” since the last FOMC. Of course it is possible
that the US economy will deteriorate in the months ahead, but this seems unlikely, given the huge tax
cuts and interest rate reductions to which American consumers are likely to start responding in the second
half of this year. Britain and Europe, on the other hand, are only just entering the bust phase of the
credit and housing cycle that started in America almost two years ago. The scale of these credit busts is
likely to be at least as severe in the UK and Europe as it was in America, for the simple reason that the
credit and housing booms were even bigger on this side of the Atlantic. Moreover, exchange-rate policies
imply that US industry and employment will recover mainly at Europe's expense. All this means that, in the
year ahead, a serious recession is a much bigger threat for Britain and Europe than in America. Having
said this, however, there still seems a decent chance that Europe and Britain may avoid recessions for
the same reason as the US - consumers and non-financial businesses are turning out to be much less
vulnerable to credit tightening and falling property prices than widely assumed.
Inflation not a threat- just speculation

Kaletsky 08 (From The Times in June 30, 2008- “Forget the credit crunch, oil is the key to world recovery” by
Anatole Kaletsky: Economic view
But if a global recession is likely to be avoided, why are investors in such a funk? The answer is that most
now see inflation as a much greater threat than recession. This makes sense, but only up to a point. The
bad news is that inflation is much harder to cure than weak growth or unemployment because the remedies
required - higher interest rates and cuts in government spending - are painful to implement.The good news is
that inflationary pressures in the US, Britain and the eurozone are still fairly weak - and will get
steadily weaker in the year ahead, as house prices keep falling, consumption growth slows and
unemployment drifts up.I suspect that what really worries investors in the US and Europe is not really
the likelihood of high inflation, but the risk that central banks will over-react to inflation fears. If
central banks are paralysed by fears of igniting inflationary expectations they may stop supporting
financial institutions through the credit crunch. This idea seems to be behind the panic selling of
financial stocks. In addition, there is a growing worry that developing countries, including China, will be
overwhelmed by inflation, like Italy and Britain in the 1970s, instead of learning to tame it as did
Germany and Japan. A long period of disappointing performance from the developing countries would be a
big shock to the world economy, since global growth depends increasingly on emerging markets. US
consumption growth, while it is not collapsing, is bound to be much weaker in the next decade than it was in
the last.
A2: High Oil Prices Bad – A2: Inflation (2/2)

Inflation not a threat
Kaletsky 08 (From The Times in June 30, 2008- “Forget the credit crunch, oil is the key to world recovery” by
Anatole Kaletsky: Economic view
On this interpretation, the real worry for financial markets is neither recession nor inflation, but rather
the policy paralysis caused by $140 oil. The oil shock has created a pincer movement of inflationary
and deflationary pressures that is not only threatening the world economy but also disabling the policy
tools of Western governments and central banks. This is why I have always said that another oil shock is a
far greater threat to the world economy than any conceivable credit crisis.The future of the world economy
now depends entirely on whether America and Europe can stop the feeding-frenzy among investors that
suddenly pushed oil above $100 four months ago, even as demand began to collapse. What is ailing the
world economy is now quite simple: it is $140 oil. If investors come back to their senses, the oil price will
fall back below $100 after the summer and the second half of this year will prove less traumatic than
the first. But in the unlikely event that oil is still trading above $140 by the year-end, all bets are off on
world economic prosperity.
A2: High Oil Prices Bad – Inflation – Down

Global inflation slowing
Informity News 6/30 http://www.informify.com/top-stories/50-economy/270-us-global-economies-face-inflation-federal-reserve-holds-steady

Policy makers around the world must monitor the situation carefully for signs that the increases in relative prices
globally do not generate persistently higher inflation," said Kohn last Wednesday. (International Herald Tribune,
6/29/08) Recent interest rate hikes in Mexico, India and the EU may indeed slow global inflation—
moderately.
US, Europe are fighting inflation
Informity News 6/30 (http://www.informify.com/top-stories/50-economy/270-us-global-economies-face-inflation-federal-reserve-holds-steady)

INTERNATIONAL INFLATION: The Federal Reserve System announced its plan to keep interest rates steady
for the first time since it began lowering them last September. Analysts say this move indicates a switch of focus—from
stimulating a recessionary economy to stemming spiraling inflation. The European Union, Mexico and India also plan
to address their inflation with interest rate increases, which may boost the U.S. economy. The Fed announced last Wednesday
that it would not lower interest rates any further, and may in fact raise them in the near future. The European Central Bank (ECB) has announced
a .25% interest rate hike in July in an effort to curb growing inflation in the European Union. With the international exchange rate for the U.S.
dollar at an all-time low, increased interest rates abroad may strengthen the dollar's value.
Europe and US fighting to slow global inflaiton
Christian Science Monitor 7/1 (http://www.csmonitor.com/2008/0701/p01s05-usec.html)

Global inflation is growing harder to ignore. Oil, which has become the main symbol of global inflation, traded at a new record
Monday. And European inflation has reached highs never seen under the euro currency. By one new survey, 3 billion people – 42 percent of the
world's population – are experiencing double-digit annual rises in consumer prices. That's why many nations have begun to
tighten their credit reins in an effort to curb inflation. This Thursday, forecasters expect the European
Central Bank to join the battle by raising its interest rate. Sweden and Indonesia may do the same that day.
Even the US Federal Reserve has been forced to consider a tighter policy.
Global inflation will slow
Calgary Herald 6/30

(http://www.canada.com/calgaryherald/news/story.html?id=c14668e1-b0f6-4f70-bee2-7a630a75ece5)
In light of the ``clear and present threat'' of global inflation from soaring energy and food prices, and rising wages, and with
interest rates in most countries at historically low levels, it would ``seem appropriate'' that central banks now lean towards a
tighter monetary policy of higher interest rates. Still, because circumstances in different countries vary, there is no `òne size fits
all'' policy prescription, it said. And should the global economy slow sharply, as it fears it could, and inflationary
pressures in turn ease, central banks would have to ease off their attack on inflation, it added.
A2: High Oil Prices Bad – A2: Pipelines

Pipelines Are Environmentally Friendly
Zhu 2006 (Ling, China Daily Editor, “Gas Pipeline Wins Environmental Award”, GOV.cn,
http://english.gov.cn/2006-06/10/content_306173.htm, June 10, 2006)
The longest gas pipeline running through China from the west to the east has won the country's top
environment-friendly project award for its effective protection of the environment. This is the first time
that China has issued environment-friendly awards to construction projects, aiming to encourage more
constructors to follow suit.The 3,838-km-long gas pipeline, starting from west China's Xinjiang Uygur
Autonomous Region and ending in east China's port city of Shanghai, runs through various ecologically
fragile areas and the country's three longest rivers. Since the launching of the project in 2002, the
China National Petroleum Corporation has taken various steps to conserve the environment along the
line. "The pipeline bypasses environmentally-sensitive areas and important historical cultural sites,
and all the damaged environment resulting from the construction has been restored," said Pan Yue,
deputy-director of SEPA, at the ceremony.
Pipelines Go Beyond Federal Standards

Pope 2006 (Charles, P-I Washington Correspondent, “Pipeline Safety Sees “Good Step Forward””,
seattlepi.com, http://seattlepi.nwsource.com/local/272742_pipeline05.html, June 5, 2006)
"Many forward-thinking pipeline companies have taken pipeline safety seriously enough that they are
now leading by example and operating and maintaining their pipelines in ways that go beyond the
minimum federal standards," said Lois Epstein, an engineer and analyst for Cook Inlet Keeper, an
environmental group that has been deeply involved in pipeline issues for years. "Everyone should celebrate
this progress, while acknowledging that continuous evaluation and improvement can make pipelines
considerably safer yet and thereby restore the public's trust in pipelines," said Epstein.
A2: High Oil Prices Bad – A2: Food Prices – No Link

Oil isn’t key - Ethanol is the Main Contributor to High Food Prices
Goldman 2008 (David, CNNMoney.com staff writer, “Food Price Spike: Is Ethanol to Blame?”,
CNNMoney.com, http://money.cnn.com/2008/06/27/news/economy/ethanol_food_prices/, June 27, 2008)
The nation's corn crop was hurt by an unusually rainy spring. More recently, the havoc-wreaking floods in
the top Midwestern corn-growing states wiped out farms and threaten future harvests. "It seems pretty clear
that we'll have a substantially lower planted acreage than last year, and we'll probably have a lower yield
too," said former U.S. Department of Agriculture chief economist Keith Collins, who was commissioned by
Kraft Foods to study food prices. "We're looking at a good drop in production, and as a result, corn prices
will spike." Now the rising price of corn is fueling a movement to reduce the amount of corn ethanol that is
added to American gasoline. Ethanol's primary component is corn, so demand for the crop has soared since
the ethanol standard was enacted in 2005 and increased with the Energy Independence and Security Act of
2007. The government passed the legislation in an effort to support the U.S. farm and ethanol industry, to
promote cleaner-burning fuels and to reduce the nation's dependence on foreign oil. But in late April, Texas
Gov. Rick Perry petitioned the Environmental Protection Agency to grant a 50% waiver on the nation's 9
billion gallon corn-based Renewable Fuel Standard. "While the RFS was a well intentioned policy, it has had
the unintentional consequence of harming segments of our agriculture industry and contributing to
higher food prices," Perry wrote in his petition. The EPA has opened a period of public comment about the
standard and will make a decision on the waiver by July 24. The EPA requires that 7.76% of gasoline
products be blended with ethanol in 2008. That amounts to about 9 billion gallons U.S. ethanol producers
have to put out this year. Next year, they will have to produce 10.5 billion gallons. Gov. Perry said the the
"artificial pressure" on the corn crop created by the mandate threatens "irreparable damage" to livestock
operations across the country. Ethanol puts pressure on food prices Critics of the program argue that a corn
shortage could be exacerbated by the government's demand for ethanol, thus raising food prices even further
for consumers. "A lot depends on how badly this weather has devastated the corn crop," said Thomas Elam,
an agricultural economist at Indiana University who was commissioned by the Balanced Food and Fuel
Coalition to release a study on the matter. "A smaller crop will be devastating to meat, dairy, and poultry
producers if the Renewable Fuels Standard is maintained, and consumers will suffer as food and fuel costs
rise." About 5% of the world's corn supply goes to producing bio fuels - representing a whopping three years
of growth in typical crop production, according to Elam. "Corn will have to go to at least $8 a bushel to
squeeze out enough food use to keep up with corn for ethanol," he said. "Food prices will be significantly
impacted by corn if RFS goes to 10.5 billion gallons for 2009." How significantly? Collins said food
costs could rise 23% to 35% above the normal annual inflation rate of 2.5% over the next two to three
years if the RFS mandates are not reduced. Elam said food price inflation rate could go as high as 7%
without a mandate reduction. The USDA also maintains ethanol has an impact on food prices, even if it is an
indirect link. "Higher ethanol production definitely and directly raises the price of corn," said USDA
economist Ephraim Leibtag. "Higher corn prices have an impact on food prices on the retail level." By
contrast, if the government were to reduce the RFS by just half, both Elam and Collins agree that corn prices
would fall $2 a bushel, which could save more than $9 billion in feed and food costs. The case for the
ethanol standard Not everyone is convinced that ethanol poses such a definite threat to food prices.
"Collins' conclusions are at odds with the conclusions of a number of other ethanol studies," said Geoff
Cooper, director of research at the Renewable Fuels Agency.
A2: High Oil Prices Bad – A2: Food Prices – Prices Low
( ) Food prices going through a revolution – we now have cheap food.
Minten 8 (Bart, Senior Research Fellow in the New Dehli office of the International Food Policy Research
Institute, http://www.medicalnewstoday.com/articles/112137.php)
Most people don't think twice as they pass spring apples from the southern hemisphere as they enter the
supermarket, but they are participating in a cheap food revolution that has swept the industrialized world
over the past couple of generations. The supermarket is the last step in a complicated global process that has
changed every aspect of how we produce and consume food. In theory, the arrival of supermarkets in a country
should bring with it the "cheap food" that we have enjoyed for so many years.
( ) The price of chicken has hit an all-time low.

Colquhoun 7/1(telegraph.co.uk/news/uknews/1574617/The-shameful-price-of-cheapfood.html)
We are living in the era of cheap food, when you can pick up a chicken in the supermarket for less than the
price of a pint of beer. But there is a hidden cost: of the 850 million birds reared in Britain every year, only five per
cent have had anything approaching a comfortable life. The vast majority are intensively reared, in prison-camp
environments. Now two of our most celebrated campaigning chefs, Hugh Fearnley-Whittingstall and Jamie
Oliver, are about to try to change our minds, and to ensure that the 25 kilos of chicken meat we each consume
a year have come from birds that were decently treated. Hugh Fearnley-Whittingstall and Jamie Oliver aim to
convince us how wrong current chicken production is Starting next week, Channel 4 is devoting a season of
programmes to the nation's eating habits. There will be a one-off Oliver special - Jamie's Fowl Dinners - in which he
demonstrates the realities of industrial chicken production, while Fearnley-Whittingstall's aptly titled Hugh's
Chicken Run will follow his attempts to set up an intensive farm - in the course of which he is reduced to tears.
A2: High Oil Prices Bad – A2: Corruption

Gulf Oil Money Solves Corruption
Reuters 2008 (“Gulf Oil Economies Join Forces”, YOUR CAREER GUIDE,
http://www.yourcareerguide.co.uk/article.asp?aid=484, June 16, 2008)
"Unlike the previous oil booms of the 70s and 80s this time the region is investing in its own economy and its
own future. I think they do recognise that they are dependent completely on oil and gas so they are trying to
shift away," said Dubai-based Pean, who advises family-owned businesses in the Middle East. "You are
going to see more and more global leaders emerge from this region and the sovereign wealth funds are
going to become a major force but they will be good corporate citizens and gradually the governance
and transparency is going to become more open...," he added. Pean said 1.9 trillion dollars worth of
investments were either on the way or had been announced for the next 7 years in the oil-and-gas producing
Gulf Cooperation Council (GCC) countries, grouping Saudi Arabia, Kuwait, the United Arab Emirates,
Bahrain, Oman and Qatar.
A2: High Oil Prices Bad – A2: U.S.-China Oil War

No U.S.-China oil war – incentives for cooperation are high
Zweig and Jianhai 5 (David, director of the center on China’s Transnational Relations at the Hong Kong University of Science and Technology, and
Bi, postdoctoral fellow at the same location, Foreign Affairs, “China’s Global Hunt for Energy”, September/October,
http://fullaccess.foreignaffairs.org/20050901faessay84503/david-zweig-bi-jianhai/china-s-global-hunt-for-energy.html)
A much bigger issue is how the magnitude of China's energy needs affects the international oil market:
China's demand is so great and likely to get much greater--that it could affect global supplies and
prices. Yet it is precisely because China and the United States are both great oil guzzlers that there are
grounds for cooperation. Some energy experts, such as Amy Myers Jaffe at Rice University, argue that big
consumers can best protect their interest in keeping oil supplies steady and prices predictable by joining
forces to counterweigh the influence of producers rather than by trying to forge privileged relations with them. One strategy is to create
joint reserves of oil. Members of the International Energy Agency, an organization of 26 industrialized states, including the United
States, created to manage energy emergencies, have already contributed to such a common pool. And some analysts, such as Herberg,
have urged Congress to invite China to participate.
Similarly, Washington and Beijing share a common interest in securing open sea-lanes to ensure the
unhindered passage of cargo ships. That both governments want stability in the Malacca and Taiwan
straits does not pit them against each other--just the opposite. Moreover, developing an oceangoing navy to defend
far-off sea-lanes is an arduous and expensive project, which will take Beijing decades to complete. In the meantime, China must
cooperate with the United States to maintain its sea-passage security, in particular the security of its
energy shipping lanes. This should not be a problem, so long as China and the United States avoid war over Taiwan.
US and China won’t break cooperation over oil
Associated Press 8 (6/17, http://www.msnbc.msn.com/id/25212576/)

Top finance officials from the United States and China pledged greater cooperation Tuesday on a range
of economic issues from dealing with soaring energy prices to coping with the global shocks from America’s
subprime mortgage crisis. However, it was clear that the fourth round of high-level economic talks would
leave both nations far apart on a number of contentious subjects from U.S. unhappiness over the slow pace of
China’s economic reforms to Chinese concerns about increasing protectionist sentiments in the United States.
Treasury Secretary Henry Paulson hoped that the two days of talks will produce enough results to persuade
the next administration to continue the meetings. It was Paulson’s brainchild to start the twice-a-year
discussions in 2006. Chinese Vice Premier Wang Qishan, the head of the Chinese delegation, said he
believed that real progress had been made in dealing with contentious issues such as currency and the
trade deficit, and he urged patience going forward as China implements necessary reforms. Wang said the
two countries needed to avoid “complicating and politicizing economic issues.” The Chinese have grown
concerned about a number of bills introduced in Congress that would impose economic sanctions on China
unless the country moves more quickly to allow its currency to rise in value against the dollar. “Our
cooperation is an irreversible and unstoppable current,” Wang said, speaking through an interpreter.
“China needs the United States and the United States needs China.” In addition to a broad sampling of
President Bush’s Cabinet and their counterparts from China, the talks also included Federal Reserve
Chairman Ben Bernanke and the head of China’s central bank, Zhou Xiaochuan. Paulson said it was critical
that the United States and China, the world’s two largest importers of oil, increase their cooperation
on energy issues in the face of increased demand and record-high oil prices. He said the two sides would
work to flesh out more details of a 10-year cooperative agreement reached in Beijing in December.
A2: High Oil Prices Bad – A2: U.S.-China Oil War

China and the US will cooperate to solve energy crises.
Hu 8 (Richard, Brookings Institute visiting fellow, http://www.brookings.edu/opinions/2008/03_energy_hu.aspx)
The United States and China are the largest and second largest energy consumers in the world, respectively. Last year China was a net-importer of 159.28
million tons of crude oil, about 46% of its total consumption. The size of U.S. petroleum imports was 3.2 times larger than those of China, and Americans
Beijing and Washington have similar
depend on foreign sources for over 60% of the energy they consume. With that in mind,
concerns in their energy policies and face the same set of challenges: high dependency on foreign sources
of energy, rising energy-related environmental impacts, and energy conservation and efficiency, in addition to
the effect on their economies of energy price spikes. Although China and the United States do not rely on
each other for energy supplies, as the two largest oil consuming countries they are natural “energy
bedfellows” in coping with similar challenges. They must cooperate, through joint or parallel action, to
keep global energy supplies open, secure, and at an affordable price level. Neither country can hope to
achieve much without the support of the other. Both would win if they choose to cooperate rather than
confront each other in their pursuit of energy security. The Sino-U.S economic relationship and the price
of energy Chinese economic growth and the U.S. economy have become highly interdependent with
each other, with a bilateral trade volume of $386.7 billion in 2007. The U.S. economy has enjoyed an
average 3.5% growth since 1992 with relatively low inflation. On the whole the United States has benefited
greatly from a steady inflow of low-priced “Made in China” products, which has helped to keep the overall
price of consumer goods low and consumer confidence high. On the other side of the linkage, Chinese
economic growth has also benefited from its strong exports to the American market over the years. In
assessing this interdependent economic relationship, it should not be forgotten that a sufficient and affordable
energy supply and an abundant supply of cheap labor in China have been the key ingredients to this
successful story. China’s economic miracle is based on labor-intensive, low-wage manufacturing and robust
exports. Without a sufficient and affordable energy supply, this path of export-driven growth would
encounter serious problems, and so would the Sino-U.S economic relationship, in its current form. Of
course, as the world’s largest and fourth largest economies, both the U.S. and China are capable of
absorbing the economic impact of the recent oil price hikes. Indeed, to some extent, oil price hikes are
not completely bad news for either. It would be conducive for both economies, particularly for the
Chinese economy, to meeting government policy objectives of energy efficiency and energy reduction,
environmental conservation, and reduction in dependence on foreign sources of energy. It is exactly in
these policy areas that the two countries require dialogue rather than competition. China-U.S. energy
policy dialogues The present Sino-American Energy Policy Dialogue (EPD) was established between
China’s National Development and Reform Commission (NDRC) and the U.S. Department of Energy
(DoE), in May 2004, to facilitate policy-level bilateral exchanges of views on energy security, economic
issues, and energy technology options. Before the EPD was in place, the two governments also launched
an Oil and Gas Industry Forum in 1998 to facilitate opportunities for government and industry leaders
from both countries to have frank discussions about their respective needs in the oil and gas sector. At
the international level, both countries have also been involved in multilateral forums, such as the Asia-
Pacific Economic Cooperation (APEC), the Asia-Pacific Partnership on Clean Development and Climate
(APP), and the International Energy Forum’s Joint Oil Data Initiative (JODI). In December 2006, the EPD
became part of the newly-launched China-U.S. Strategic Economic Dialogue (SED). In his inaugural
speech to the SED, Treasury Secretary Henry Paulson stated that energy cooperation was one of the three
pillars of the SED, together with “maintaining sustainable growth without large trade surpluses” and
“continuing to open markets to trade, competition, and investment.” In his view, “[both countries] are
committed to developing the use of cleaner, more abundant energy sources and we will talk about the
best ways to do that.”[1] As the two largest energy consumers in the world, it is useful for both
governments to increase mutual understanding of each other's energy policies, programs, and priorities,
and the annual EPD has served that purpose since 2004. In the previous rounds, EPD discussion topics have
included energy policy making, supply security, power sector reform, regulatory issues, energy efficiency,
and the development of energy technology. In the dialogue, the Chinese side got familiarized with various
U.S. policy initiatives under the Energy Policy Act of 2005 and what the U.S. government does to
encourage the commercialization of advanced technology in the energy sector. For Americans, it was a
good opportunity to learn from the Chinese energy officials about the rationales behind China’s policy
of reducing energy intensity in the economy under China’s five-year planning cycle. Another EPD
achievement is that China was encouraged to establish a strategic oil reserve as a hedge against supply
disruptions: strategic oil reserve projects are currently under way at four different locations in China.
A2: High Oil Prices Bad – A2: Democracy – Global Democracy Up

Democracy is spreading from foreign aid.
Op Ed News 2/11 (“Foreign aid sows hope for democracy”, ln)

AT THE start of a seven-country visit to Africa that will take me to Ghana, Benin, South Africa, Botswana,
Mozambique, Zambia, and Tanzania, I find there are two things that people at every level want to talk about.
The first is the Barack Obama phenomenon, and the second is the Millennium Challenge Initiative. In his
recent State of the Union address President Bush called on Congress to fully fund this program. And he was
right to do so. While the Millennium Challenge might not be familiar to the average American, in Africa
this program is recognized as one of this country's most important initiatives to encourage democracy
through development in parts of the world that could use a healthy dose of both. In a nutshell, the
program is meant to provide countries that are serious about democracy some of the resources they
need to improve the quality of life and expand opportunity. To date, the proposals presented for support
have included plans to build bridges, roads, ports, hospitals, and schools. The projects are more than bricks
and mortar. They are monuments to hope and symbols that America cares. There is a major budget battle
brewing in Washington that could exact a heavy toll on developing countries and America's global standing.
The bone of contention is the level at which to fund the Millennium Challenge Corporation. Bush wants to
fund it at $3 billion. Senator Patrick Leahy of Vermont and Representative Nita Lowey of New York, who
control the congressional purse strings for foreign aid programs, want to fund it at $1.2 billion or $1.8 billion,
respectively. An initiative this valuable should not become partisan foil or political fodder. Nor can cuts be
justified for budgetary reasons. Funding this program for one year at the level requested by the administration
is a little more than the United States spends in one day in Iraq and Afghanistan. In terms of protecting
America's long-term security interests, the Millennium Challenge Initiative inarguably gives the United
States a "bigger bang for the buck." There is an old African proverb that is applicable to this partisan tussle
on Capitol Hill - "when elephants fight, it is the grass that suffers." The grants that have been given to
governments through the Millennium program have had a real grass-roots impact. When the president and
Congress fight over programs like this, it is the grass roots that suffer. It is the countries with too many
desperate people, desperately trying to make it, that ultimately are bludgeoned in a battle like this. The
excitement and energy that the initiative's support has aroused in places like Ghana and Tanzania is real. The
governments in those countries are gearing up to build badly needed infrastructure. What a program
like this has meant for the Cape Verde economy is tangible. This program is one of America's most
effective ways of expanding opportunity and promoting stability, both of which are the best antidotes
to the radicalism preached by groups such as Al Qaeda. The Millennium Challenge Corporation has
done more to enhance American prestige and inspire a greater sense of hope than anything this
country has done in a long time. It stands in stark contrast to the angst and anger caused by the
incursion into Iraq. Has the implementation of the program been hampered with fits and starts? To be sure,
it has. But, having said that, the countries that benefit from the program as well as the corporation itself are
better prepared than ever to ensure that this initiative reaches its full potential.
A2: High Oil Prices Bad – A2: Democracy

Oil Doesn’t Trade Off With Freedom- Oil Helps Build Democracy
Kraus and Smith 2005 (Joseph and Benjamin, Paper presented at the annual meeting of the
southwestern Political Science Association, “When Oil Lubricates Democracy: Transition and Consolidation
in Latin America and Africa”, allacademic.com,
http://www.allacademic.com/meta/p_mla_apa_research_citation/0/8/8/9/5/p88959_index.html, March 2005)
In this paper we address a number of arguments: tying oil wealth to democracy, including those stemming
from both the social requisites and historical legacy traditions in democracy studies. The unique set of cases
that we address here sheds valuable, and in some cases disconfirming,light on many of those theoretical
conclusions. In the second section, we develop a set of propositions underlining the conditions under which
democracy is likely to emerge, and to survive, in oil-exporting countries. In the third and fourth
sections, we compare two cases which experienced democratic transitions but failed to
consolidate (Congo and Nigeria) to three cases in which transitions led to democratic
consolidation (Ecuador, Trinidad, and Venezuela), respectively. Finally, we address the
problems that the latter three countries have faced since 1990 and point to some ways in which
oil both helped to cement democratic politics and to set the stage for these political conflicts.
A2: High Oil Prices Bad – A2: Democracy- Terrorism

First, their claim that direct US leadership will solve terrorism is wrong multilateralism
must be used to rid the world of Islamic extremism.
Krepon 2004 (Michael, Co-founder of the Henry L. Stimson Prior to co-founding the Stimson Center, Krepon
worked at the Carnegie Endowment for International Peace, the US Arms Control and Disarmament Agency during
the Carter administration, and in the US House of Representatives “Is Dominance Enough? Countering Terrorism
and WMD”, Henry L. Stimson Center, 2004, http://www.stimson.org/pub.cfm?id=185)
Just as a "combined arms" approach increases the likelihood of success on the battlefield, a "combined
efforts" approach is needed to rid the world of Islamic extremism and the most deadly, indiscriminate
weapons. The strategic concept of military dominance can produce successes, but it constitutes a
severely skewed approach to a multifaceted problem. The use of force is not widely applicable to
proliferation threats, and the pursuit of unfettered dominance corrodes rather than builds international
cooperation. The application of power projection may be required, but if employed unwisely, it
generates more terrorist threats than it foils. It also risks heavy casualties, and places great burdens on
the societies liberated from tyrants. The more the strategic concept of dominance is actually
demonstrated, the more it exhausts or alienates the countries waging, receiving, and observing its
effects.
Second, the threat of Islamic extremism the greatest to the whole world only a shift to
multipolarity can prevent the wars that come from Islamic extremism.
Foxman 2006 (Abraham H., National Director of the Anti-Defamation League, “The Threat of Islamic
Extremism”, To the ADL National Commission Meeting, October 2006)
Today I want to speak about another, greater threat to us – to democracy, to America, to the State of
Israel and Jewish people, indeed to the world – the threat of Islamic extremism. History will record the
20th century as one of triumph and tragedy…of miracles and massacres…of hope to make life better
through inventions and technology and mostly, of the horrors of the Holocaust that destroyed the life
of 6 million Jews and a war that destroyed millions of others. This 21st century is starting out with a clash
of cultures, a clash of faiths -- Islamists against Western and Judeo-Christian values. This looms ominously
as the greatest threat to the safety of the world – to the safety of world Jewry and world peace. Radical
Islamists are arming their faithful with hate and rage, with a goal toward dismantling democracy and
creating a world ruled by Islamic law. This threat must be confronted with the same resolve that brought
triumph for democracy and freedom over fascism and Communism. This threat is especially dangerous
because its roots are in religion, thus there is no way to reason with it, as we, the Jewish people, know
too well from our history. Al Qaeda's chief in Iraq made our blood run cold when he said "killing the
infidels is our religion, slaughtering them is our religion, until they convert to Islam or pay us
tribute." How do you reason with these thoughts? How do you debate? How do you argue? How do you
dialogue?
A2: High Oil Prices Bad – A2: Leadership – A2: Impacts

US primacy fails to protect against the proliferation of WMDs
Krepon 02 (Michael, Founding President Henry L. Stimson Center, arms control and asymmetric warfare,
disarmament.un.org/rcpd/pdf/5cnfkrepon.pdf)
This is not a good time to adhere to Cold War formulations for and against arms control. The incoming
Bush administration took office with fixed views about the efficacy of treaties, nuclear weapons, and missile
defenses – and with many questions about the efficacy of CTR programs. The administration’s
reassessment has wisely led to a reaffirmation of the value of these programs, but its approach
remains unbalanced in significant respects. US primacy is insufficient to reduce the dangers
associated with proliferation, asymmetric warfare, and terrorism. When primacy is accompanied by
the unraveling of treaty regimes, security is weakened.
The wars and deterrance that are inherent with US hegemony would limit our response
time, which would destroy our ability to stop proliferation of WMDs
Corr 03 (Anders, department of government harvard "american primacy and offensive posture:a reply to stephen
walt." belfer center for science and international affairs, November)
In order to ease international fear of American military primacy, Stephen Walt (2002) prescribes decreasing
US military mobility (an offensive capability) in favor of localized defensive forces -- ground troops and
tactical aircraft (primarily defensive capabilities). "United States ground troops and tactical aircraft
could be deployed overseas to defend key allies, as they currently do in Japan, Germany, and South
Korea," writes Walt. "By eschewing large offensive capabilities (such as long-range bombers), the United
States would appear less threatening to others and would be less likely to provoke defensive reactions"
(148-9). While such a defensive position is entirely appropriate for a lesser power concerned primarily
with providing security to itself, it is not effective for the provision of security to an international
system. Such a decrease in mobility would damage the US ability to respond in a timely manner to
surprise violations of the international order by rogue states such as Iraq or even large powers such as
China. Decreasing the mobility of troops would decrease the deterrent of what limited stationary troops are
located with close allies such as South Korea or Taiwan. Defending these allies requires that forces quickly
move to the theater of conflict. The forces currently in place are too thin to defend those theaters without
rapid reinforcements from distant locations. Military intervention in humanitarian crises and civil wars
must often be rapid to gain effect. A slow US response to civil war or genocide may be no response at all.
Most importantly, a defensive posture would deny the US the ability to fight wars of prevention
against surprise weapons of mass destruction (WMD) proliferation. If intelligence is received that a
state is quickly developing a WMD capability that can strike the West and its allies, the US military
necessarily requires speed in eradicating the threat and upholding international treaties of
nonproliferation. A defensive conventional posture would protect the US in the short-term, but it
would not give the US the ability to deter WMD proliferation that threatens the international system
and long-term US national security.
A2: High Oil Prices Bad – A2: Leadership – A2: Links (1/2)
US Leadership Strong Despite High Oil Prices
Engardio 2008 (Pete, Business Week International Staff Writer, “Is U.S. Innovation Headed Offshore?”,
BUSINESS WEEK,
http://www.businessweek.com/innovate/content/may2008/id2008057_518979.htm?campaign_id=eu_May13&li
nk_position=link44, May 7, 2008)
To those worried about America's ability to compete in the 21st century, the trend is alarming: Just as key manufacturing industries fled offshore in the
1970s and '80s, U.S. companies are now shifting more engineering and design work to low-cost nations such as China, India, and Russia. Surely, innovation
itself must follow. Apparently not, according to a new study published by the National Academies, the Washington organization that advises the U.S.
government on science and technology policy. The 371-page report titled Innovation in Global Industries argues that, in sectors from software and
semiconductors to biotech and logistics, America's lead in creating new products and services has remained
remarkably resilient over the past decade—even as more research and development by U.S. companies is
done offshore. "This is a good sign," says Georgetown University Associate Strategy Professor Jeffrey T. Macher, who co-edited the study
with David C. Mowery of the University of California at Berkeley. "It means most of the value added is going to U.S. firms,
and they are able to reinvest those profits in innovation." The report, a collection of papers by leading academics assessing the impact of
globalization on inventive activity in 10 industries, won't reassure all skeptics that the globalization of production and R&D is good for the U.S. One drawback is that most of the
conclusions are based on old data: In some cases the most recent numbers are from 2002. Exporting the Benefits? And while the authors of the report make compelling cases that U.S.
companies are doing just fine, thank you, none of the writers addresses today's burning question: Is American tech supremacy thanks to heavy investments in R&D also benefiting
U.S. workers? Or are U.S. inventions mainly creating jobs overseas? A few years ago, most people took it for granted that what was good for companies was good for the greater
economy. But the flat growth in living standards for most Americans during the last boom has raised doubts over the benefits of globalization. "Innovation shouldn't be an end in itself
for U.S. policy," says trade theorist Ralph E. Gomory, a research professor at New York University's Stern School of Business. "I think we have to address whether a country can run
on innovation. If you just do R&D to enhance economic activity in other countries, you are getting very little out of it." Gomory, a former top IBM (IBM) executive, retired in 2007 as
president of the Alfred P. Sloan Foundation, which funded the National Academies study. Still, given all the debate over offshoring, the report's central findings are interesting. The
thanks to innovation, globalization hasn't eroded U.S. leadership even in some
authors marshal a wealth of evidence to show that,
industries where there has been a substantial offshore shift in engineering and design. Despite an explosion of outsourcing to India and Ireland, for example,
America's software industry still trumps the rest of the world in exports of packaged software and services, patent activity, and venture capital investment.
The U.S. also accounts for 90% of chip-design patents—the same level as 1991—although Asian companies now do most of manufacturing. And when
it comes to biotechnology, the U.S. is way ahead, luring more venture capital than all other countries
combined. America First The U.S. even remains a heavyweight in personal computers, the study says, though China and Taiwan manufacture most of
the hardware. That's because the real innovation and profits still belong to companies like Microsoft (MSFT) and Intel (INTC), makers of the operating
system and central processors, while U.S. brands command 40% of the global market and still define breakthrough design.
Oil doesn’t hurt leadership – interdependence and connections to oil-dependent allies

means that we would only lose influence over oil producers if we abandoned oil.
Verrastro and Ladislaw 07 (Frank and Sarah, CSIS Energy and National Security Program director and
fellow, “Providing Energy Security in an Interdependent Work”, p. 4-5,
www.twq.com/07autumn/docs/07autumn_verrastro.pdf)
All energy producers/exporters and consumers/importers are bound together by a mutual
interdependency. All are vulnerable to any event, anywhere, at any time, that has an impact on supply
or demand. The U.S. energy future likely will be shaped at least in part by events outside of its control and
beyond its influence. Calls for energy independence absent major technological breakthroughs and a
national commitment ring hollow and in the near term are both unrealistic and unachievable. In the absence
of decisive political will to undertake those steps necessary to improve efficiency, promote conservation, and
encourage the development of domestic energy resources as well as renewable energy forms, learning to
manage the risks accompanying import dependency may be the only reasonable course of action, at least for
the foreseeable future. Although reducing U.S. import dependence will make us more secure, absent the
reimposition of domestic price controls, the United States will still be subject to global oil price increases
regardless of whether oil import dependence is at 20 percent or 60 percent. Further, the notion that simply
reducing the United States’ oil import dependence would significantly enhance U.S. foreign policy
options is also mis guided and potentially damaging to many existing relationships. Even if the United
States were energy self-sufficient, as long as its allies remained import dependent it might well have
less leverage diplomatically, as the world could become more factionalized. The mutual dependence
among consumer nations n and between consumers and producers should be used as a means for
finding common solutions to shared global energy problems, including environmental, security, and
economic considerations.
A2: High Oil Prices Bad – A2: Leadership – A2: Links (2/2)
Oil producing countries don’t inhibit US leadership – they still import energy and we’re
interdependent.
Verrastro and Ladislaw 07 (Frank and Sarah, CSIS Energy and National Security Program director and
fellow, “Providing Energy Security in an Interdependent Work”, p. 5,
www.twq.com/07autumn/docs/07autumn_verrastro.pdf)
Of 193 countries in the world, none are energy independent. Even the major oil-exporting countries of
Saudi Arabia, Russia, Norway, the United Arab Emirates, and Nigeria all import energy in the form either
of refined petroleum products, electricity, natural gas, or coal. Oil is currently the most widely traded
energy resource, with nearly 60 percent of global oil traded across national borders. The percentages for
international trade in natural gas and coal are lower but still significant at 25 percent and 17 percent of
production, respectively. Over the coming decades, global trade in all three fuel types is expected to
increase significantly. By 2030 the volume of global oil trade is expected to double, and natural gas trade is
expected to triple. The global oil market is far from perfect, and the influence of the Organi- zation of the
Petroleum Exporting Countries over the price and supply of oil on the market is not insignificant. One of the
main arguments for reducing dependence on imported oil is to reduce the strategic leverage of
countries in the Middle East. This sentiment is particularly strong after the September 11 attacks and in the
midst of the war in Iraq. Yet, oil-producing countries rely on these markets for their own domestic
economic stability. The trend has thus been for oil-producing countries to seek stable pricing that
allows enough market stability and certainty for them to make investments and ensure a steady income.
A2: High Oil Prices Bad – A2: Species – Turn: Oil Increases Species
Oil feeds species
Button 77 (Don, UAF Institute of Marine Science, http://www.gi.alaska.edu/ScienceForum/ASF1/148.html)

Particularly in coastal areas this oil would persist were it not for the bacteria that eat it. Other
microorganisms metabolize oil too, as do higher organisms. Whereas humans do not gain energy from
ingested hydrocarbons, many species of microorganisms--bacteria, yeasts and fungi--obtain both energy
and tissue-building material from petroleum. These microorganisms require both the existence of
oxygen and certain minerals to metabolize oil. They are able to attack the oil best when it is mixed with
water. Even highway blacktop gets eaten in time, but its dryness, the lack of minerals such as nitrogen and
the large size of the asphaltene molecules in blacktop make it tough chewing for the bugs. Many
hydrocarbons dissolve only slowly in water. Others such as the aromatic compounds like benzene are more
soluble, and these are toxic to living cells. The aromatic hydrocarbons can attack the fat-like membranes
surrounding cells and adversely affect their normal functioning. But, fortunately, bacteria and other
microorganisms composing the marine flora are able to feed upon the wide variety of compounds
found in petroleum. The ocean water itself aids the process by helping to transport oxygen and
minerals to the microorganisms.
A2: High Oil Prices Bad – A2: Species Loss

Biodiversity is not key to preventing ecological collapse
Calgary Herald, August 30, 1997
Ecologists have long maintained that diversity is one of nature's greatest strengths, but new research suggests
that diversity alone does not guarantee strong ecosystems. In findings that could intensify the debate over
endangered species and habitat conservation, three new studies suggest a greater abundance of plant and
animal varieties doesn't always translate to better ecological health. At least equally important, the
research found, are the types of species and how they function together. "Having a long list of Latin names
isn't always better than a shorter list of Latin names," said Stanford University biologist Peter Vitousek,
coauthor of one of the studies published in the journal Science. Separate experiments in California,
Minnesota and Sweden, found that diversity often had little bearing on the performance of ecosystems --
at least as measured by the growth and health of native plants. In fact, the communities with the greatest
biological richness were often the poorest when it came to productivity and the cycling of nutrients. One
study compared plant life on 50 remote islands in northern Sweden that are prone to frequent wildfires from
lightning strikes. Scientist David Wardle of Landcare Research in Lincoln, New Zealand, and colleagues at
the Swedish University of Agricultural Sciences, found that islands dominated by a few species of plants
recovered more quickly than nearby islands with greater biological diversity. Similar findings were reported
by University of Minnesota researchers who studied savannah grasses, and by Stanford's Vitousek and
colleague David Hooper, who concluded that functional characteristics of plant species were more important
than the number of varieties in determining how ecosystems performed. British plant ecologist J.P. Grime, in
a commentary summarizing the research, said there is as yet no "convincing evidence that species
diversity and ecosystem function are consistently and causally related." "It could be argued," he added,
"that the tide is turning against the notion of high biodiversity as a controller of ecosystem function and
insurance against ecological collapse."
Multiple alternate causes of ecosystem damage including industrialization and agriculture.

FINDLEY & VOLK 2000 PhD Director, Water Initiatives Chemonics International, Inc & CHAIRMAN,
ASSOCIATION OF NATIONAL ESTUARY PROGRAMS, MS Environmental Management Texas U.
[Meg & Richard,"Towards a Water Secure Future: USAID’s Obligations In Water Resources Management For FY
2000," http://www.usaid.gov/our_work/environment/water/tech_pubs/towards_water_secure.obligations.pdf]
Moreover, none of the water scarcity data takes into account that finite water resources are becoming
increasingly polluted. Inadequately treated wastewater from industries and cities; polluted runoff from
agricultural operations; and massive siltation from logging, road construction, and other land use
activities are perhaps the largest culprits. As a result, excessive nutrients, pesticides, heavy metals,
pathogens, sediments, and other pollutants degrade lakes, rivers, and coastal environments to the
detriment of aquatic ecosystems and humans alike. At least 20% of the world’s freshwater fish species are
already extinct, threatened, or endangered (Revenga et al., 2000). While there are many contributing factors
(e.g., habitat loss, freshwater diversions, and climate change), increasingly polluted waters often shift the
balance towards extinction, diminished productivity, and lost ecosystem services.
Species extinction is natural – your impact is denied by 4.5 billion years of history
Morano and Washburn 2000,(Marc and Kent,WorldNet Daily, Part 1 Shaky science behind save-rainforest
effort New TV documentary finds skeptics among researchers, http://www.bio.net/bionet/mm/ag-forst/2000-
July/015413.html)
Stott agrees that the focus on species loss is misguided from a scientific point of view. "The earth has
gone through many periods of major extinctions, some much bigger, let me emphasize, than even
being contemplated today and 99.9999 percent (of all species) and I wouldn't know the repeating
decimal have gone extinct. Extinction is a natural process," he asserts.
A2: High Oil Prices Bad – A2: Species Loss

Biodiversity is not key to the ecosystem
Guterman 2002 (Lila Guterman is a reporter for the Chronicle of Higher Education, “The Importance of
Biodiversity to Ecosystem Health Is in Dispute,” Current Controversies: Biodiversity. Ed. William Dudley. San
Diego: Greenhaven Press, 2002, A.Z.
If environmentalists were to write down their Ten Commandments, one of the sacred principles would surely
be, "Honor thy species." The green movement takes as a truism that ecosystems are healthier when they
contain many species of plants and animals. Ecological scientists have even coined a term for this riot of life:
biodiversity. Though the idea now seems natural to environmentalists, scientists have long wondered
whether an abundance of species truly improves the health of ecosystems and the way they work.
Experiments to test that link were not completed until the mid-1990's, when some large-scale, much-heralded
studies seemed to provide a positive answer. In 1999, the Ecological Society of America enshrined the
importance of biodiversity to ecosystems in a report intended for educators and policymakers. The report
concluded that, because ecosystems are vital to human welfare, we must "adopt the prudent strategy of
preserving biodiversity in order to safeguard ecosystem processes vital to society." It sounded harmless
enough. But the publication of the article touched off a firestorm of debate that had been smoldering
within ecology. A group of scientists charged that the society's report ignored a different viewpoint held
by many. The studies cited by the report, the scientists said, were flawed and didn't justify the
conservation recommendation. Diversity is worth saving for moral, aesthetic, and even economic
reasons, the critics said, but it might not make ecosystems healthier or more efficient. The altercation
went public when, in a letter in the July 2000 issue of the Bulletin of the Ecological Society of America,
eight ecologists bluntly charged that the report was "biased" and "little more than a propaganda
document"; made "indefensible statements"; and set a "dangerous precedent" for scientific societies
by presenting only one side of the debate, even though the report seemed to represent the entire 7,600-
member society. They wrote, "Our concern is that unjustifiable actions are being made to protect this
single rationale for biodiversity conservation, and that scientific objectivity is being compromised as a
result." Today, the controversy encompasses issues beyond scientific disagreement. Some scientists claim
that the eminent researchers who lead the movement to link biodiversity to ecosystem health, including
John H. Lawton at the Imperial College of Science, Technology, and Medicine's Silwood Park campus, in
England, and David Tilman at the University of Minnesota-Twin Cities, have exerted so much influence in
the field that the major journals are silencing the critics. The backing of the environmental movement
amplifies the message of those renowned researchers, and may even distort the conclusions they draw from
the data, the skeptics charge. "Ecological scientists need to be very, very careful to clearly separate the
results of experiments from feelings about what should be," says William K, Lauenroth, a professor of
rangeland-ecosystem science at Colorado State University, and one of the letter's authors.
Alt Causes to Threats to Biodiversity

Navjot S. Sodhi, Department of Biological Sciences, National University of Singapore, Lian Pin Koh,
Department of Biological Sciences, National University of Singapore and Department of Ecology and Evolutionary
Biology, Princeton University, Barry W. Brook, Key Centre for Tropical Wildlife Management, Charles Darwin
University, and Peter K.L. Ng, Department of Biological Sciences, National University of Singapore, December
2004, TRENDS in Ecology and Evolution Vol.19 No.12, http://rmbr.nus.edu.sg/news/pdf/sodhietal-tiee2004.pdf
The outlook for the biodiversity of Southeast Asia appears bleak, owing to several key social, scientific and
logistical conservation challenges faced by the region. The major challenges in mitigating the imminent
threats to its biodiversity are primarily socioeconomic in origin, including population growth, poverty,
chronic shortage of conservation resources (both expertise and funding) and corrupt national
institutions. As regional societies strive to match the living standards of developed nations, environmental
issues are inevitably marginalized. Increasing human population density is a primary socioeconomic
driver of forest loss in Asia [60] and, in Southeast Asia, both this and economic growth are positively
associated with forest loss (Figure 2).
A2: High Oil Prices Bad – A2: Species Loss – NW Bad

Nuclear war destroys the environment
Bryner 06 (Jeanna, “Small Nuclear War Would Cause Global Environment Catastrophe,” Live Science, 12-11,
http://www.commondreams.org/headlines06/1211-05.htm)
A small-scale, regional nuclear war could disrupt the global climate for a decade or more, with
environmental effects that could be devastating for everyone on Earth, researchers have concluded.The
scientists said about 40 countries possess enough plutonium or uranium to construct substantial nuclear
arsenals. Setting off a Hiroshima-size weapon could cause as many direct fatalities as all of World War II.
"Considering the relatively small number and size of the weapons, the effects are surprisingly large," said
one of the researchers, Richard Turco of the University of California, Los Angeles. "The potential devastation
would be catastrophic and long term." The lingering effects could re-shape the environment in ways never
conceived. In terms of climate, a nuclear blast could plunge temperatures across large swaths of the
globe. "It would be the largest climate change in recorded human history," Alan Robock, associate
director of the Center for Environmental Prediction at Rutgers' Cook College and another member of the
research team. The results will be presented here today during the annual meeting of American Geophysical
Union. Blast fatalities In one study, scientists led by Owen "Brian" Toon of the University of Colorado,
Boulder, analyzed potential fatalities based on current nuclear weapons inventories and population densities
in large cities around the world. His team focused on the black smoke generated by a nuclear blast and
firestorms—intense and long-lasting fires that create and sustain their own wind systems. For a regional
conflict, fatalities would range from 2.6 million to 16.7 million per country. "A small country is likely to
direct its weapons against population centers to maximize damage and achieve the greatest advantage," Toon
said. Chilled climate With the information, Robock and colleagues generated a series of computer
simulations of potential climate anomalies caused by a small-scale nuclear war. "We looked at a scenario of a
regional nuclear conflict say between India and Pakistan where each of them used 50 weapons on cities in the
other country that would generate a lot of smoke," Robock told LiveScience. They discovered the smoke
emissions would plunge temperatures by about 2 degrees Fahrenheit (1.25 degrees Celsius) over large
areas of North America and Eurasia—areas far removed from the countries involved in the conflict.
WMD cause extinctions

Hitchens 02 Christopher Hitchens is a columnist for Vanity Fair "WMD" and "Inspection" Dec. 26, 2002
http://www.slate.com/id/2076026 MP
The term "WMD," then, appears to be both an over- and understatement. It can overstate the destructive
power of some weaponry, while understating its wickedness. The two most destructive moments of the last
Gulf War were, in point of casualties, the revenge taken by Saddam on the Shia and Kurdish intifada in the
conflict's closing moments; in point of physical mayhem, his decision to ignite the Kuwaiti oilfields during
Iraq's ignominious retreat. The main weapon in the first instance was the helicopter-gunship, and the chief
one in the second instance was high explosive. Mass destruction of humans and resources was the outcome
in each case, but this tells us little about the weaponry (while telling us a good deal about the regime). The
term "WMD" originated, as far as I can tell, as a Soviet expression during the protracted '70s and '80s
negotiations about arms control and détente. It was a generalization, as well as something of a euphemism,
but it was also a loosely pejorative way of referring to thermonuclear weaponry. This kind of warfare
obviously meets all conditions of condemnation, because it causes unimaginable damage to cities and to
the infrastructure, as well as vaporizing civilians by the million and tearing apart the web of nature
that we call the ecology. Insofar as we can tell, it also threatens the whole biosphere and creates long-
term risks from radiation and climatic change. At its worst, it could cause extinction rather than mere
extermination: killing everybody alive, as well as those yet unborn—a true and apocalyptic "end of
history." No gas or bug or nerve agent can quite do that.
***Russian Oil Disad***

1NC Shell- Russia (1/2)

1) Russian econ is  due to oil exports
Interactive Investor June 27, 2008
http://www.iii.co.uk/articles/articledisplay.jsp?article_id=9937459&section=Markets
Guess which country will be Europe's biggest consumer market by 2010. No, not affluent Germany or the aspirant UK, but Russia. Of course, Russia has more than twice the
Russians' emerging affluence is perhaps the most
population of the UK, at 142 million, and 1.7 times as many people as Germany, but the
tangible sign of the country's transformation from struggling, controlled communist economy to one of
the fastest growing ones in the world. While most of the interest in emerging markets has focused on the twin giants of China and India, Russia - the R in
the BRIC acronym - should be at least as interesting to investors. Its growth last year was a healthy 8.1% and while the global slowdown may dent that, the US accounts for less than
5% of Russia's exports. Exports to fast-growing China nearly doubled last year, so most commentators still expect growth in 2008 to exceed the 7% average for the last decade. While
China and India's army of affluent consumers are still more of a hope than a reality, the Mercedes and BMWs that clog Moscow's streets, and the designer stores that line them,
indicate clearly that Russia has arrived. Over the past four years Russians have enjoyed pay rises of more than 20% a year. And while prices in Moscow hotels and bars are among the
highest in the world, Russians are using their new-found wealth to splash out on everything from houses to financial services. Robin Geffen, manager of Neptune Investment
Management's Russia & Greater Russia fund, thinks strong growth in consumer spending is one of the key attractions of Russia for investors. Over the first few months of this year, it
has been rising by 17% compared with 12% last year. He is seeking out companies whose businesses depend on this growth, such as fruit juice and foods business Wimm-Bill-Dann
or airline Aeroflot, for his portfolio. Resources, however, are the key to the Russian growth story. Gazprom, the state energy group, is now the third largest company in the world and,
while rivals such as Chevron and Exxon have little more than 10 years' worth of reserves, some Russian companies have as much as 40 years' worth of proven reserves. The country
still has huge oil-rich areas that are largely unexplored, partly because of the punitive tax regime imposed on oil companies by Vladimir Putin's government, a tax regime he has
The surge in oil prices - 10 years ago oil was trading at just $10 a barrel; this year it has passed $135 - has undoubtedly been
promised to review.
a key factor in Russia's emergence as a global economic force. Despite a wave of flotations in financial services, telecoms and other
consumer industries, oil companies still account for half of the stock market and the industry represents a quarter of GDP. Putin has managed the wealth well, investing it in the
Stabilisation fund, which reached $156.8 billion by the end of 2008 and is now being divided between the Reserve fund and National Wellbeing fund.
2) Alternative energy lowers oil prices

Strand 07 (Jon, The Energy Journal [http://goliath.ecnext.com/coms2/gi_0199-
7309937/Technology-treaties-and-fossil-fuels.html] Technology treaties and fossil-fuels
extraction/ October 1, 2007)
Assume that a treaty will lead to increased international funding of technology developments, which in turn implies a likelihood that a new energy technology will be developed.
alternative technology, once developed, implies a constant marginal energy cost, lower than the
Assume that the
(assumed constant) cost of extracting fossil fuels. (3) Fossil fuels will then become redundant once the
new technology is adopted, and no more fossil fuels will be extracted from then on. (4) We assume that the time it takes to develop such a technology is
stochastic, modeled in a very simple way, as exponentially distributed with constant parameter [lambda](with expected period until development equal to 1/[lambda]). One so far
overlooked implication of such a scenario is that the prospect of developing a new and more efficient energy technology will affect incentives of fossil-fuel producers to extract and
market the resource, in both the short and the longer run. In the model, dealt with in Sections 2-3 below, we assume that the fossil-fuel market is competitive on a global scale, there is
no market uncertainty, and there is initially a zero probability of developing an alternative technology replacing fossil fuels. The initial resource price (prior to any technology treaty)
can then be shown to evolve according to the so-called Hotelling rule, whereby the growth rate for the real resource price (net of extraction cost) equals the real rate of interest, r, in
when the technology treaty is in place, the equilibrium price and
the economy. (5) In Section 2 below we first show that,
extraction path for the resource will both shift as a result. Along the new price path, the net resource price will grow at the higher rate
r+[lambda]. The entire resource price path shifts down, resulting in a higher volume of extraction at any given date until the resource is fully extracted, or until the new technology is
Intuitively, when fossil-fuel producers are made aware of an increased likelihood that their
developed.
resource may become redundant within a limited future time period, the incentive will be to extract it
more quickly. For a given demand function directed toward fossil fuels, with global fossil-fuel demand
a decreasing function of the price, this must mean a lower market price of fuel
1NC Shell- Russia (2/2)

3) Declining Russian economy causes NW
Steven David, Prof. of political science at Johns Hopkins, 1999, Foreign Affairs
If internal war does strike Russia, economic deterioration will be a prime cause. From 1989 to the present, the GDP has fallen
by 50 percent. In a society where, ten years ago, unemployment scarcely existed, it reached 9.5 percent in 1997 with many economists declaring the true figure to be much higher. Twenty-
two percent of Russians live below the official poverty line (earning less than $ 70 a month). Modern Russia can neither collect taxes (it gathers only half the revenue it is due) nor
significantly cut spending. Reformers tout privatization as the country's cure-all, but in a land without well-defined property rights or contract law and where subsidies remain a way of life,
the prospects for transition to an American-style capitalist economy look remote at best. As the massive devaluation of the ruble and the current political crisis show, Russia's condition is
even worse than most analysts feared. If conditions get worse, even the stoic Russian people will soon run out of patience. A future conflict would quickly draw in Russia's military. In the
Soviet days civilian rule kept the powerful armed forces in check. But with the Communist Party out of office, what little civilian control remains relies on an exceedingly fragile
foundation -- personal friendships between government leaders and military commanders. Meanwhile, the morale of Russian soldiers has fallen to a dangerous low. Drastic cuts in spending
mean inadequate pay, housing, and medical care. A new emphasis on domestic missions has created an ideological split between the old and new guard in the military leadership, increasing
the risk that disgruntled generals may enter the political fray and feeding the resentment of soldiers who dislike being used as a national police force. Newly enhanced ties between military
units and local authorities pose another danger. Soldiers grow ever more dependent on local governments for housing, food, and wages. Draftees serve closer to home, and new laws have
increased local control over the armed forces. Were a conflict to emerge between a regional power and Moscow, it is not at all clear which side the military would support. Divining the
military's allegiance is crucial, however, since the structure of the Russian Federation makes it virtually certain that regional conflicts will continue to erupt. Russia's 89 republics, krais, and
oblasts grow ever more independent in a system that does little to keep them together. As the central government finds itself unable to force its will beyond Moscow (if even that far), power
devolves to the periphery. With the economy collapsing, republics feel less and less incentive to pay taxes to Moscow when they receive so little in return. Three-quarters of them already
have their own constitutions, nearly all of which make some claim to sovereignty. Strong ethnic bonds promoted by shortsighted Soviet policies may motivate non-Russians to secede from
the Federation. Chechnya's successful revolt against Russian control inspired similar movements for autonomy and independence throughout the country. If these rebellions spread and
Should Russia succumb to internal war, the consequences for the United States
Moscow responds with force, civil war is likely.
and Europe will be severe. A major power like Russia -- even though in decline -- does not suffer civil war quietly or alone. An embattled Russian
Federation might provoke opportunistic attacks from enemies such as China. Massive flows of refugees
would pour into central and western Europe. Armed struggles in Russia could easily spill into its neighbors.
Damage from the fighting, particularly attacks on nuclear plants, would poison the environment of much of Europe
and Asia. Within Russia, the consequences would be even worse. Just as the sheer brutality of the last Russian civil war laid the basis for the privations of Soviet communism, a second civil
war might produce another horrific regime. Most alarming is the real possibility thatthe violent disintegration of Russia could lead to loss of
control over its nuclear arsenal. No nuclear state has ever fallen victim to civil war, but even without a clear precedent the grim consequences can be foreseen.
Russia retains some 20,000 nuclear weapons and the raw material for tens of thousands more, in scores of sites
scattered throughout the country. So far, the government has managed to prevent the loss of any weapons or much material. If war erupts, however, Moscow's
already weak grip on nuclear sites will slacken, making weapons and supplies available to a wide range of
anti-American groups and states. Such dispersal of nuclear weapons represents the greatest physical threat
America now faces. And it is hard to think of anything that would increase this threat more than the chaos
that would follow a Russian civil war.
***Russia UQ***
UQ – Russian Econ  (1/3)

Russian econ is  due to oil exports
Interactive Investor June 27, 2008
http://www.iii.co.uk/articles/articledisplay.jsp?article_id=9937459&section=Markets
Guess which country will be Europe's biggest consumer market by 2010. No, not affluent Germany or the aspirant UK, but Russia. Of course, Russia has more than
twice the population of the UK, at 142 million, and 1.7 times as many people as Germany, but the Russians'
emerging affluence is perhaps the
most tangible sign of the country's transformation from struggling, controlled communist economy to one of
the fastest growing ones in the world. While most of the interest in emerging markets has focused on the twin giants of China and India, Russia -
the R in the BRIC acronym - should be at least as interesting to investors. Its growth last year was a healthy 8.1% and while the global slowdown may dent that, the
US accounts for less than 5% of Russia's exports. Exports to fast-growing China nearly doubled last year, so most commentators still expect growth in 2008 to exceed
the 7% average for the last decade. While China and India's army of affluent consumers are still more of a hope than a reality, the Mercedes and BMWs that clog
Moscow's streets, and the designer stores that line them, indicate clearly that Russia has arrived. Over the past four years Russians have enjoyed pay rises of more than
20% a year. And while prices in Moscow hotels and bars are among the highest in the world, Russians are using their new-found wealth to splash out on everything
from houses to financial services. Robin Geffen, manager of Neptune Investment Management's Russia & Greater Russia fund, thinks strong growth in consumer
spending is one of the key attractions of Russia for investors. Over the first few months of this year, it has been rising by 17% compared with 12% last year. He is
seeking out companies whose businesses depend on this growth, such as fruit juice and foods business Wimm-Bill-Dann or airline Aeroflot, for his portfolio.
Resources, however, are the key to the Russian growth story. Gazprom, the state energy group, is now the third largest company in the world and, while rivals such
as Chevron and Exxon have little more than 10 years' worth of reserves, some Russian companies have as much as 40 years' worth of proven reserves. The country
still has huge oil-rich areas that are largely unexplored, partly because of the punitive tax regime imposed on oil companies by Vladimir Putin's government, a tax
regime he has promised to review. The
surge in oil prices - 10 years ago oil was trading at just $10 a barrel; this year it has passed $135 - has
undoubtedly been a key factor in Russia's emergence as a global economic force. Despite a wave of flotations in financial
services, telecoms and other consumer industries, oil companies still account for half of the stock market and the industry represents a quarter of GDP. Putin has
managed the wealth well, investing it in the Stabilisation fund, which reached $156.8 billion by the end of 2008 and is now being divided between the Reserve fund
and National Wellbeing fund.
Russian econ  due to rising oil prices

Nicholas Vardy June 26, 2008
http://seekingalpha.com/article/82827-busted-6-economic-myths
Russia presents a conundrum for the Western good guys. Yes, it is a kleptocracy and a handful of Western investors and Russian companies have
been shafted in a high profile way. But thanks largely to the soaring price of oil, the Russian economy has exploded,
growing at 9.5% in Q4 of last year and 8.5% in Q1 of 2008. That means that it is nipping at the heels of India, and is hot on the
trails of China in the economic growth sweepstakes. Among the BRICs, Russia has been by far the best investment during
the past decade or so, with investors clocking 60x returns since the Russian market bottomed in October 1998. Russia is
also one of the top markets in the world this year. And here's a factoid that warms the Russian heart: Moscow now boasts a larger
number of billionaires than New York or London.
Russian econ growth is strong

The Earth Times June 24, 2008
http://www.earthtimes.org/articles/show/214459,medvedev-spells-out-his-vision-ahead-of-g8-debut--feature.html
Moscow - "To use the words of John Le Carre, Russia has 'come in from the cold'... " new President Dmitry Medvedev declared
in the first of two major foreign policy speeches building to his debut at the G8 summit. His words rang softly on the ears of business
audiences in Berlin and St Petersburg who applauded Medvedev's premise that "Russia is a global player" that wants "to take part in
the rules of the game," with more than one enthusiastic banker echoing, "Russia has emerged." "The world's new economies -
with Russia among the leaders - will drive global growth and value creation in the early decades of this
new century," CEO of Renaissance Capital Stephen Jennings predicted.

Russian econ strong now, exports and purchasing power prove
The Baltic Course June 14, 2008
http://www.baltic-course.com/eng/analytics/?doc=2414
The Baltics now show clear signs of a slowdown, while the outlook still seems bright for Poland and Russia. This creates new
opportunities for Nordic companies operating in the region. These are some of the conclusions presented by Nordea's economists in their
publication Baltic Rim Outlook. When the domestic overheating calms down in the Baltics, the preconditions for exports to the countries
diminish. However, prospects for outsourcing production improve as property prices and building costs fall and labor shortages ease. The
opposite is the case for Russia and Poland. Export opportunities have never been better in light of the rapidly increasing
growth of the purchasing power of these two countries’ large populations, reports ELTA. Until recently, the Baltic countries were the
star performers in terms of growth among the European Union countries. However, the economic outlook deteriorated in all the countries in early
2008, and the adjustment towards slower growth has started. According to Nordea's experts, in Estonia and Latvia the slowdown seems to be
much faster than it was previously expected. The boom-bust cycle is more pronounced in Latvia and Estonia, whereas in the Lithuanian economy
the upswing and the coming downswing will be more moderate. Even though the short-term outlook for the Baltic countries is bleak, growth will
resume after a few slow years – and the Baltic countries will continue to offer business opportunities for the Nordic companies. The Russian
economy has shown impressive growth figures during recent years. The favorable developments are expected
to continue.
Russia econ growth is , oil prices prove

Alliance Media June 11, 2008
http://eng.investmarket.ru/NewsAM/NewsAMShow.asp?ID=462998
Russia - in just eight years - has firmly established itself as a thriving and rapidly developing economy. Total output has grown by 67 percent,
and Prime Minister Vladimir Putin has said that he expects this figure to overtake that of the UK by the end of this year. Moreover, since
1999, stock market capitalization has increased 22-fold and foreign trade turnover five-fold. These positive trends appear set to continue,
with the IMF forecasting another 33 percent increase in GDP by 2013. Yes, the Russian economy is red-hot. But there
remain some lingering doubts about the economy's long term success and stability. Russia's biggest task is
to balance economic growth while keeping inflation low. During the 1990s, inflation sometimes soared to over 10 percent a
month, wiping out people's savings and triggering mild panic in the economy. Although the inflation dragon has been tamed, it continues to
be stuck at over 10 percent annually. This year the inflation target has been revised up to 10 percent after price increases at the beginning of
the year. Meanwhile, the IMF predicts that inflation will finish at 11.4 percent for the year. The major factor causing inflation is
the massive increase in oil prices since 2002. In the last six years there has been an increase from
approximately $20 a barrel to $125. Furthermore, there has been speculation that oil prices will continue to
rise and according to Goldman Sachs and the Iranian oil minister, they could hit $200 a barrel in two years.
Russia's economy is highly dependent on natural resources, with 28 percent of exports to the U.S. last year
being oil and gas products. The high oil prices have helped the Russian economy to grow, while even permitting
for the creation of a massive stabilization fund.
Russian econ strong

Moscow News June 10, 2008
http://mnweekly.ru/business/20080610/55332956.html
ST. PETERSBURG, (RIA Novosti, MN) - First Deputy Prime Minister Igor Shuvalov told an economic forum on
Sunday that the Russian economy will become the world's sixth largest by the end of this year. Addressing the
12th International Economic Forum in St. Petersburg, the official also outlined the government's future role in the economy, saying that while
new state companies will be set up, the government aims to limit its "excessive interference" in the economy. Shuvalov said: "For the past
eight years, Russia has been developing. By the end of this year we will become the world's sixth largest economy." Russia, which joined
the G8 in 1998, has now "become a fully-fledged member of the world's largest economies. We are beginning
to put behind us the severe crisis of the last decade, and have given ourselves new goals - to become a country with
developed institutions, a modern democracy with a post-industrial economic structure, and to build a global financial center." A key goal of
the government in the coming years will be to scale down its dominant role in the economy, he said. "Reducing excessive state interference
in the economy is now an important factor... The state reacts to crises far slower than an economic entity acting on market signals."

Russian econ strong, stock market investment, purchasing power prove
Westman May 29, 2008
http://rbth.rg.ru/articles/2008/05/29/2008_05_DT_03_westman.html
Over the last decade, Russia has transformed itself from a post-Soviet "basket case" into an "emerging giant". Last
year, GDP grew from $986bn to $1,278bn – and is set to reach $1,750bn by the end of 2008. Russia, incredibly, is now the world's eighth
largest economy. Investors know Russia is growing, but few have grasped the extent of this growth – and its spread beyond oil and gas. The domestic
economy is booming – with construction growing by 15pc last year and retail sales up 14pc. The energy sector, in contrast, grew by less than 2pc last year. So the
share of GDP accounted for by oil and gas, currently 25pc, is falling fast. This "broader growth" is a crucial "source of value" in Russia's stock market today. For
instance, with real wages up 13-fold since 1998, Russia will soon become Europe's biggest retail market. One company benefiting from this is Magnit – the
second-largest food retailer. Having opened with a single store in 1998, the company now has 2,200 outlets across the country. Magnit has just unveiled a 77pc
rise in annual earning and has more than 30 hypermarkets under construction – so there's much more to come. Yet while US stocks have an average price-
earnings ratio of more than 20, Magnit's P/E is set to tumble to less than 10. Given its superb management and exposure to Russia's fast-growing regions, I'd
Russia's growth is also becoming "deeper" – another important
argue that's a serious under-valuation. As well as "broadening",
"source of value". Domestic investment is expanding at more than 20pc a year as capital pours into an
array of sectors, from road-building and power-generation to healthcare and education. One company taking advantage is Mostotrest – Russia's largest
bridge/flyover construction outfit. The company's revenues grew 65pc last year, to $960m. As the government rolls out a massive $1,000bn infrastructure
programme, Mostotrest is set for similar growth in 2008. But it still as a P/E of less than 7 – which, again, looks very cheap. Russia's economy is now benefiting
from a "virtuous circle". Higher investment is driving up labour demand and wages, so boosting household spending power.
That's fuelling the
retail boom – which, in turn, feeds back into more investment in infrastructure, services and real estate. But while future share
prices will be supported by economic growth in general, I'd say that an even more significant "source of value" is the rapid
improvement in Russian productivity. Over the last 10 years, as the corporate landscape has changed, Russia has registered average annual
productivity rises of 10pc. These huge increases, unprecedented in any major economy, have already delivered
serious shareholder benefits.
Russian econ is strong, high oil prices prove

Investment News May 26, 2008
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080526/REG/548723428/1030/MUTUALFUNDS
The Metzler/Payden European Emerging Markets Fund (MPYMX) has a 39% weighting in Russia and gained 20% over the past year,
while the Templeton BRIC Fund (TABRX) has a 23% Russian weighting and gained 29% over the period. "We're seeing some funds
invest primarily in Russia and other [funds investing] to a lesser degree, and the challenge is to use these funds at an appropriate level,"
said Jeff Tjornehoj, research manager at Lipper. "There's clearly evidence that the Russian economy is working for somebody. We're just
waiting to see if it will work for everybody," Mr. Tjornehoj added. "Investors still need to be careful, because if oil
prices decline substantially, these funds will take a double hit." This new interest in a country that didn't even have
publicly traded stocks 15 years ago is shared by a lot of advisers and analysts who view Russia as a high-octane
alternative to the struggling U.S. equity markets. "As the composition of this market changes, we think there will be more
opportunities to invest, and a compelling longer-term story," said Vladimir Milev, an analyst with Los Angeles-based Metzler/Payden
LLC. The story at this point, according to a recent Metzler/Payden research report, focuses on the fact
that the price of Russian crude oil has increased by more than 300% since 2000. Add to that the idea
that Russia's consumer/retail sector has outperformed the energy sector since 2005, and suddenly, the
economic expansion gets even more interesting, according to Mr. Milev. "There is still a large population in Russia living
around the poverty line, but there is also an emerging middle class," he said. "In Russia right now, there is a real high-end-luxury-goods
market, and there is also a lower-end retail market where increased discretionary spending has people now replacing their TV and their
old furniture." While Mr. Milev believes that Russian economic expansion could stay strong for the next three to five years, some
advisers are less convinced, saying the country's best performance might be behind it and that risk should be carefully monitored. "The
trend is strong, and you certainly don't short it, but it's all being driven by oil, and I think the
consumer trend will die as soon as oil dies," said Sam Jones, president of All Season Financial Advisors Inc. in Denver.
UQ – A2: Inflation
The Russian government is taking steps to fight inflation
Reuters UK June 25, 2008
http://uk.reuters.com/article/topNews/idUKL2450096420080625
REUTERS: Mr President, as far as Russia and Russia's economy are concerned, there is a problem: inflation is rising and spending is rising at the
same time. How are you going to tackle this problem, are you going to cut spending, are you going to raise interest rates, or revalue the rouble ?
What are you going to do to lower inflation in Russia? MEDVEDEV: You have correctly noted the two trends. Actually, inflation has
accelerated. We will definitely take measures -- and are taking already -- to bring it down. These include
limits on excessive state spending. We should also influence the so-called monetary causes of inflation, and
other, non-monetary factors that have an impact on inflation. The government worked out such a programme
and it is being implemented now. As for the interest rate policy, of course we could not pursue interest rate policy in isolation from the
general situation. It is determined both by the current level of inflation and the situation with international financial institutions. For instance, I
mean the state of international financial liquidity. Because, as we see it, money now freely flows from one state into the other, depending on the
interest rate policy pursued by the surrounding world. So we will adjust our interest rate policy, proceeding from this. But there must be no
surprises here.
Putin has pledged to bring Russian inflation down

RBC Online June 24, 2008
http://www.rbcnews.com/free/20080624174010.shtml
During today's budget committee meeting, Russia's Prime Minister Vladimir Putin set the objective of bringing
the rate of inflation down to one-digit figures over the next few years. The budget, as one of the key instruments for achieving
macroeconomic stability, is essential for attaining this goal, Putin noted. Amid growing uncertainty in the global economy, Russia must be ready
for any development, negative or positive, on foreign markets, the PM stressed. He added that Russia's budget policy needed to be aimed at
resolving the country's social and economic problems.
Russian econ strong and inflation is

RIA Novosti June 8, 2008
http://en.rian.ru/russia/20080608/109529706.html
ST. PETERSBURG, June 8 (RIA Novosti) - Russia's average annual inflation will slow to 2-3% by 2020, while GDP growth
is expected at 6.4-6.5%, Deputy Economics Minister Andrei Klepach said on the sidelines of an economic forum in Petersburg Sunday. First
Deputy Prime Minister Igor Shuvalov told the 12th St. Petersburg International Economic Forum on Sunday that it was important for Russia to
reduce inflation, to raise the standard of living rather than to seek high growth rates. As Russia continues to reap the benefits of
high world oil prices with a large influx of petrodollars, consumer price growth has proved to be a major
problem for the Russian authorities. Russia's inflation hit 7.7% from January 1 to June 1 compared with 4.7% in the same period last
year, the country's top statistics body earlier said. The Russian government plans to keep inflation within 10.5% in 2008.
Russia's GDP grew 8.1% in 2007, and expanded at an annualized rate of around 8% in the first four months of the year compared to the
government's forecast of 7.6%.
Russian inflation rates are 

International Property News May 30, 2008
http://www.easier.com/view/International_Property_News/General/article-182126.html
A location where previously high rates of growth have slowed is Russia. Price inflation has fallen from an annual
rate of 30% to Q4 2007 to 22% in Q1 2008. St Petersburg has continued to see growth rates outpace those in the
capital.
UQ – A2: Ruble Weak

Ruble is strong
FinChannel.com June 24, 2008
http://finchannel.com/index.php?option=com_content&task=view&id=15507&Itemid=8
EBI’s net sales revenue in Russia increased by 41.8% in 1Q 2008 over the comparable quarter of the previous year. Revenue growth, which
was ahead of volume growth, was achieved through local currency price increases and positive brand mix effect as a result of an increased share
of upper mainstream brands, especially “Stary Melnik”, in total sales volume. Revenue growth was also positively impacted by
the strengthening of the Ruble against USD in the period. As a result of our strong volume growth in Russia, our market share
increased to 9.2% as of March 2008 from 8.6% in March 2007. (AC Nielsen) “Stary Melnik iz Bochonka” also received one of the most
prestigious international awards, EFFIE “Brand of the Year 2007” in the beer category in Russia. Other innovations for this brand included a new
bottle with twist-off cap and new can designs.
Ruble has gained against the dollar

Howe Street Online June 23, 2008
http://www.howestreet.com/articles/index.php?article_id=6726
The Ruble has appreciated 9.3% vs. the US Dollar in the past year, though it appears to be running into firm resistance at
current levels after having retreating slightly from March's high. Although the RUB still enjoys a 2.22% forward discount out
one year, emerging currency demand appears to be waning moderately. In an environment where traders can't decide which major currency to
short (mainly because to don't want to go long any of the others), emerging market currencies are beginning to fall slightly out of favour, even
with the big interest rate driven discounts.
Ruble is strong due to Russian econ boom

The Guardian June 8, 2008
http://www.guardian.co.uk/business/feedarticle/7571563
ST PETERSBURG, Russia, June 8 (Reuters) - The Russian rouble could potentially become a reserve currency if the
country's economy continues to grow and inflation can be brought under control, an International Monetary Fund official said on Sunday. Russian
President Dmitry Medvedev has said he wants to turn the rouble into a key regional reserve currency as part of a Kremlin drive to make Russia an international
financial centre. "It's
quite conceivable that the rouble could emerge as a much more important international
currency," John Lipsky, the fund's first deputy managing director, told Reuters in an interview at the St Petersburg Economic Forum. "The structural reforms that
would provide this seem clear. The timetable will emerge in turn," he said. Lipsky earlier told reporters that fighting inflation and maintaining strong economic growth
were among the main tasks facing Russia as it seeks to grow the rouble's influence on world currency markets. "Developments
in the Russian
economy have been broadly very favourable. There is a sense of confidence and modernisation; an increasing
recognition that, if managed well, the Russian economy will play an increasingly important role," he said. Russia,
with a $1.3 trillion economy at the end of last year, is targeting a place among the world's top five economies by 2020, Medvedev has said. But he acknowledges the
rule of law needs to be strengthened and corruption must be rooted out. "To become a reserve currency, experience shows that they're always backed by a developed
financial system," Lipsky said. "The development and modernisation of the Russian financial system will open the prospect of the rouble becoming more generally
used as a reserve currency." The IMF forecasts Russian economic growth in the region of 8 percent both this year and next. It forecasts inflation to reach around 14
percent this year, far above the government's current target of 10.5 percent. Record
oil and commodity prices have played a large part
in a decade of economic boom in Russia, the world's second-largest oil exporter.
UQ – A2: Unemployment/Population
Russian unemployment rates are down, population growth is up
Moscow News June 19, 2008
http://www.mnweekly.ru/interview/20080619/55334032.html
We are dealing with urgent problems like the supply of housing. It grew twenty percent last year, which is a very good result. We built almost
900,000 square meters of housing in 2007. We'll build 1,100,000 square meters this year. We also have a shortage of schools now. We plan to
create 140,000 places in the next four years. Last year we reduced unemployment significantly. Today's level of
unemployment in the Khanty-Mansiysk autonomous region is about one percent of the population. The wages of
our population are rising. The average wage is 35,000 rubles per month in the Khanty-Mansiysk autonomous region (Ed.: about $1,500). Our
region is in the top five Russian regions with the highest salary level. Wage growth is about 17 percent per year. The population of our region is
very optimistic, which is confirmed in our demographic patterns. The birth rate is increasing. Our region is one of the leaders
in Russia with the best demographic results. The death-rate is going down - meaning that the population of
our region is increasing because of a greater number of births than deaths. Khanty-Mansiysk autonomous region is very
attractive for immigrants. However immigrants make up approximately 5 to 8 percent of the total growth of population of the region today.
Russian birth rate is , population is growing

Itar-Tass June 25, 2008
http://www.itar-tass.com/eng/level2.html?NewsID=12812071&PageNum=0
MOSCOW, June 25 (Itar-Tass) --The birth rate in Russia in the first four months of 2008 increased by 12 percent from
the same period of 2007. In the first four months of this year, 547,100 children were born, an increase of 58,400 from the same period of 2007,
the Ministry of Health and Social Development said. “The number of applications for maternity capital certificates is also
growing,” the ministry said. According to the Pension Fund, 218,032 maternity capital certificates had been issued by June 7, and 17,569
applications are under consideration. As the birth rate grows, the natural decrease situation is also improving. In the first
four months of the year, the natural decrease in the population slowed down by 18.1 percent from the same period of 2007.
The natural decrease ratio in the first four months of 2008 was 3.8 per 1,000 people compared to 4.6 in 2007.
Russian unemplyoment rate is down

Kommersant June 3, 2008
http://www.kommersant.com/p899158/r_528/macroeconomics_international_organizations/
The annual World Bank report on the Russian economy had its positive moments as well. It noted that,
between 1999 and 2007, the GDP rose from $196 billion to $1.3 trillion, unemployment fell from 13 percent to 6.1
percent and the budget deficit equal to 3.1 percent of the GDP has been replaced by a surplus equal to
6.1 percent of the GDP. International reserves have risen from $12.5 billion to $534.4 billion. “Only inflation spoils the picture,”
commented chief economist in the World Bank Russian office Zeljko Bogetic, “and it is a clear sign that the economy is overheated.”
Another sign of overheating, the World Bank claims, is the fact that the GDFP is growing by 8.1-8.8 percent per year, much higher than
the “7-percent long-term trend.” To that can be added the growing gap between the rate of salary growth and the productivity of labor.
UQ – Investment High
Investment in Russia high
RIA 08 (Russian News & Information Agency [http://en.rian.ru/business/20080530/108889933.html] Russia says
foreign investment in Russia reaches $220 bln/ May 30, 2008)
Accumulated foreign investment in Russia has exceeded $220 billion, a Russian deputy prime minister
said at an international economic conference in Moscow on Friday. "We expect more foreign investors to
come to Russia. So far accumulated foreign investment has exceeded $220 billion," Alexander Zhukov
said. Transport, mineral production, power generation, the social sector and the real estate market have been
the major areas for investment, Zhukov said. The official acknowledged that a lack of protection for
intellectual property rights has hampered investment in Russian companies. He also said investment in
infrastructure development in Russia was expected to top $1 trillion by 2020.
UQ – A2: Investments Already Low

Investment now is critical- growth in Russia’s oil industry till now has been predicated on
catch up potential
International Monetary Fund 07 ([http://www.imf.org/external/np/sec/pn/2007/pn07123.htm] IMF
Executive Board Concludes 2007 Article IV Consultation with the Russian Federation/ October 5, 2007)
Russia's economic growth remains robust. High oil prices, a strong catch-up potential, and sound fiscal
policy underlie Russia's long spell of robust growth. Several years of double-digit terms-of-trade gains,
reinforced by rapidly developing financial markets and much-improved access to foreign borrowing, have
underpinned strong investment growth, punctured only by a soft spot in late 2004. Nevertheless, the level of
investment has remained low, and capital and labor have accounted for less than half of the increase in
GDP since 2003, with the balance due to higher total factor productivity. Robust growth has thus owed
much to Russia's still considerable catch-up potential, as resources are reallocated to more dynamic
sectors in the economy. The resulting nexus of strong productivity growth, rising real incomes, and
higher consumption has been a key source of self-sustaining growth, especially in recent years as
capacity constraints have slowed energy exports.
UQ – A2: Not Enough Oil

Russia has the largest amount of proven reserves
Tohmatsu 05 (Deloitte Touche
[http://www.deloitte.com/dtt/cda/doc/content/Oil%20&%20Gas%20Investments%20in%20Russia.May05.pdf] Oil
and Gas Investment in Russia: Time to Review the Risk?/ May 2005)
In terms of oil and gas, Russia is a country with enormous energy resources. Because it holds the
world's largest proven natural gas reserves and the seventh-largest oil reserves, Russia plays a critical
role in the global energy market. Since 2001, Russia's increases in crude oil production have more than
matched increases in China's demand. Further, Russia is the world's biggest natural gas producer and
exporter, providing close to one-fourth of the requirements of European countries that are part of the
Organization for Economic Cooperation and Development. Russia supplies nearly one-third of the natural
gas needs of the growing economies of Eastern Europe and the Baltic states.
UQ – A2: Resilience – Oil Key

Oil is the root of Russian resilience
DPA 8 (MonstersandCritics,com,
tp://www.monstersandcritics.com/news/business/features/article_1398923.php/Russia_an_island_of_stability_amid_turbulent_markets, 4-9)
Moscow - Like a teenager at the wheel of his diamond encrusted Mercedes, Moscow feels invulnerable, set
to swerve past the US housing slump and slam through the global credit crunch. And today's precious fuel
prices have armed Russia's economic heavy foot. 'Nothing bad, nothing awful will happen,' Vladimir Bragin,
an analyst at Trust Bank, said blithely. 'If Russian oil prices remain relatively high, there'll be no
problem.' Russia's economy in blush is underpinned by plentiful commodities, strong growth spurred
by a consumption and investment boom and a banking system that is largely insulated from the
paucity of money that has threatened lenders in other markets. 'This is an unusual global slowdown in
the sense that it hasn't hit Russia's main export commodities,' agreed Rory MacFarquhar, a managing director
at Goldman Sachs, which 'very bullish' on commodities predicted last week that oil prices could spike as high
as 175 dollars per barrel in the long-term. But neither is Russia's economy susceptible to collapsing as in
1998 from a sudden drop in oil prices, economists in the capital said. 'For Russia this is all gravy. This money
is all going straight into government accounts,' said MacFarquhar. Now approaching the 10th anniversary of
the financial crisis, the singe of cautiousness marking Russia's financial authorities after watching their
nation's savings vaporize in 1998 has left Russia best positioned to weather through. The government has
culled huge current account and budget surpluses from taxes on oil into the so-called state
Stabilization Fund, representing 170 billion dollars taken out of the investment cycle to mitigate the
relationship of world oil prices on Russia's growth. 'With most of this oil windfall is taxed away and
stashed away now, the effect of oil prices is not as strong as seven years ago,' said Yaroslav Lissovolik,
Deutsche Bank's chief economist in Russia. Addressing the World Economic Forum in Davos, Finance
Minister Alexei Kudrin ebulliently proclaimed Russia is 'an island of stability,' perhaps teasing other
economic leaders caught out in the storm. Nonetheless, both Russian indexes plunged in last month's global
stock market tumble and Moscow felt the same thirst as other markets as cheap money from corporate
borrowing and oil inflows dried up. 'It is not as if Russia is an island. It is part of the world economy. The
financial channel is hurting much more than one could expect,' stressed MacFarquhar of Goldman Sachs,
which revised its growth projections a full percentage point to down from last year's 8.1 per cent. Russian
banks and companies accumulated a lot of external debt and some significant institutions are likely to be
caught out unable to refinance let alone borrow more, judged Anders Aslund, a senior fellow at Peterson
Institute for Economics. In the first two months of this year net private capital outflows reached 18 billion
dollars, according to the Central Bank. These outflows place greater pressure on interest rates to rise among
other factors that may lead to liquidity downturn persisting into April, said Lissovolik. But confidence in
Russia is based in part on the ability of financial authorities to mitigate a crisis and thus far Russia has clearly
opted for protecting its banking system rather than moving to deal with ballooning inflation. The country's
heavy financial war chest may be used to offset the worst of a crisis, said MacFarquhar. 'Simply by deploying
that money in the domestic economy they can substitute for credit inflows that haven't materialized,' he said.
Growth predictions averaged a bullish 7.5 per cent among Moscow banks contacted by Deutsche Presse-
Agentur dpa, who cited strong consumer and investment data. 'Really the story with respect to Russia is the
consumer and investment boom working in tandem to produce these high growth rates,' said
Lissovolik. These aggregates are less vulnerable to the current credit crunch 'showing Russia is very much
resilient to global shocks,' he said. The consumer credit boom last year was the result, not the cause of
consumer credit and retail loans linked to the baking sector, said Bragin of Trust Bank. Whereas, Aslund
speculates that Russia's problem may even be an excess of capital inflows as investors see the glow of
Russia's economy alongside gloomier markets. In dramatic reversal of the fortunes of 10 years ago, Russia
may turn a profit from the current crisis, leading the tide among emerging markets. Economic ambassador
Kudrin's vociferous affirmations at every public appearance - 'Russia stands slightly apart,' 'We have done it'
and 'Russia's economy remains highly resistant' - underscores the economy's positive fundamentals and is
perhaps the best favour to be doing for the Russian economy.
***Russia Internals – Key to Econ***

I/L – Oil Key to Russian Economy (1/4)

Oil is key to Russian econ
OECD Observer 2005
http://www.oecdobserver.org/news/fullstory.php/aid/1658/
The Russian economy has now entered its seventh year of expansion, confounding almost everyone
with an average real GDP growth of just under 6.8% per annum during 1999-2004. But the economy has
come to depend heavily on the performance of a small number of natural resource sectors, above all
oil. The trouble is, oil-sector growth has been slowing of late, despite record-high prices. Add to this a
number of persistent institutional weaknesses, and doubts start to creep in about Russia’s capacity to
sustain high growth over the longer term. The role energy has played in Russia’s expansion is striking.
Natural resource sectors directly accounted for roughly 70% of the growth of industrial production in
2001-2004, with the oil sector alone accounting for just under 45% (see graph). This implies that natural
resource sectors directly contributed more than one third of Russian GDP growth over the period, and the oil
industry alone close to one quarter. There are, of course, well known dangers associated with resource-
dependent growth, and these underlie much of the scepticism about Russia’s longer-term prospects, as
well as much of the concern with diversifying economic activity in Russia away from natural resources.
Nevertheless, given its current economic structure, Russia is destined to remain highly dependent on the
performance of its resource sectors for many years to come.
Oil Key to Russian Economy – Surplus

Tehran Times, 06/ 12/ 08 (“IEA: Russia is biggest oil producer: The International Energy
Agency says Russia has turned into the biggest crude oil producer, a title traditionally
belonged to Saudi Arabia,” http://www.tehrantimes.com/index_View.asp?code=170556)
The IEA declared on Tuesday that Russia has been the biggest crude oil producer in the first quarter of
2008, extracting 9.5 million barrels per day, ahead of Saudi Arabia at 9.2 million barrels, AFP reported.
The IEA ranks the United States as the third-biggest producer with 5.1 million barrels per day, followed by
Iran, pumping 4 million barrels per day China is in fifth place with output of 3.8 million barrels per day. In
principle, Russia’s oil bonanza could continue for years: it has the world’s seventh-biggest oil reserves,
at 80 billion barrels, according to BP, a British oil firm. And oilmen reckon there are 100 billion more barrels
to find—“the biggest exploration prize in the world”, in the words of Robert Dudley, the boss of TNK-BP,
BP’s Russian joint venture.
Oil Key to Russian Economy – Exports

Energy Information Administration, 6/12/08 (Official Energy Statistics From the U.S.
Government: Russia, http://www.eia.doe.gov/cabs/Russia/Background.html)
Russia holds the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest
oil reserves. Russia is also the world's largest exporter of natural gas, the second largest oil exporter and the
third largest energy consumer. In 2007, Russia’s real gross domestic product (GDP) grew by
approximately 8.1 percent, surpassing average growth rates in all other G8 countries, and marking the
country’s seventh consecutive year of economic expansion. Russia’s economic growth over the past seven
years has been driven primarily by energy exports, given the increase in Russian oil production and
relatively high world oil prices during the period. Internally, Russia gets over half of its domestic energy
needs from natural gas, up from around 49 percent in 1992. Since then, the share of energy use from coal and
nuclear has stayed constant, while energy use from oil has decreased from 27 percent to around 19 percent.
Russia’s economy is heavily dependent on oil and natural gas exports. In order to manage windfall oil
receipts, the government established a stabilization fund in 2004. By the end of 2007, the fund was expected
to be worth $158 billion, or about 12 percent of the country’s nominal GDP. According to calculations by
Alfa Bank, the fuel sector accounts for about 20.5 percent of GDP, down from around 22 percent in 2000.
According to IMF and World Bank estimates, the oil and gas sector generated more than 60 percent of
Russia’s export revenues (64% in 2007), and accounted for 30 percent of all foreign direct investment
(FDI) in the country.
Oil Key to Russian Economy (2/4)

Oil Key to Russian Economy -- Development
Government: Russia, http://www.eia.doe.gov/cabs/Russia/Background.html)
Oil Product Exports and Balance Most of Russia's product exports consist of fuel oil and diesel fuel, which
are used for heating in European countries and, on a small scale, in the United States. Russian oil exports to
the U.S. have almost doubled since 2004, rising to over 400,000 bbl/d of crude oil and products in 2007.
Updated monthly and annual data are available from EIA’s Petroleum Navigator. Increases in product
exports can be attributed to political pressures to maintain refinery operations and higher
international oil product prices. A draft plan for the refining sector’s development for 2005-2008 foresees
continued increases in the production of high quality light oil products, catalysts and raw material for the
petrochemical industry. As production of fuel oil is reduced, local refineries are only meeting about half
of the country’s demand for high octane gasoline. Consequently, Russia must import the remainder.
Oil Key to Russian Economy – Disposable Income

The Economist, 06/05/08 (“Crisis? What oil crisis?: High oil prices may be causing pain for
carmakers in America, but they have helped create a booming market in Russia,”
http://www.economist.com/PrinterFriendly.cfm?story_id=11496858)
Total car sales fell for the third month in a row.But there is one country where the high oil price is powering
the expansion of the market, rather than painful restructuring. Thanks to abundant natural resources,
Russia's economy has grown by an average of 7% a year for the past decade. Real disposable income
has nearly doubled in the past five years and is growing by more than 10% a year. That means a lot of
Russians can suddenly afford to buy cars.
Oil Key to Russian Economy – Dependence

The Economist, 05/08/08 (“Trouble in the pipeline: Despite booming demand and record
prices, Russia's oil industry faces problems,”
http://www.economist.com/business/displaystory.cfm?story_id=11332313)
Meanwhile, Russia today is more dependent on oil and gas than it has ever been, argues Chris Weafer, a
long-time Russia watcher and chief strategist at Uralsib, a bank. The share of oil and gas in Russia's gross
domestic product has more than doubled since 1999 and now stands at above 30%, according to the
Institute of Economic Analysis, a think-tank. Oil and gas account for 50% of Russian budget revenues
and 65% of its exports. Yet the government has put at risk the goose that lays these golden eggs.
Oil key to Russian Economy – Migration.

Hill, 2005 (Fiona, September 22, Senior Fellow Brookings Institute, HASC Threat panel)
Since 1999, with the rise of world oil prices, the Russian economy has increasingly become tied to
energy export revenues and international energy markets, making it extremely vulnerable to future oil
shocks. In the meantime, the oil-fueled growth of the Russian economy has turned Russia into a
migration magnet for the rest of Eurasia. Over the last five years, millions of people from all across the
region have flooded into Russian cities in search of work—becoming accustomed to the idea that there is
work in Russia, even if unemployment is high elsewhere. This migration has become a regional safety valve
and has taken the edge off social conflicts and economic disparities across Eurasia. Impoverished states like
Tajikistan and Kyrgyzstan have increasingly tailored their own economies and labor forces to serving the
Russian market. Even in the three Caucasus countries of Armenia, Azerbaijan, and Georgia, remittances from
migrant workers in Russia account for between 20-25% of GDP. If the oil price drops and energy export
revenues fall in Russia, economic growth will taper off. Moscow will have to make decisions about what
to prioritize and pay for at home; current migrant workers may have to return to their countries of origins;
and new migrants may not find work in Russia. The problem will not just be one of constrained remittances.
Trade flows in goods and services to Russia will also be negatively affected retarding regional economic
growth and exacerbating regional tensions.

Oil Key to Russian Economy – Monoculture
Ekimoff, 12/07/06 (Lana, Director of Russian and Eurasian Affairs, U.S. Department of
Energy, “Putin, Petroleum, Power and Patronage”,
http://www.jamestown.org/events_details.php?event_id=21)
Professor Goldman explored at great length the current situation in Russia with regard to energy production,
including Europe's increasing dependence on Russian energy exports. He also examined how Russian
energy production has been the single most important factor with regards to Russia's improving
economy as well as its vastly increased economic and political influence on the world's stage. Professor
Goldman made several important observations: - Putin has publicly stated (in 2005) that he intends to use the
production and supply of Russian energy as an instrument of foreign policy. - The Russian economy has
almost become a monoculture of oil and gas production, with a dramatically close relationship between
the increase in oil production and the increase in GDP rarely found in economies. - The recent increase
in Russian oil production accounts for approximately 40% of the world's increase in oil production. The
result is that Gazprom is now the third largest company in the world in terms of capitalized income, behind
only ExxonMobil and General Electric. - Energy production in Russia has been largely re-nationalized with
the result that the "siloviki," or Putin's close allies, who replaced the oligarchs of the 1990's, have essentially
created an "oilgopoly" in Russia. - Russia intends to dominate both the supply and distribution of energy to
Europe, which is already increasingly dependent on Russian energy. - Russia is currently as strong as it ever
was in czarist or even Soviet times. - Europe does not even have "Mutually Assured Deterrence," let alone
"Mutually Assured Destruction" to use as a lever against Russia's monopoly over Europe's energy supplies,
thus leaving Europe in a vulnerable situation. - Alternatives are few and far in between: as Europe threatens
to take its business elsewhere, Russia is busy opening up its energy market in China, which could also fall
into this energy dependence trap. - The only real weakness in this system is that it might not survive should
someone who is not a Putin acolyte succeed him in 2008. Ms. Lana Ekimoff's comments during the event
were off-the-record. Brief: Professor Goldman began the discussion by noting that Russia's decision to cut off
energy supplies to Ukraine in January 2006 should not have come as a shock. President Putin had openly
talked about changing Russia's energy subsidies towards Ukraine should Ukraine adopt an openly pro-
Western policy. Professor Goldman commented that although Russia was surprised by the world's reaction to
this, it nonetheless gave President Viktor Yushchenko's government a black eye, and prompted Ukraine to
change direction, which is what Russia wanted in the first place. Goldman then commented that since the
collapse of the Russian economy in August 1998, gas and oil production in Russia has increased from 303
million tons in 1998 to 469.6 million tons in 2005. This has almost single-handedly been responsible for
the constant growth of the Russian economy since that time and has also amassed a huge trade surplus for
Russia.

Oil Key to Russian Economy -- Empirically Proven.
Birch, 12/28/01 (Douglas, Baltimore Sun Foreign Staff, “Oil is czarina of Russia's economy:
Industry is vital, subject to vagaries of climate, market, ”
http://www.cdi.org/russia/johnson/5619-4.cfm#top)
Memories are still sharp among workers in Kharyaga of the last time oil prices fell, in the mid-1990s. The
region's largest oil company, Komineft, pumped oil at a furious pace but wouldn't spend the money needed to
repair broken equipment. Many wells had to be shut down. Workers weren't paid for months at a
stretch; they eventually were put on eight-hour weeks. Oil workers and their families began to leave
their homes in this region, about 1,000 miles northwest of Moscow. Government employees, high school
graduates and retirees fled Usinsk - the main town of 60,000 people about 100 miles south of the Kharyaga
camp. Usinsk eventually lost one resident out of five. Among those who stayed, there was a sharp
increase in alcoholism and suicides. Residents talk of a man who sold his apartment for three bottles of
vodka, of a woman who jumped off the roof of her apartment building with her baby in her arms - tales of
despair.
Oil Key to Russian & world Economy

West, 2005 (J. Robinson, PFC Energy Chairman, Summer, “The future of Russian energy,”
http://findarticles.com/p/articles/mi_m2751/is_80/ai_n15696644/print)
The world needs every barrel of Russian oil. With growing Chinese and Indian demand and the insatiable
appetite of the United States, markets will be tight and even more reliant on the Middle East. Given today's
high oil prices, Russian companies and the Russian government believe that they can fund a good part
of new developments and even infrastructure projects themselves. Additionally, Chinese and Indian
companies, with the strong backing of their governments, are ready to do business with Russian companies
and the Russian government. Their investment criteria are more in line with the approach favored by their
Russian hosts. Skills as well as money will be crucial, however, and they bring few. If as a result Russia
cannot sustain its current oil production level, this will negatively impact world oil markets. A faltering
Russian oil sector would be a disaster for the world economy as well as for Russia itself.
Oil Key to Russian Economy -- Exports

Victor, 2/19/03 (David G., Adjunct Senior Fellow for Science and Technology, “Nuclear
Energy, Not Oil, Should Fuel US-Russian Ties”,
http://www.cfr.org/publication.html?id=5562 )
Russia needs high oil prices to keep its economy afloat, whereas US policy would be largely unaffected by
falling energy costs. Moreover, cheerleaders of a new Russian-American oil partnership fail to understand
that there is not much the two can do to influence the global energy market or even investment in Russia's oil
sector. The focus on oil has also eclipsed another area in which US and Russian common interests could run
deeper: nuclear power. Joint efforts to develop new technologies for generating nuclear power and managing
nuclear waste could result in a huge payoff for both countries. These issues, which are the keys to keeping
nuclear power viable, are formally on the Russian-American political agenda, but little has been done to tap
the potential for co -operation. Given Russia's scientific talent and the urgent need to reinvigorate nuclear
non-proliferation programmes, a relatively minor commitment of diplomatic and financial resources could
deliver significant long-term benefits to the United States. On the surface, energy co-operation seems a wise
choice. Russia is rich in hydrocarbons and the US wants them. Oil and gas account for two-fifths of
Russian exports. Last year, Russia reclaimed its status, last held in the late 1980s, as the world's top oil
producer. Its oil output this year is expected to top eight million barrels per day and is on track to rise
further.
I/L – Exports Key

Oil Key to Russian Economy -- Exports
Gelb, 01/03/06 (Bernard A, Specialist in Industry Economics Resources, Science, and
Industry Division, “CRS Report for Congress: Russian Oil and Gas Challenges,”
http://fpc.state.gov/documents/organization/58988.pdf)
Energy exports have been a major driver of Russia's economic growth over the last five years, as
Russian oil production has risen strongly and world oil and gas prices have been relatively high. This type of
growth has made the Russian economy very dependent on oil and natural gas exports, and vulnerable to
fluctuations in world oil prices. On average, a $1 per barrel change in oil prices results in a $1.4 billion
change in Russian government revenues in the same direction.
Exports Key – Only Link to global Economy

Kovalyova 09/20/2001 (Svetlana, “Russia economy sheltered for now from world shocks,”
http://www.cdi.org/russia/johnson/5452-9.cfm)
Some suggested the export-driven Russian economy might profit from surgingoil prices caused by
growing political tension after last Tuesday'sdevastating events, while U.S and other major world economies
fear a possibleslowdown. But Russia's Deputy Prime Minister Alexei Kudrin warned againstover-optimistic
expectations and said the government would stick to aconservative budget policy to aviod macroeconomic
instability. "We should not become euphoric about our current economic achievements... Wecannot
completely distance ourselves from what is going on in the U.S.,Europe and Asia. The risks remain high,"
Kudrin told Russia's RTR statetelevision. Russia's economy had been recovering from the 1998 crisis
boosted by highprices for key exports -- oil, gas and metals. The country posted record post-Soviet
economic growth of 8.3 percent of grossdomestic product in 2000 and the government has forecast 5.0-5.5
percent GDPgrowth this year. "Russia remains isolated from international capital markets and our only
strong link with the global economy is foreign trade, which has not yet beenhit by the negative events,"
said Oleg Vyugin, chief economist at TroikaDialog investment bank.
***Russia Internals – Investment***

I/L – Investment K/T Growth (1/2)

Oil investment in Russia key- it holds 20% of the world’s gas reserves
The world's largest gas company, Gazprom holds more than 20% of the world's total gas reserves and in
2004 produced close to 80% of Russia's total gas output. The company's supplier position in Eastern
Europe is remarkable. Gazprom provides approximately 91% of Hungary's gas imports, 79% of Poland's, and
nearly 75% of the Czech Republic's. In Western Europe, Gazprom supplies about one-fourth of the
region's natural gas. Based upon its size, production capabilities, and market position, the Russian
government is reinforcing Gazprom's position as an international energy giant. Gazprom is currently looking
beyond Europe to America and Asia and has targeted the development of LNG projects as part of an
ambitious expansion plan. The company recently signed memorandums of understanding with a number of
international firms such as Chevron, ConocoPhillips, Statoil, and Petro-Canada regarding the development of
the giant Shtokman field, and is also involved in several large pipeline projects. Foreign companies that
wish to gain access to Russian gas will have to partner with Gazprom based upon its size, pipeline
connections, and reserves. The company will rely on international firms to supply the substantial
funding for project development and infrastructure costs.
Investment in Russia’s oil market key to growth

Weir 08 (Fred, The Christian Science Monitor [http://www.csmonitor.com/2008/0528/p01s04-wosc.html?page=1]
Has Russian Oil Output Peaked?/ May 28, 2008)
Others say Russia's gas-and-oil sector can continue to grow, but only if there are massive new
investments and critical reforms to an industry that under Putin became dominated by two state-owned
behemoths, Gazprom and Rosneft. Both companies have accumulated huge debt in an ongoing campaign to
take over formerly private assets that have returned nearly half of Russian oil and gas reserves to state control
in recent years. "Ten years ago the bulk of our oil resources were held by private companies, and growth rates
were very high," says Michalkova. "Growth rates have become sluggish for complex reasons lately, but
political interference and battles over ownership have not been helpful." Major investments will be
needed to eke out further production from the largely exhausted Soviet-era oil fields of western
Siberia, experts say. "Production costs have more than doubled in the past six years, and the current tax
regime makes additional output at older fields unviable," says Valery Nesterov, an energy expert with
Troika Dialog.
I/L – Investment K/T Growth (2/2)

Investment in oil key to Russia’s economic growth
Bush 04 (Jason, BusinessWeek [http://www.businessweek.com/magazine/content/04_47/b3909079_mz054.htm]
Oil: What's Russia Really Sitting On?/ November 22, 2004 )
This increasing recoverability, and not dramatic new discoveries of oil, explains why Russia's proven
reserves keep shooting up. The leading Russian oil companies have all announced big increases this
year, following independent international audits. Lukoil (LUKOY ), Russia's largest oil outfit, saw a boost of
4.7% in proven reserves both this year and last, according to Society of Petroleum Engineers SPE standards.
No. 2 producer Yukos, meanwhile, jumped 13.2% this year, according to stringent standards set by the U.S.
Securities & Exchange Commission. The growth in Russia's proven reserves is mainly happening at
existing fields in western Siberia, a supposedly "mature" region where production had been declining
until recently. DeGolyer & MacNaughton predicts that western Siberia could boost its output to 10 million
bbl. a day by 2012, up from less than 6 million at present, and keep production at that level for at least 10
years. The use of even newer technologies available by then means that western Siberian oil production may
not decline for decades to come. Russia's reserve potential is vaster still when undeveloped regions, such
as the Arctic, the Caspian, and in particular eastern Siberia, are factored in. And then there's Russia's
plentiful supply of natural gas. It is already acknowledged as having the world's largest gas reserves, with 47
trillion cubic meters, or 26.7% of global reserves. But tapping Russia's vast oil pool will require billions in
investment, especially in export pipelines. Although on course for 8% growth this year, production gains
could slow as export bottlenecks appear. But infrastructure investment is likely to go up in tandem with
reserve estimates. If Russia finds a way to get all that lovely oil to needy international consumers, its
days as a global energy powerhouse could be just beginning.
I/L – Investment K/T Exploration (1/2)

Investment key to oil exploration and maintaining production
Aris 08 (Ben, Russia Profile
[http://www.russiaprofile.org/page.php?pageid=Business+New+Europe&articleid=a1212652503] Russia enacts new
law on foreign investments in strategic areas/ June 5, 2008)
The upshot is little exploration work has been done over the last 17 years. The Soviets explored western
Siberia pretty thoroughly and started production on many of the biggest fields. However, as this
produced more than enough oil little prospecting was done in eastern Siberia, which has a very similar
geology and is widely believed to contain rich oil deposits. Just no one has been to look yet. The lack of
exploration will only exacerbate the recent trend of falling oil production in Russia. Most of the Soviet-
era fields currently being exploited are either mature or already in decline. Heavy investment is needed
simply to maintain current production levels, while demand for oil is rising all the time. The decrease
xfgcan't be offset by production at the new oil fields coming on stream. The International Energy Agency's
World Outlook 2007 says that even in the best-case scenario growth of the oil production in Russia might
stall in 2010 to 2012 and is not likely to resume until 2015.
Production peaked- oil investment key to expansion

Hays 08 (Kristen, Houston Chronicle
[http://www.redorbit.com/news/business/1358023/russian_calls_for_boost_in_oil_field_investment/index.html]
Russian Calls for Boost in Oil Field Investment/ April 25, 2008)
A top foreign affairs official with the Russian government says the country needs investment in new oil
fields amid recent reports that Russian oil production has peaked. "The legacy of the Soviet oil and gas
industry is almost over," Mikhail Margelov, chairman of the committee on foreign affairs of the federation
council of the Russian Federation, said Thursday after a luncheon speech to the World Affairs Council in
Houston. "As any old industry, and our oil and gas industry is relatively old, it needs more investment and
organization." The latest data on Russian oil production showed that for the first time in a decade,
output fell in the first three months of this year. Merrill Lynch analyst Francisco Blanch said in a recent
report to investors that Russia surpassed Saudi Arabia as the world's largest oil producer in 2007 with an
average daily output of 9.84 million barrels. But first-quarter production this year fell to an average 9.75
million barrels per day. "Mature fields, exploding costs, a heavy tax burden, infrastructure constraints
and market-unfriendly government policies have led to stagnation in oil exploration and production,"
Blanch wrote.
I/L – Investment K/T Exploration (2/2)

Investment key to develop new oil fields in eastern Siberia
The Economist 08 ([http://www.economist.com/business/displaystory.cfm?story_id=11332313] Russia’s oil
industry: Trouble in the pipeline/ May 8, 2008)
In principle, Russia's bonanza could continue for years: it has the world's seventh-biggest oil reserves,
at 80 billion barrels, according to BP, a British oil firm. And oilmen reckon there are 100 billion more
barrels to find—“the biggest exploration prize in the world”, in the words of Robert Dudley, the boss of
TNK-BP, BP's Russian joint venture. But Russia has regulated the industry so poorly that production is
falling despite the soaring oil price. “Tax is the major impediment,” says Ms Redman. The government levies
an export duty of 65% at prices over $25 a barrel. Add to that various corporate, payroll and production
taxes, oilmen complain, and the state creams off as much as 92% of profits. Executives at TNK-BP have
argued that rising costs across the oil industry will make many investments in Russia unprofitable unless the
tax regime is changed. As it is, TNK-BP accounts for a fifth of BP's production, but only a tenth of its profits.
The government does offer tax breaks on production from older fields. So oil firms, naturally, have been
concentrating on squeezing as much oil as they can out of those. Until recently, that was an obvious
priority anyway, since fields that had fallen into ruin after the collapse of the Soviet Union in the early 1990s
could be revived relatively easily and cheaply. By mapping existing fields more precisely, installing new
pumps and injecting water and chemicals into wells to maintain pressure, private oil firms were able to
raise Russia's production from 6m b/d to almost 10m b/d, mainly from western Siberia. In 2003 alone,
output jumped by 12%. But this strategy is now yielding diminishing returns. Mr Fedun says the western
Siberian fields have reached their natural limit. To keep production at today's levels requires ever more
investment. To get Russia's output growing again, firms must make huge investments to develop new
fields in remote provinces such as eastern Siberia and the Sakhalin region.
Investment key to expansion of Russian oil fields

Bush 08 (Jason, BusinessWeek
[http://www.businessweek.com/magazine/content/08_26/b4090054450644.htm?chan=globalbiz_europe+index+pag
e_energy+%2Bamp%3B+environment] Prime Minister Putin Primes the Pump/ June 19, 2008)
Geological limits are also behind the decline. Unlike other parts of the world, such as the North Sea or
Gulf of Mexico, Russia isn't running out of oil. But most of today's production comes from mature
fields in western Siberia, first developed in the 1970s and now experiencing significant declines. Growth
requires massive new investment in the Arctic and in eastern Siberia, inhospitable regions where
infrastructure must be built from scratch. Oil companies will have to invest $2 trillion to tap these
remaining reserves, estimates Leonid Fedun, vice-president at Lukoil (LUKOY), Russia's No. 2 producer.
"It's colossal money," he says.
I/L – Investment K/T Infrastructure

Investment key to improve Russia’s pipeline infrastructure
Gelb 06 (Bernard A- Specialist in Industry Economics Resources, Science, and Industry Division, CRS Report for
Congress [http://fpc.state.gov/documents/organization/58988.pdf] Russian Oil and Gas Challenges/ January 3, 2006)
Russia’s capacity to export oil faces difficulties, however. One stems from the fact that crude oil exports
via pipeline are under the exclusive jurisdiction of Russia’s state-owned pipeline monopoly, Transneft.
Bottlenecks in the Transneft system prevent its export capacity from meeting oil producers’ export
ambitions. Only about four million bbl/d can be transported in major trunk pipelines; the rest is shipped by
more costly rail and river routes. Most of what is transported via alternative transport modes is refined
petroleum. The rail and river routes could become less economically viable if oil prices fall sufficiently. The
Russian government and Transneft are striving to improve the export infrastructure. Unless significant
investment flows into improving the Russian oil pipeline system, non-pipeline transported exports
probably will grow. For example, without a dedicated pipeline, rail routes presently are the only way to
transport Russian crude oil to East Asia. Russia is exporting about 200,000 bbl/d via rail to the northeast
China cities of Harbin and Daqing and to central China via Mongolia. Since Yukos was the leading Russian
exporter of oil to China, there was concern that the breakup of Yukos by the Russian government (see below
under “Energy Policy”) might affect rail exports to China. However, Lukoil has taken over the role of rail
supplier.
I/L – Investment K/T Technology

Investment key to energy technology and increasing exports
Gelb 06 (Bernard A-Specialist in Industry Economics Resources, Science, and Industry Division, CRS Report for
Russia’s ability to maintain and expand its capacity to produce and to export energy faces difficulties.
Russia’s oil and gas fields are aging. Modern western energy technology has not been fully
implemented. There is insufficient export capacity in the crude oil pipeline system controlled by Russia’s
state-owned pipeline monopoly, Transneft. And, there is insufficient investment capital for improving
and expanding Russian oil and gas production and pipeline systems.
I/L – A2: Investors Won’t Invest (1/2)

Investors will seek Russia because of increased demand for oil
Page 06 (Bill, Deloitte Touche Tohmats [http://www.euromoney-yearbooks.com/images/143/downloads/p37-
43%20O&G%20-%20Russia.pdf] Prospects for foreign investment in the Russian oil & gas industry/ June 2006)
During the chaotic decade after the collapse of the USSR, Russia acquired a reputation as a difficult
place to do business and accordingly many companies which had initially rushed to invest there, became
extremely wary about country risk. This effect was compounded by falling oil prices. The greater political
and regulatory stability brought by President Putin’s administration at the beginning of the present
decade started to improve perceptions. Foreign interest in the Russian oil sector was also stimulated by
rising oil prices and enthusiasm peaked in 2003 when TNK and BP announced their joint venture. Since
then there has been a continuing stream of new investment, but at the same time there is a perception of
increasing political intervention, for example with the Yukos affair and the recent controversy over the
Sakhalin 2 project. Over the last three years oil prices have climbed to unprecedented heights and
industry commentators have begun to focus more and more on the issue of ‘peak oil’. Opinions are
divided on when the World will reach ‘Hubbert’s Peak’, and some believe that we have already passed that
point. While we can not be certain about this we can be certain that hydrocarbons are a finite resource and it
is clear that the rate of increase in proven reserves does not at present match the rate at which consumption is
increasing. Conventional oil reserves in political stable locations (such as the US or UK) are in
irreversible decline. The rapid emergence of China and India as major oil consumers will almost
certainly continue and, baring a catastrophic global recession, one can see continuing upward pressure on
oil prices over the next decade and increasing pressure on supply. This creates an environment in
which hydrocarbon sources which were previously uneconomic (such as Canada’s oil sands), or
unattractive because of perceived political risks (such as the former USSR), become the focus attention
for the energy industry. These become even more important if one doubts the ability of major OPEC
producers, particularly Saudi Arabia, to fill the widening gap between supply and demand.2 In this
situation the international oil companies (IOCs) are facing serious challenges in replacing reserves and many
are increasing M&A activity to supplement exploration and help fill the gap. Their non-OPEC supply has
begun to decline and access to reserves in some OPEC countries is problematic. On top of this high prices
have encouraged ‘energy nationalism’ in, for example, Bolivia and Venezuela and this is further squeezing
the IOCs
Investors still flocking to Russia despite inconveniences

A considerable group of foreign investors are looking for routes to enter the Russian market. For
example, the upstream arm of RWE was recently reported to be looking at a major gas project; Repsol YPF
and PetroCanada are also reported to be considering gas and LNG options; Hungarian MOL is already
active in Russian upstream, as is Wintershall; Eni is reported to be in the process of negotiating a joint
venture with Gazprom. Total, Chevron, ConocoPhillips, Hydro and Statoil were the short-listed
bidders for Shtokman, before Gazprom’s recent announcement that it would develop the project alone. Not
only is the interest manifest via direct investment. Portfolio investors were enthusiastic purchasers of
Ural Energy and Novatek when those two companies listed in London during 2005, and while the 2006
Rosneft IPO was overshadowed by the threat of litigation because of its role in the dismemberment of Yukos,
the investment community has still given it a larger market capitalisation than Lukoil.
I/L – A2: Investors Won’t Invest (2/2)

Russia has opened its oil markets to foreign investments
Gelb 06 (Bernard A- Specialist in Industry Economics Resources, Science, and Industry Division), CRS Report for
Central Asian countries have extensive energy ties to Russia stemming from the numerous transportation
routes that go through Russia. Russia initially opposed western investment in Caspian Sea energy
projects, insisted that oil from the region be transported through Russian territory to Black Sea ports, and
argued for equal sharing of Caspian Sea oil and gas. But it has become more agreeable, and even
cooperative with, western projects; and it has signed an agreement with Azerbaijan and Kazakhstan on
Caspian seabed borders essentially based upon shore mileage.
Russia removing limitations on foreign investments

The European Weekly 08 ([http://www.neurope.eu/articles/87794.php] Reduction on limits to foreign
investment/ June 16, 2008)
Russia announced a reduction of controversial limitations on foreign investment in strategic branches

of the country’s economy at the St Petersburg International Economic Forum. Russia’s First Deputy Prime
Minister Igor Shuvalov announced the reduction of Russian state involvement in “unnecessary”
controls in economy. Under former president Vladimir Putin, more than 40 sectors of the economy -
including aviation, nuclear and defence industries as well as airand seaports - were identified in which
foreign businesses could invest only with state permission. These measures were considered by the
West as hurdles to investment.
New law encourages foreign investors

Stott 08 (Michael, Reuters [http://www.reuters.com/article/topNews/idUSL079404220080607] Russia's Medvedev
pledges rule of law to woo investment/ June 7, 2008)
Russian President Dmitry Medvedev pledged on Saturday to reinforce the rule of law and called for more
foreign investment as part of a Kremlin drive to make Russia the world's number five economy by
2020."Our task is to create absolutely independent modern courts that comply with the country's economic
development level," Medvedev told more than 80 chief executives of major global companies at Russia's top
annual business forum. He also said that a recent law regulating foreign investment in strategic sectors
was based on U.S. rules and should facilitate investment. Muhtar Kent, the COO of Coca-Cola Co, told
reporters after the closed meeting at the St Petersburg Economic Forum that foreign executives were
impressed by Medvedev's willingness to have an open dialogue on topics of interest to investors.
Medvedev had stressed the need for Russia to become a more innovative economy, to be more energy-
efficient and to invest in better education and science, Kent added. Kent said the CEOs had raised two issues
with Medvedev: the need for Russia to improve its creaking, mostly Soviet-era infrastructure to avoid
bottlenecks in growth and the need for a more transparent, improved legal system. Energy chief executives
were very complimentary about a new law passed last month by Russia regulating foreign investment
in strategic sectors of the economy because it set out for the first time clear and concise rules, he added.
I/L – A2: Investments too Risky

Higher oil prices increase investors’ tolerance for risks
Page 06 ( Bill, Deloitte Touche Tohmats [http://www.euromoney-yearbooks.com/images/143/downloads/p37-
So a clearer picture emerges. Tighter access to reserves has given IOCs the need to look for new places to
invest. At the same time higher prices have increased their tolerance for higher costs and higher risks.
Russia’s huge proven reserves of oil and gas, and even vaster potential, makes it a magnet for the
IOCs. While the Kremlin’s approach may seem sometimes to be hostile to foreign investors in the
hydrocarbon sector, this does not seem to have fully taken the edge of the IOCs’ appetite for Russian
oil and gas.
I/L – A2: Taxes Prevent Investments

Putin removed tax barriers on oil investments
Bush 08 (Jason, BusinessWeek
[http://www.businessweek.com/magazine/content/08_26/b4090054450644.htm?chan=globalbiz_europe+index+pag
e_energy+%2Bamp%3B+environment] Prime Minister Putin Primes the Pump/ June 19, 2008)
On June 11, the International Energy Agency announced that Russia's oil production had hit 9.5 million
barrels per day in the first quarter, edging past Saudi Arabia's 9.2 million to make the country the
global King of Crude. But few in Russia are cheering because that new crown is already wobbling.
After climbing for years, Russia's output has begun to drop: It was down by 0.7% in April. The problem
is so serious that the new Prime Minister, former President Vladimir Putin, has said the issue is his first
priority. To get production growing again, Putin has pledged billions of dollars in tax cuts for the
industry. The biggest change is a lower tax on production, which would result in an extra $4 billion in oil
company coffers each year. An additional $3 billion in benefits would come from tax holidays of up to 15
years for major projects in remote regions. In late June, the Parliament is expected to approve both
adjustments, which would take effect next year. Oil "was so obviously overtaxed that they had to do
something," says Ronald P. Smith, head of research at Alfa-Bank in Moscow.
I/L – A2: Russia Doesn’t Need Investments

Russia needs 900 billion in investments
The message seems to be that the government will keep a close eye on the Russian energy sector, and
access to the most desirable resources will be especially conditioned. Although the country remains high on
the list of places with promise, these messages require foreign companies to revise their thinking about
Russia. The recent government announcement will increase the number of assets that foreign firms can
pursue and gives them a chance to secure a share of proven reserves that by some estimates may total
between 60 and 200 billion barrels of oil and over 1,500 trillion cubic feet of gas. This represents a huge
opportunity for oil and gas companies which are not already active in the region. Although business risks
continue and future events cannot be accurately predicted, there are a few conclusions that can be reasonably
made: According to the International Energy Agency, investments required to maintain and grow Russia's
energy infrastructure will total some US$935 billion between now and the year 2030. A significant
amount of investment will come from multi-national loans and international corporations.

High oil prices key to future investments in Russia
Offshore exploration and production is still in relatively early stages, and operations in the Barents Sea or
offshore Sakhalin are regularly hampered by storms and seriously restricted for up to half the year because of
thick ice cover. While infrastructure may be well-developed in the mature producing regions of western
Siberia and the Volga-Urals basin, in the promising areas of Sakhalin, the Barents Sea and eastern
Siberia, only the largest prospects are economic because of the huge cost of developing infrastructure
from scratch. Projects which would be major finds in the Central North Sea or in Kuwait may be simply too
small to justify the level of investments required. Much of Russia is, therefore, a high-cost environment for
hydrocarbon exploration and production operations, and for this reason high oil prices are necessary
to sustain the interest of investors
I/L – Foreign Investment Key

Foreign investment key to developing Russia’s oil sector
Aron 07 (Leon- resident scholar and director of Russian studies at the American Enterprise Institute), The
American [http://www.american.com/archive/2007/january-february-magazine-contents/russia2019s-oil-woes/]
Russia’s Oil Woes/ January 2007)
With some of its key potential domestic investors expropriated, scared into selling, or forced to reduce
their investments because of the increasingly uncertain business climate, Russia needs a massive
infusion of foreign capital in order to continue developing its energy sector. Here too, however, statist
ideology trumps the country’s long-term interests.
Investing in Russia is a strategic decision for the US

Given that the United States, as well as Russia, is a major energy producer and user, Russian energy
trends and policies affect U.S. energy markets and economic welfare in general. An increase in Russia’s
energy production and its ability to export that energy westward and eastward may tend to ease the
supply situation in energy markets in the Atlantic and Pacific Basins. On the other hand, the Russian
government’s moves to take control of the country’s energy supplies noted earlier may have the effect of
making less oil available. Possibly as important as Russian oil and gas industry developments is the
associated potential for U.S. suppliers of oil and gas field equipment and services to increase their sales
and investment in Russia.
I/L – Investments Increase Production

Investments in exploration key to increased production
Strahan 08 (David, The Independent [http://www.independent.co.uk/news/business/analysis-and-features/hope-
springs-eternal-but-the-oil-wont-a-russian-lament-851834.html] Hope springs eternal but the oil won't: a Russian
lament/ June 22, 2008)
Those constraints are starting to emerge in Russia itself – where the decade-long boom came to a halt
last year and production has now begun to fall. Some pundits blame the high level of tax levied on oil
profits by Russia, but the deeper cause is that the easy gains achieved by refurbishing existing fields
have now been exhausted. Future increases in production capacity will require the development of new
fields in frontier provinces such as east Siberia and the Arctic, where working conditions are especially
hostile. Analysts agree that it gets very much harder from now on.
Empirically, investments are key to increasing production

Strahan 08 (David, The Independent [http://www.independent.co.uk/news/business/analysis-and-features/hope-
springs-eternal-but-the-oil-wont-a-russian-lament-851834.html] Hope springs eternal but the oil won't: a Russian
lament/ June 22, 2008)
With the fall of the Soviet Union at the end of the 1980s, the Russian economy had slumped and oil
production collapsed from 11.5 million barrels per day in 1987 to just over six million in 1998, as fields
were mothballed or simply not maintained. But as confidence returned so did the necessary investment,
and output began to recover – rising almost 60 per cent by 2007. It was this wave that Lord Browne
wanted to ride.
A2: No Link: Dollar k Oil Prices

Dollar value isn’t controlling oil price.
Associated Content 8 (Robert, BA English, May,

http://www.associatedcontent.com/article/756127/high_oil_prices_caused_by_falling_dollar.html)
In the past few months, economists and pundits have blamed raging oil prices on a falling value of the
dollar relative to foreign currencies. From a period of December through March, the dollar fell against
the euro and other major currencies as aftershocks of the housing and credit crisis rippled through the
US economy. But today, oil touched $124 dollars a barrel in the face of a rising dollar. According to
Nate Hudgins at The Oil Drum, in the period of time when oil has risen from $106 per barrel to its
current high price, the dollar has rallied from 1.6 to 1.535 dollars per euro. Looking at the price data
in this way lends new clarity for the reasons behind the high price of oil. Such reasons have been well
defined by Peak Oil theorists like Colin Campbell and Kenneth Deffeyes for more than a decade now. But
despite Campbell and Deffeyes sounding the alarm far ahead of the crisis we are in today, it takes the
removal of all other possibilities for energy optimists like CERA's Daniel Yergin to predict $150 oil.
***A2: Russia Internal Link Turns***

A2: Dutch Disease – Diversification Up

Diversification Up
World Economic Forum, October 2005 (“Economic Diversification Is Proceeding Slowly
But Surely, Says German Gref, Russian Economy Minister,”
http://www.weforum.org/en/media/Latest%20Press%20Releases/PRESSRELEASES100)
“The diversification of the economy is here already,” said German Gref, Russia’s Minister of Economic
Development and Trade, in response to a set of ten recommendations from business leaders at the closing
session of the World Economic Forum in Russia. Participants voted on a list of key issues defined by the
World Economic Forum’s Russia Scenarios project. Minister Gref said that “the Russian government is
committed to reform and will do everything to make Russia’s economy as transparent as possible and
one of the most liberal in the world”. He said the “pace of transformation and the time pressure are very big
and we start to do several things simultaneously. We don’t always manage to gauge things properly” and
sometimes have to step back, which is perceived as a lack of efficiency and consistency by others. He
stressed that the most important thing is not the speed of movement but the country’s stability. Movement
forward is clearly outlined and the country is moving in that direction, he stated.
Russian government is diversifying econ and investing in high tech
Bloomberg 8
http://www.bloomberg.com/apps/news?pid=20601087&sid=a8IoBFiocjdo&refer=home
Russia, the world's biggest energy exporter, created state- run institutions including the Development Bank in
2007 to help develop industries other than commodities extraction. Government spending, including on state-
operated corporations, increased by 40 percent last year as Russia seeks to diversify the economy and become
a global leader in nanotechnology and other high-tech industries by 2020.
***Russian Oil – Impacts***

Impact – Nuclear War (1/2)

Collapse of Russia’s economy will result in a nuclear war
Mann 99 (Paul, Center for Defense Information [http://www.cdi.org/adm/1228/transcript.html] Russia’s Nuclear
Crisis/ March 21, 1999)
"Russia's deteriorating economy elevates the uncertainty quotient in a number of very important
areas. Politically, Russia is increasingly unpredictable and the worsening economy situation affects all
aspects of the Russian scene, as the desperate search for revenue streams is exacerbating a number of very serious problems. For example, it has magnified the proliferation threat across
the board as growing financial pressures raise incentives to transfer sensitive technologies, especially to Iran." (Before Senate Armed Services Committee, Feb. 2, 1999.) NARRATOR: The director of the Defense
"The
Intelligence Agency, Lieutenant General Patrick Hughes, also finds reasons for the United States to worry about Russia's worsening economic situation. LG PATRICK HUGHES, DIA Director:
number of Russian strategic nuclear warheads will continue to decline, but Moscow will retain a potent
strategic arsenal and will increasingly rely on strategic forces to offset its diminished conventional
military capability." (Before Senate Armed Services Committee, Feb. 2, 1999.) NARRATOR: The Russian military has been dramatically diminished both in size and capability since the days of the
Soviet Union. The humiliating defeat in the 1995 war with Chechnya, a tiny breakaway republic, demonstrated Russia's military weakness Nowadays, Russia's armed forces are better known for horrendous living
conditions than for military might. Russian soldiers, once feared as "ten feet tall" by the West, now look considerably shorter. A visit with these raw recruits shows just how far they are from "combat ready." In 1998,
Russia's military budget was barely $5 billion, due to the greatly weakened ruble. In 1999, it may shrink to just one percent of the $267 billion the US spends on its military In 1998 alone, the Russian military reduced its
strength by 400,000 troops. Its forces stand at 1.2 million today. But even that force is much larger than the economy can sustain and according to reports in the Russian press, an additional cut of 600,000 troops may be
needed At "Tank Day," a family holiday for Russia's tank divisions, these weapons may be seeing their final action. The collapse of Russian military forces is highlighted by Pavel Felgenhauer, Russia's leading military
correspondent. PAVEL FELGENHAUER: There were no big maneuvers for already almost at least eight years and there -- the commanding generals and (inaudible) are mostly working as, you know, administrators,
trying to feed the troops and trying to keep their units together. But when it comes to battle, they're not ready. NARRATOR: Today, the mission of these soldiers is to harvest cabbages to make sure they have something
,
to eat tonight. These are the troops both we and the Russians rely on to man and safeguard a still-mammoth nuclear arsenal. CORPORAL ALEXEI GUSHIN Sertolova Tank Division (through translator): To make ends
meet, we have to work side jobs, such an unloading railway cars at night. Sometimes we get by with the help of relatives, but generally we have to look for money elsewhere because we're certainly not getting it from
the military. NARRATOR: When soldiers are worried about feeding their families, nuclear safety drops precipitously on the list of priorities. At home, Corporal Gushin's wife reflects the view of many Russian military
families. ELVIRA GUSHINA (through translator): The military simply should not be neglected as they are today. We are left at the mercy of fate. We have to look after ourselves in almost every way because the military
What worries many of us is that the traditional elements of control, guns and
is certainly not doing it. MR. CIRINCIONE:
guards, over these nuclear materials are weakening as the guards are not being paid, as they may be, in
some cases, selling their guns to buy food or using their guns for other purposes. We have documented
cases of guards deserting their posts around nuclear facilities to go scavenging for food. NARRATOR: Russia's military
has become alienated from a government that fails to provide even basic support and from a society that no longer respects and honors it.
Russia today maintains 6,000 nuclear warheads poised for long-

A recent State Department report to Congress detailed Russia's military crisis.
distance delivery. It has more than 20,000 nuclear weapons of all types. There's plenty to worry about.
MR. CIRINCIONE: We're watching potentially the de-evolution of a nuclear state, something that the world has
never seen before, and that could have catastrophic consequences. You can't ignore something like this.
My biggest concern with the Soviet Union is nuclear technology getting out to the wrong hands. Not
just the technology, but the actual weapons themselves. In an economy that's in trouble like that, it's
entirely possible. MR. MANN: The more immediate danger in nuclear terms might be control over tactical nuclear weapons rather than a breach of strategic command. Because tactical nukes -- there
are tens of thousands of them, literally, and they're spread among about 50 storage depots. And that very dispersion is cause for concern. And in some instances, we know that security is not good. NARRATOR: In the
early days of the honeymoon between a new Russia and an America most Russians admired, the United States initiated a program to help Russia with its nuclear problems. When the Soviet Union collapsed, nuclear
weapons were deployed in Russia, Belarus, Kazakhstan and Ukraine. In 1991, the US Congress, recognizing the increased dangers, created and funded the bipartisan Cooperative Threat Reduction Program, also known
as Nunn-Lugar for its original Senate sponsors, Senators Sam Nunn and Richard Lugar. Since then, the US has spent about $3 billion on programs to help dismantle and secure nuclear weapons and materials. The effort
is still far from complete, but it stands out as a rare success in cooperative US-Russian relations. MR. CIRINCIONE: These programs are working. They are helping to lock up the material. They are finding jobs for
scientists and technicians, even if it's make-work jobs. They are destroying the nuclear delivery vehicles that carry these warheads. These things are making concrete contributions to our national security. NARRATOR:
Senator Lugar visited Russia in November, 1998 to inspect the results of his initiative. The US Department of Energy is initiating a program to help Russia's large cadre of unemployed nuclear scientists and technicians.
:
This is the Nuclear Cities Program. MR. CIRINCIONE You have ten closed cities in Russia, nuclear cities, where scientists and technicians for literally generations have built and perfected nuclear weapons. The
unemployment rate in Russia is estimated to be about 20 percent. Inside the nuclear cities, it's estimated to be 60 percent. Many of these technicians and scientists haven't been paid in months and may never get paid.
You want to give these scientists and their families some hope that if they stay in Russia, that there might be a future for them. NARRATOR: But there is a real danger. With the declining concern about Russia in the
United States, funding for the Cooperative Threat Reduction programs could also decline, and this could happen just as new dangers emerge. One danger is the potential failure of the Russian early warning system.
Another is the risk coming from the Year 2000 computer problem. And yet another is that over 100 mothballed nuclear submarines are rusting in Russia's Arctic ports, threatening to leak radioactive waste because
officials can't afford to unload their spent nuclear fuel Russia has already experienced several false warnings of missile attacks. When the Soviet Union broke up in 1991, important radar facilities located in other
: The early warning

republics were no longer available to Russia. And the Russian military doesn't even have the money to maintain the satellites and radars is still has. MR. CIRINCIONE
system is, like the other defense systems in Russia, collapsing. It is deteriorating from wear and tear. 5 .
The consequences of poor early warning is that Russia may launch a nuclear missile in response to
what may or may not be a US attack. NARRATOR: Both the United States and Russia continue to maintain a large percentage of their nuclear missiles on high alert, ready to be
launched in moments. MR. CIRINCIONE: Many people are saying it's time to take these missiles off their hair-trigger alert. MR. MANN: The best thing we could do of an immediate nature is greatly to increase the
Nunn-Lugar funding that helps Russia with its de-nuclearization. In fact, it might be wise at this point to go one big step further and just simply say to the Russians, let's buy every single nuclear device, every part of
their nuclear inventory that they're willing to sell, and presumably, they'd be willing to sell almost all of it because they're broke. I mean, we would save so many tens of billions of dollars in future defense expenditures
we should make every effort to help

if we would just simply buy all of Russia's nuclear stuff. We need a master stroke. We need a dramatic action. MAN-on-the-Street: I think
Russia's economy. My information is that folks in Russia, at least in some parts of Russia outside of the Moscow area, are concerned about whether or not they have enough potatoes to survive
through the winter. NARRATOR: While we have focussed on the security of Russia's nuclear arsenal, the root of the
problem is Russia's economic crisis and the failure of the so-called reform program carried out by President Yeltsin with considerable American collaboration.
Impact – Nuclear War (2/2)

Economic decline will unleash the control of 22,000 Russian nuclear warheads
Nettelton 01 (Steve, CNN [http://www.cnn.com/SPECIALS/1998/09/crisis.russia/overview/] Russian Economy-
What Went Wrong?/ 2001)
The dismal economic situation has many Russians wondering, "What went wrong?" After all,
international banks had dumped billions of dollars of aid into the economy. More was promised. Russian
leaders had pledged that tough economic reform would improve their lives. Instead, Russians have seen their
quality of life rapidly erode. Analysts say corruption, watered-down reform measures and the lack of an
economic safety net are to blame. "The ruble was stabilized largely because people didnt use it very much,"
Kramer said. "Inflation was brought down because the government and enterprises didnt pay wages or
pensions. All that suggests that what was built was, to some extent, a house of cards that has come
crashing down." The economic crisis in Asia struck Russia hard, weakening its exports and damaging
investors confidence. A drop in oil and natural gas prices only made matters worse. Russia owns a third
of the world's natural gas reserves, and 5 percent of the oil reserves. When oil and gas prices go down, so
does Russias primary source of hard currency earnings. Russian President Boris Yeltsin has sacked his
prime minister twice this year, both times shaking investors faith in Russia's stability. "Yeltsin's done two
important things this year," said Kramer. "He's dismissed two governments. That's significant power that he
wields, but he basically hasn't done much else." Both Yeltsin and his on-again, off-again heir apparent, Viktor
Chernomyrdin, have close ties to Russia's banking and media barons. The bankers funded Yeltsins 1996 re-
election campaign, while Chernomyrdin was once head of Russia's natural gas monopoly, Gazprom. Critics
have accused the tycoons of using their influence to protect, and grow their businesses. Unless Chernomyrdin
and Yeltsin can somehow get their powerful friends to swallow difficult reforms, analysts say, their policies
will do little to fix the economy. The stakes of the crisis in Russia are high. At best, Kramer said, the
government will patch up the economy well enough to limp into the next presidential elections, scheduled for
2000. At worst, an unhappy populace could rise up in revolt, perhaps fragmenting Russia into smaller
provinces and throwing into question the control of some 22,000 nuclear warheads in Russia's arsenal.
An attack by Russia would trigger WWIII

Miller 08 (Robert, The Digital Journal [http://www.digitaljournal.com/article/256579] Houston, We Have a Very,
Very Serious Problem/ June 25, 2008)
What's more - Russia has a very similar agreement with their closest ally, and you have heard of them
too, they boast 'the million man army'; China. The agreement between Russia and China is far more blunt.
They aim to work together militarily and economically in order to counter 'western' hegemony in both
fields. In other words - if Russia is involved in a serious militaristic enterprise wherein they need
support, China will back them up. So now this doomsday World War III scenario begins to unfold.
The picture begins to paint itself. But for the sake of clarity, let words be the paintbrush.
Impact – Democracy
Economic collapse would result in a Russian political disaster
Broder 98 (Jonathan, Salon News [http://www.salon.com/news/1998/09/01newsa.html] Who Lost Russia?
September 1, 1998)
Never mind that Russia is not yet lost and that its political and economic crises could still stabilize. But
with Wall Street's 513-point plunge Monday, fanned by continued global uncertainty -- and by Russia's
prolonged political crisis in particular -- concern is deepening about the fragile young democracy. "It
could get much worse," Stephen Cohen, a Russian specialist at Princeton, told PBS's "Newshour with Jim
Lehrer," referring to the crisis in Russia. "It will get worse, I'm absolutely convinced of it. "Russia's
economic collapse will mean social pain, social anger, vengeance, hatred," Cohen said, reminding viewers
that all this would be playing out in a country that was not long ago the second superpower. "Leave
aside the nuclear weapons. If this country spins out of control, if this country becomes an Albania or
Indonesia scenario, you're talking about a major political catastrophe as well."
Impact – World Econ

Russian growth key global growth
Russia Economy Watch 8 (Monday, June 16, 2008 “Russia's GDP Growth Q1 2008” Russia Economy Watch
http://russiatooat.blogspot.com/2008/06/russias-gdp-growth-q1-2008.html Russia At A Glance accessed June 30, 2008)
Russia's economy expanded an annual 8.5 percent in the first quarter, higher than previously estimated,
as consumer demand fueled a continuing investment boom. The expansion followed 9.5 percent growth in
the previous three months, the Moscow-based Federal Statistics Service said today. Growth in, along with
that in a number of other key emerging market economies is evidently far outpacing that in the United
States, Japan and the euro region, and is at present one of the key drivers of global economic growth, not
to mention oil and food prices. Russia's economy, which is boosted enormously by commodities exports -
is largely being driven by wage growth, investment and consumer spending at the present time and this is
raising questions about distrortions and sustainability in the longer term. The rapid expansion is also fuelling
inflation, which accelerated to 15.1 percent in May, and may be a signal that the economy is overheating.
Russian economic collapse leads to instability and collapse of global economy

Steve Nettleton, 2001 (Economic Crisis:What went wrong?, CNN
http://www.cnn.com/SPECIALS/1998/09/crisis.russia/overview/)
The stakes of the crisis in Russia are high. At best, Kramer said, the government will patch up the
economy well enough to limp into the next presidential elections, scheduled for 2000. At worst, an unhappy
populace could rise up in revolt, perhaps fragmenting Russia into smaller provinces and throwing into
question the control of some 22,000 nuclear warheads in Russia's arsenal. Externally, Russia's problems
could drive world markets further downward. They already helped send the Dow Jones Industrial Average
to its second biggest single-day drop ever, 512 points, on August 31. Kramer said Russia's troubles could also
create political instability in Russia's neighbors, such as Ukraine, Belarus and Kazakhstan, and damage
markets as far away as Latin America.
Impact – Nationalism (1/3)

Economic depression cause Russian ultra-nationalism
Somin 8 (Ila, Russia After Putin, March 25 2008, http://www.volokh.com/posts/1206472900.shtml)
Obviously, the big difference between Russia and the many other similar societies is that Russia just happens
to have huge quantities of oil and nuclear weapons. The big question for the future is whether or not
continued economic growth will lead to pressure for liberalization, or whether the Russian political elite will
succeed in maintaining a semi-authoritarian system in the long run. Another key question is what will
happen when oil prices fall and Russia's economy suffers a downturn. It's possible that the resulting
anger at the government will redound to the benefit of supporters of liberal democracy. But I fear that it will
instead lead to increased support for the Communists or for ultra-nationalists and anti-Semites, such as
Vladimir Zhirinovsky. In Russia, as elsewhere, most of the public is rationally ignorant about politics, and
has little incentive to evaluate what they do know in a logical way. As a result, Russia's next economic crisis
could result in a much worse government taking power, not a better one. As Young points out, Russian
extremists of both the right and the left can tap into a long tradition of nationalism and belief in the notion
that all problems can be solved by a leader with a "strong hand." On the other hand, Russia also has a long
counter-tradition of pro-Western liberalization. Former world chess champion and political opposition leader
Gary Kasparov represents that tendency today. When the current government eventually runs into trouble,
much will depend on whether the ultra-nationalists or the liberal democrats are better positioned to take
advantage of the situation. Unfortunately, Putin and Medvedev have targeted democrats for repression
far more than the communists and nationalists. However, that very fact might give them greater
credibility with the public when and if the current regime becomes unpopular.
Russia nationalist terrorism spreads to effect US
Hill 5 (Fiona, Brookings Senior fellow, the Eurasian Security Environment, HASC threat pannel, September 22 2005)
In fact, none of the North Caucasus fighters captured in Afghanistan was from Chechnya—in
spite of the evident radicalization of the Chechen rebel movement, which is no longer chiefly
driven by a political campaign for independence. Arguably, the situation in Chechnya is now
slowly improving, while things are getting markedly worse in the rest of the North Caucasus
with the spread of militant insurgency from Chechnya to neighboring republics. Last year’s
brutal school siege in Beslan, North Ossetia, highlighted the fact that the situation in the North
Caucasus has become increasingly desperate. Since then, there have been daily reports from the
North Caucasus of terrorist attacks, explosions, assassinations, and incidents of intra-communal
violence, kidnappings, disappearances, and other atrocities. There is also now clearly an
ideological link between Chechen and other North Caucasian radicals and international jihadi
terrorists. There is also a demonstration effect. Terror tactics adopted by jihadis in Chechnya
have been propagated by video and the internet, and adopted elsewhere––including in Iraq. The
spread of these tactics across the North Caucasus and the links with international jihadi terror
raise the possibility that the next “soft target” of North Caucasian terrorism, perhaps in Moscow,
could be a U.S. or a Western one. There is also every possibility that the North Caucasus, like
Afghanistan before it, could become the training and staging ground for terrorist recruits for
operations in Europe, if not the United States.

Russian economic collapse results in nationalism
Somin 08 (Ilya, Volokh [http://www.volokh.com/posts/1206472900.shtml] Russia After Putin/ March 25, 2008)
Cathy Young has an interesting summary of the state of Russian politics in the wake of President
Vladimir Putin's replacement by his handpicked successor Dmitry Medvedev. Although Putin's
authoritarian policies have rolled back much of the liberalization that occurred in the 1990s, Russia is
still a much freer society than it was under communism. Indeed, as Young shows, it has become a fairly
typical Third World pseudo-democracy with partly fraudulent elections, a corrupt government dominated by
cronyism, and significant, but far from totalitarian, repression of political dissent. As in many other Third
World countries, the government tries to divert the people's attentions away from its own shortcomings by
spouting nationalist rhetoric and blaming all problems on Western interference. At the moment, the Russian
ruling elite is actually enjoying some genuine popularity - largely as a result of economic growth driven
by high oil prices, as well as successful efforts to harness Russian nationalism into support for the
regime. Obviously, the big difference between Russia and the many other similar societies is that Russia just
happens to have huge quantities of oil and nuclear weapons. The big question for the future is whether or
not continued economic growth will lead to pressure for liberalization, or whether the Russian political
elite will succeed in maintaining a semi-authoritarian system in the long run. Another key question is what
will happen when oil prices fall and Russia's economy suffers a downturn. It's possible that the
resulting anger at the government will redound to the benefit of supporters of liberal democracy. But I fear
that it will instead lead to increased support for the Communists or for ultra-nationalists and anti-
Semites, such as Vladimir Zhirinovsky. In Russia, as elsewhere, most of the public is rationally ignorant
about politics, and has little incentive to evaluate what they do know in a logical way. As a result, Russia's
next economic crisis could result in a much worse government taking power, not a better one.

Levels of nationalism correlate with the state of the economy
Kolsto 08 (Pal, Department of Literature, Area Studies and European Languages, University of Oslo, Norway
[http://www.blackwellsynergy.com/action/showFullText?submitFullText=Full+Text+HTML&doi=10.1111%2Fj.146
9-8129.2008.00332.x] Nations and Nationalism/ January 2008)
Elise Giuliano (2005, 2006) has employed a competition model in an analysis of nationalist mobilisation
in the non-Russian autonomous republics in the Russian Federation after 1989. Giuliano argues that
there was a close correlation between economic and political trends. Republics with high levels of
educational and job competition for white-collar jobs, such as Tatarstan and Sakha-Yakutia, experienced
higher levels of nationalist mobilisation than republics with lower levels of such competition, such as
Mari-El and Mordovia (Giuliano 2005: 6, 2006).
Impact – Nationalism – Risk High

Current state of the Russian economy provides a catalyst for nationalism
Bremmer 07 (Ian, Real Clear Politics
[http://www.realclearpolitics.com/articles/2007/06/wary_of_future_russia_confront.html] Wary of Future, Russia
Confronts U.S., EU Now/ June 20, 2007)
But Russian officials have a much more immediate reason for "standing up to the West": it's popular at home.
Anti-Americanism is cresting in many parts of the world, and Russia is certainly no exception. In addition,
Russian nationalism continues to foster animosity toward a European Union that has, like NATO,
expanded onto former Soviet territory. As a result, Kremlin resistance to Western "encroachments" is sure
to further boost its domestic popularity. Nationalism aside, however, there's a nagging fear in the Kremlin
that Russia's new strength won't last. Russia faces three emerging threats that analysts of its foreign
policy often ignore. First, the Russian population is shrinking. Rising tuberculosis and HIV infection
rates and high consumption of both cigarettes and alcohol have brought life expectancy for men to 59 years.
In 2000, there were about 146 million Russian citizens. Today there are about 142 million. A recent UN
survey warned that the population might well fall by 40 million over the next four decades. That's not an
encouraging forecast for the economy's long-term prospects. Second, the government is not investing
enough of its oil profits back into energy infrastructure. The International Energy Agency has formally
expressed concern over "creeping nationalization in the oil sector," noting that as production turns from fast
maturing fields toward others that will prove more difficult and expensive to develop, a Russia that
discourages potential foreign investment will struggle to maintain production levels over time. In other
words, just as more money is needed for investment in new infrastructure, the Kremlin has chosen to spend
less. The IEA has also raised concerns over the inadequacy of Russia's "fiscal, legal and regulatory reform"
programs. In short, the Russian government and its supporters among the commercial elite are buying short-
term political strength at the expense of investment in the country's long-term growth. Third, many of
Russia's most successful businessmen still view their country as a wealth generator but not as a sound
long-term investment bet. Any substantial uptick in political uncertainty could generate destabilizing
levels of capital flight. In particular, legislative elections in December and a presidential election next March
increase the risk that investors, fearful that particular friends in high places might lose their influence, will
safeguard assets by moving them abroad. The Kremlin is well aware of these longer-term vulnerabilities.
Russia's ruling elite may calculate that winning domestic support by challenging the world's wealthiest
and most powerful governments will be easier from today's position of strength than from a future
position of relative weakness. For the next several years, the Russian economy, buoyed by strong growth in
domestic consumption, will continue to grow. Foreign direct investment will continue to flow into many
sectors of the economy. High oil prices will bolster Russian surpluses. But fears for the longer-term future
help persuade the Russian elite that it's better to break domestic opposition now while political critics,
independent media, and civil society organizations are weak and the government is both popular and
flush with oil money. That Russia's more confrontational foreign policy flows from domestic
considerations will make it tougher for U.S. and European negotiators to find ways to resolve future
disputes. If the Kremlin would rather obstruct than deal, hope is slim that the slow, steady deterioration in
Russia's relations with the West can be reversed anytime soon.
Threat of Nationalism High

The threat of Russian nationalism is high
Umland 08 (Andreas, The American Chronicle [http://www.americanchronicle.com/articles/66359] Russian
Nationalism, Post-Soviet Political Discourse, and the New Fascist Danger/ June 26, 2008)
Will the newfound sensitivity towards nationalist tendencies lead to a sustained return to tolerant and
liberal aspects of Russia´s political tradition? Or is this new tendency no more than the latest episode
in Moscow´s fluctuating media campaigns? One can identify two contrary trends – one ideological, the
other pragmatic – whose collision has restored a certain measure of controversy to the generally dull
public discourse in Russia. On the one hand, the dualist worldview introduced by Putin´s entourage in the
past few years – the simple, but honest Russians struggling for independence against a devious, soulless,
imperialist West – fulfils an important role in legitimating the "tough" course of the resurging Russia.
However, the officially approved paranoia also opens the floodgates for radical conclusions. Since the US
model of society is presented as the antithesis of Russian civilization, one should not be surprised when
youth gangs of violent thugs try to prevent an "Americanization" of Russian society, in their way. The
damage caused by such reactions to the international image of Russia is, in turn, incompatible with the
equally strong tendency towards establishing the country as a respected partner of the Western countries and
as becoming a part of the "civilized world" (the preferred Russian term for the economically advanced
democratic states). Extreme nationalism has already made the Russian Federation an unattractive study
destination for dark-skinned international students who are regularly beaten and, sometimes, killed at
Russia´s university towns. In trying to stem this tide, the government deals, however, only with the
symptoms of the phenomenon. To get to the root of the problem, the whole logic of current Russian
politics would need to be changed – something that a well-meaning ministerial bureaucrat can,
obviously, not do. Besides, the leadership of the Kremlin appears to be considering large-scale immigration
as a way of replenishing the rapidly dwindling population of the Russian Federation, which would create
new, potentially explosive, tensions. Finally, the fanatical anti-Americanism and pro-Iranian positions of
Dugin as well as others are in contradiction to a number of security policy preferences of the Kremlin
and its efforts to join the international coalition against terrorism as a full member. Due to these and
other challenges in the coming years, the – at least partial – handover of power last month gains some
importance. It will be interesting to see which of the two contradictory tendencies currently present in
Russia – the nationalist anti-Western one, or the urge to become integrated into international formal
and informal networks – will gain the upper hand. A widespread fear among Russian and Western
analysts observing the rise of Russian nationalism is now that the Kremlin could loose (or, perhaps, is
already loosing) control of the genie it has let out of the bottle. Russian nationalism might transform
from a political technology tool into a societal force of a proportion beyond the limits of manipulation
by the cynical manipulators working for the Russian government. If one extrapolates Russia´s
development during the last eight years into the future, we will not only witness a second Cold War. The
Russian Federation might become something like a new apartheid state where foreigners and non-Slavic
citizens are treated separately from white citizens of Russia by governmental and non-governmental
institutions. It is in connection with this, that some observers do not hesitate to speak of a "Weimar
Russia" comparing post-Soviet conditions to those in inter-war Germany. Though it is not likely (yet)
that Russia will turn fascist, it seems even less probable that Russian society will become more tolerant
soon.
Impact – Nationalism – A2: Medvedev Checks (1/2)

Medvedev supports the Russian nationalism movement
Dyomkin 08 (Denis, Reuters
[http://www.reuters.com/article/gc07/idUSL2270465420080622?pageNumber=1&virtualBrandChannel=0] Russia
condemns rewriting of World War Two history/ June 22, 2008)
"This declaration is indeed a reaction to the actions of the countries in the Baltic and Ukraine, in which
recently there has been the rehabilitation of the SS Halychyna division," the Kremlin spokesman told
Reuters. "In other countries, Britain for example, Nazi criminals are arrested, not justified." Russia has
chided Ukraine for taking steps since the mid-1990s to grant some form of recognition as combatants
to the Ukrainian Insurgent Army (UPA), guerrillas who fought both Nazi and Soviet troops to secure an
independent state. The issue is contentious in Ukraine, where commemorations expose the country's
split into the nationalist west and centre and the Russian-speaking east, more sympathetic to Moscow.
Historians say the UPA had 40,000 men in its ranks at its peak. Some Ukrainians donned Nazi uniforms in a
unit known as SS Halychyna. Russia has also complained about Baltic nationalists who resisted Soviet
occupation. It became embroiled in a diplomatic row with Estonia last year over the removal of a
statue of a Red Army soldier from Tallinn's city centre to a military cemetery. Moscow also says
Russsian-speaking minorities in Estonia and Latvia have been denied basic rights against a
background of strong anti-Russian sentiment. Medvedev also reaffirmed Russia's support for steps to
create a "union state" with Belarus -- planned since the mid-1990s but with little concrete progress so far.
Nationalism still possible- Medvdev is Putin’s puppet

Kasparov 08 (Garry, The Wall Street Journal
[http://online.wsj.com/article/SB121297877757056351.html?mod=googlenews_wsj] Kremlin's Mafia-Style Foreign
Policy: Show Me the Cash/ June 9, 2008)
Without addressing Sen. Charles Schumer's central premise that sanctions would be effective against
oil-rich Iran ("Russia Can Be Part of the Answer on Iran," op-ed, June 3), I would like to address what
appears to be a dangerously myopic view of Russia and Russian foreign policy. First, the senator's
provocative decision to address the matter to Prime Minister Vladimir Putin instead of President Dmitry
Medvedev requires extensive explanation where none was provided. The constitution of Russia makes
very clear that the president is responsible for foreign policy. The prime minister serves at his discretion.
It is well understood that Mr. Putin remains in the seat of power in Russia and that Mr. Medvedev was
simply appointed to win a fraudulent election in March. But for an American senator to publicly take this
state of affairs for granted is remarkable. Mr. Medvedev was not mentioned once in Sen. Schumer's
editorial and I cannot believe this was accidental or the result of ignorance. Therefore, is Sen. Schumer
implicitly acknowledging that Mr. Medvedev's election was a sham and that Russia is a dictatorship?
Does this indicate a disagreement with the current U.S. policy of pretending Russia is a democracy? Would
this be the senator's policy recommendation to his Senate colleague Barack Obama? Is it too much to ask that
such an important, and commendable, stance be taken in less subtle fashion?
Medvedev has pledged support for Putin’s policies

The Trumpet 08 ([http://www.thetrumpet.com/index.php?q=5234.3521.0.0] The Week in Review/June 14,
2008)
In Russia, President Dmitry Medvedev is fitting nicely into his new role as Prime Minister Putin’s
friendlier face. During a celebration on Thursday of Russia’s resurgence as an independent world power,
Medvedev gave a holiday address stressing the importance of freedom and democracy in Russia.
Medvedev says these things while also pledging his support for the policies of his mentor. While some
may look to Medvedev as a sign of coming changes in Russia, the truth is that Russia is more
embedded under the authoritarian rule of Vladimir Putin than ever.
Impact – Nationalism – A2: Medvedev Checks (2/2)

Russian nationalism still possible with Medvedev
FitzGerald 08 (Keith, Money Morning [http://www.moneymorning.com/2008/02/21/as-sovereign-wealth-funds-
flourish-russia-looks-to-change-the-playing-field/] As Sovereign Wealth Funds Flourish, Russia Looks to Change
the Playing Field/ February 21, 2008)
As reported in both the Russian and Chinese media, Prime Minister Vladimir Putin’s hand-picked
successor, First Deputy Prime Minister Dmitry Medvedev, made his first speech to Russian big-
business recently. During the speech, Medvedev called on Russian companies to "copy China" by going
on a global buying spree. He noted that foreign investment would bolster the Russian economy while
cutting Russia’s dependence on foreign technology. While the notion of cutting foreign dependence by
buying the competition is straight out of Sun Tzu, what he said next really got my attention. Medvedev
pledged Kremlin support for companies that go on the hunt over assets abroad. At the same time - well,
practically anyway - Putin has gone on record saying that Russia will not remain a commodity supplier for
long. He said, "either we become a raw material appendage to the global economy, which can
eventually jeopardize Russia’s very existence, or we become a world leader and the best country to live
in." But Russia’s definition of an "international buying spree" is probably going to be very different
from what we’ve seen from other nations so far. Generally speaking, Chinese sovereign wealth funds
don’t hesitate to pay huge premiums for assets if they also get access to the intellectual property behind
those assets. The Blackstone Group LP (BX) deal is a great example. The Chinese could care less that they
paid $3 billion for their share of the hedge-fund-master because they know they’re getting access to the
very best deal-making know-how in the alternative-asset-management business - and that they can
leverage what they learn from Blackstone in future global deals. Middle Eastern sovereign funds, on the
other hand, don’t seem to be so concerned about intellectual property. Instead, they’re pursuing a
strategy that’s more like being "the house" in a Vegas casino, or owning any one of half a dozen
legendary Bazaars in their part of the world. They don’t appear so concerned with the individual
customers as they do with getting a tiny piece of every transaction, which is why they’ve gone after the
world’s financial centers as well as diversified plays. Here’s another interesting point: Neither of these so-
called "Cash Barons" - from China or the Middle East - has pushed for management say-so or seats on their
target companies boards of directors. The Russian Model History suggests the Russians will pursue a
blend of these two strategies - but with an aggressive edge. It’s likely they’ll look to a combination of
hard assets and operating businesses but in a uniquely Russian twist, they’ll probably seek actual
control, too. And that smacks of Russian nationalism.
Impact – Nationalism – A2: Medvedev=Puppet

Medvedev won’t be Putin’s puppet
Schorr 08 (Daniel, NPR [http://www.npr.org/templates/story/story.php?storyId=87898684] Medvedev May Be
Much More Than Putin's Puppet/ March 4, 2008)
Russia policy experts don't necessarily agree that Medvedev will be simply a rubber stamp for Putin's
agenda or that U.S. foreign policy should proceed on that assumption. Andrew Kuchins of the Center for
Strategic and International Studies says "we should leave ourselves open to taking Medvedev
seriously." Kuchins notes that Medvedev, who is 42, comes from a background that's very different from
that of his mentor, who is 55. In the context of Russia, Kuchins says, the age difference is important,
because it means that Putin spent a significant part of his career under the Soviet system, whereas
Medvedev did not. Medvedev has a background as a law professor and as the general council for a big pulp
company, while Putin worked for the KGB, the Soviet intelligence service. Kuchins notes that in a key
policy speech, delivered on Feb. 15 in the Siberian city of Krasnoyarsk, Medvedev addressed some of
Russia's problems in a way that was different from Putin's approach during his eight years in office.
"You couldn't ask for a more liberal-sounding speech from a Russian leader in today's context,"
Kuchins says. Anders Aslund, of the Peterson Institute for International Economics, agrees that the
Krasnoyarsk speech could be a sign that Medvedev is "something different." He says Medvedev
acknowledged public complaints against Russia's legal system, its culture of corruption, and its bloated
civil service. "He said there's no reason to have so many government officials on the boards of state
corporations, and he's taken a strong stand on private property rights. He's spoken up against
monopolies. He wants to lower taxes and simplify the tax code," Aslund says.
Impact – Brain Drain – Links

Bad Russian econ = brain drain of scientists and nuke weapons
Mike Martin 8 (UPI Science Correspondant http://www.weeklyscientist.com/ws/articles/braindrain.htm)

The Carnegie Endowment for International Peace today released a report detailing the decline in living
conditions and economic standards for employees of the Russian nuclear industry. According to the report, the
situation in so-called "nuclear and missile cities" populated by scientists, technicians, and engineers in those
industries is so dire it presents a national security emergency to the United States and other western nations.
"This is a major threat facing the U.S.," John Wolfsthal, the Carnegie report's editor, told a press conference at the
nation's capitol. "The Russian nuclear and missile defense industry is a gloomy picture of underpaid but
highly-skilled and educated workers with poor morale who are ready to emigrate to the land of the highest
bidder." According to Wolfsthal, the Carnegie Endowment took a census of nuclear cities to "get a good idea of how
tough life is among people in the Russian nuclear industry." The Endowment looked at 8 nuclear and missile cities,
sampling 2% of their populations. According to the survey, 63% make less than $50 per month, and almost none
make over $125 per month. The workers desire, on the other hand, not more than $150 per month. "This makes it
very cheap for a potential nuclear proliferater to come in and help these communities," Wolfsthal maintained.
Any entity helping these downtrodden nuclear workers could also be helping themselves to the necessary
expertise to create a major threat to world peace, Wolfsthal explained. "These people have a strong desire to
moonlight," Wolfsthal said. "14% want to get out of Russia entirely, and another 6% will work for anyone,
anywhere." That translates to about 3,900 people on the open market with the skills necessary to design,
construct, and launch nuclear warheads, according to Wolfsthal. With immense pressure to emigrate, these
highly-educated Russian workers might sell themselves to the highest international bidders - with dangerous
rogue nations such as North Korea, Iran, and Iraq among them. "You can't build an economy on the shoulders of
people who have emigrated," said Representative Ellen Tauscher, a Democrat whose district includes much of the
Silicon Valley. Tauscher proclaimed dismay with large cuts in the so-called "Nuclear Cities Initiative" recommended
by President Bush. "I want the President to devote even a tiny amount of time to nuclear non-proliferation,"
Tauscher told reporters. That means sending about $26 million to the Russian non-proliferation effort, not the vastly-
reduced $6 million Bush has proposed. Rose Gottemoeller, a senior associate at the Carnegie Endowment who has
visited several nuclear cities, said a Russian brain drain caused by dire conditions could pose serious problems
in the maintenance and safety of the nuclear stockpile.
Russian econ problems = brain drain of nuclear scientists
Sokova 5 (http://www.nti.org/db/nisprofs/russia/forasst/doe/closcity.htm)
Since the collapse of the Soviet Union in 1991, one of Russia's most pressing concerns has been the fate of the
so-called "nuclear cities," home to 600,000 residents and workers.[1] It was in these 10 secret, highly restricted
cities that the Soviet Union designed and produced its nuclear weapons stockpile (for a list of the 10 nuclear
cities see below or the closed cities map and table). Once generously funded by the Soviet state, the nuclear cities
have been forced to grapple with enormous funding problems over the past decade of political, social, and
economic difficulties in Russia. Formerly well-paid nuclear specialists were being paid meager wages that
were often delayed for several months; the standard of living in the closed cities dropped significantly. This
problem came to the forefront in the mid-1990s because of repeated strikes by nuclear workers in closed cities
over back wages, attempts at nuclear smuggling and theft, and the "brain drain" of scientists.
Impact – Brain Drain – Possible

Russian Scientists would rather move to a rogue nation to make more money
Christian Science Monitor, September 20, 2006 (“U-S Russia Effort to Contain Nuclear
Experts Fades”,
http://www.csmonitor.com/2006/0920/p01s03-woeu.html)
Impelling NCI and other such programs is evidence over the years that Russian scientists might be
willing to shop their skills to rogue regimes. In one reported 1992 incident, a planeload of
Russian scientists was stopped by police "on the tarmac" as they embarked for North Korea. In 1998,
an arms expert in Sarov was arrested by the FSB security service for allegedly spying for Iraq. A
study last year by the Center for Strategic and International Studies and the
Massachusetts Institute of Technology surveyed the attitudes of 602 Russian nuclear,
biological, and chemical WMD scientists. The study found that the mean income for such
scientists was about $110 a month, and that 21 percent were willing to move to a "rogue nation" to
work. As for the impact of assistance programs like NCI, the survey found 12 percent of those with
grant funding would consider work in a rogue state, versus 28 percent without funding.
A significant number of Russian nuclear scientists are willing to work for rogue states.
Global Security Newswire, December 17, 2004
WASHINGTON — A “small, but significant” number of Russian scientists have expressed a willingness
to consider working in rogue states, a researcher at the U.S. Lawrence Livermore National Laboratory said
here yesterday (see GSN, Nov. 17). A 2002 study of 600 scientists found that 21 percent would consider
working for at least a year in Iran, Iraq, North Korea or Syria, said Deborah Yarsike Ball of the
laboratory’s Proliferation and Terrorism Prevention Program. The most popular potential destination was
North Korea, Ball said, describing the finding as “positively perplexing.”
Impact – Brain Drain=Nuclear Terrorism

Russian brain drain leads to nuclear terrorism
Christian Science Monitor, September 20, 2006 (“U-S Russia Effort to Contain Nuclear
Experts Fades”,
http://www.csmonitor.com/2006/0920/p01s03-woeu.html)
MOSCOW AND BOSTON – At a Moscow conference in 2000 on stopping the global migration of
nuclearweapons know-how, a Russian security official revealed that Taliban envoys had tried to recruit
a Russian nuclear expert. That expert didn't go to work for the Afghan regime. But three of his colleagues
did leave their institute for other nations - and Russian officials had no idea which ones, US experts say.
With the threat of nuclear terrorism looming large in a post-9/11 world, the brain drain of Russian
nuclear expertise is an even more critical concern than it was six years ago, many say.
Nuclear terrorism leads to extinction

Stephens 07[ Rex Stephens, idiot, 5-22-07 “The Preparation” http://www.thepreparation.com/Chap6.html ] MP
The extinction traps of man's own making: nuclear war, biological weapons, rogue nanites, .... the
pleasure trap, and the power trap are all lined up and waiting to kill the unwary and the unprepared. None of
us wants to be in the percentage of the human population that could be claimed by each of these
extinction traps. Who ever wishes to survive needs to develop a survival strategy. Survival strategies will
vary, but only the intelligent strategies will produce survivors. Choose wisely…. Mankind has been faced
with the threat of nuclear war for some time now, and despite what some people think, the threat
hasn't gone away. The threat has shifted somewhat though, towards a threat of nuclear terrorism that
would cause nuclear exchanges between lesser military powers. Nuclear war in and of itself never did pose
a threat of eliminating all of humanity. A full scale nuclear war in which every nuclear weapon on Earth is
used could wipe out around 30% of the Earth's human population (most fatalities in a nuclear war result from
after effects of the nuclear exchange such as: radiation poisoning, environmental changes, starvation, ... and
social upheaval) and set human technology back 40 years. The larger problem with nuclear war is nuclear
weapons will almost never be used alone. Nuclear weapons will be used together with chemical,
biological, and conventional weapons, and this combination of weaponry would have the potential of
eradicating all human life, if the conflict were world wide.
Impact – Brain Drain: Nuclear Terrorism – Impact

( ) Terrorist attack risks extinction.
Alexander 3 (Yonah, Terrorism Myths and Realities, Washington Times, Prof and Director of
Inter-University
For Terrorism Studies)
Last week's brutal suicide bombings in Baghdad and Jerusalem have once again illustrated dramatically that the
international community failed, thus far at least, to understand the magnitude and implications of the
terrorist threats to the very survival of civilization itself. Even the United States and Israel have for decades
tended to regard terrorism as a mere tactical nuisance or irritant rather than a critical strategic challenge to their
national security concerns. It is not surprising, therefore, that on September 11, 2001, Americans were stunned by
the unprecedented tragedy of 19 al Qaeda terrorists striking a devastating blow at the center of the nation's
commercial and military powers. Likewise, Israel and its citizens, despite the collapse of the Oslo Agreements of
1993 and numerous acts of terrorism triggered by the second intifada that began almost three years ago, are still
"shocked" by each suicide attack at a time of intensive diplomatic efforts to revive the moribund peace process
through the now revoked cease-fire arrangements (hudna). Why are the United States and Israel, as well as scores of
other countries affected by the universal nightmare of modern terrorism surprised by new terrorist "surprises"?
There are many reasons, including misunderstanding of the manifold specific factors that contribute to terrorism's
expansion, such as lack of a universal definition of terrorism, the religionization of politics, double standards of
morality, weak punishment of terrorists, and the exploitation of the media by terrorist propaganda and psychological
warfare. Unlike their historical counterparts, contemporary terrorists have introduced a new scale of violence
in terms of conventional and unconventional threats and impact. The internationalization and brutalization
of current and future terrorism make it clear we have entered an Age of Super Terrorism (e.g. biological,
chemical, radiological, nuclear and cyber) with its serious implications concerning national, regional and
global security concerns.
Impact – Brain Drain Hurts Leadership
Martin 08 (Mike, The Weekly Scientist [http://www.weeklyscientist.com/ws/articles/braindrain.htm] Report cites

dangerous Russian brain drain/ May 2, 2008)
The Carnegie Endowment for International Peace today released a report detailing the decline in living
conditions and economic standards for employees of the Russian nuclear industry. According to the
report, the situation in so-called "nuclear and missile cities" populated by scientists, technicians, and
engineers in those industries is so dire it presents a national security emergency to the United States
and other western nations. "This is a major threat facing the U.S.," John Wolfsthal, the Carnegie report's
editor, told a press conference at the nation's capitol. "The Russian nuclear and missile defense industry is
a gloomy picture of underpaid but highly-skilled and educated workers with poor morale who are
ready to emigrate to the land of the highest bidder." According to Wolfsthal, the Carnegie Endowment
took a census of nuclear cities to "get a good idea of how tough life is among people in the Russian nuclear
industry." The Endowment looked at 8 nuclear and missile cities, sampling 2% of their populations.
According to the survey, 63% make less than $50 per month, and almost none make over $125 per month.
The workers desire, on the other hand, not more than $150 per month. "This makes it very cheap for a
potential nuclear proliferater to come in and help these communities," Wolfsthal maintained. Any entity
helping these downtrodden nuclear workers could also be helping themselves to the necessary expertise
to create a major threat to world peace, Wolfsthal explained. "These people have a strong desire to
moonlight," Wolfsthal said. "14% want to get out of Russia entirely, and another 6% will work for anyone,
anywhere." That translates to about 3,900 people on the open market with the skills necessary to design,
construct, and launch nuclear warheads, according to Wolfsthal. With immense pressure to emigrate, these
highly-educated Russian workers might sell themselves to the highest international bidders - with
dangerous rogue nations such as North Korea, Iran, and Iraq among them."You can't build an economy
on the shoulders of people who have emigrated," said Representative Ellen Tauscher, a Democrat whose
district includes much of the Silicon Valley. Tauscher proclaimed dismay with large cuts in the so-called
"Nuclear Cities Initiative" recommended by President Bush. "I want the President to devote even a tiny
amount of time to nuclear non-proliferation," Tauscher told reporters. That means sending about $26 million
to the Russian non-proliferation effort, not the vastly-reduced $6 million Bush has proposed. Rose
Gottemoeller, a senior associate at the Carnegie Endowment who has visited several nuclear cities, said a
Russian brain drain caused by dire conditions could pose serious problems in the maintenance and
safety of the nuclear stockpile.
Impact – Brain Drain=Prolif

Russian brain drain leads to nuclear proliferation.
Ingrid Staudenmeyer, Herbert Scoville Peace Fellow, June 14, 2002 (“Seminar 3: Proliferation
Dangers in
Russia's Nuclear, Chemical, and Biological Weapons Complexes”,
http://www.partnershipforglobalsecurity.org/Issues/U.S.-
Russian%20Nonproliferation%20Programs/Threat%20Reduction%20Status%20and%20Issues
/seminar3_writeup.ht
ml)
The second proliferation risk is the threat of Russian scientific brain drain. With the collapse of the
USSR in December 1991 came a loss of central political control, downward spiraling economies,
the relaxation of Soviet-era emigration/immigration restrictions, and an escalation of crime and black
market activity. These developments raised international concerns that idle and
unemployed personnel from the Soviet Union's sprawling nuclear, biological, and chemical weapons of
mass destruction complexes might sell their know-how or emigrate to countries of proliferation
concern. Related to the issue of Russian brain drain is that of scientific contact with countries of
proliferation concern. Reported cases of attempted and actual recruitment of former Soviet scientists,
technicians, and engineers have been well-documented. Recruitment efforts have been initiated by
China, Taiwan, North Korea, Libya, Iran, and other countries. Many of these same countries have
established trade offices in Moscow. As recently as late 1995, sources in Ukraine, Georgia,
and Azerbaijan, as well as in the United States, were reporting that Libyan and Iranian
"university representatives" had stepped up efforts to recruit biologists and physicists.
Russian brain drain leads proliferation with rogue states

Jonathan B. Tucker, Senior Fellow in the Washington, D.C. office of CNS, where he
specializes in chemical and
biological weapons issues, Spring 1999 (“Bioweapons from Russia: Stemming the Flow”,
http://issues.org/15.3/p_tucker.htm)
Another troubling development has been the export by Russia of dual-use technology and equipment
to countries of BW proliferation concern. For example, in the fall of 1997, weapons inspectors
with the United Nations Special Commission on Iraq (UNSCOM) uncovered a confidential
document at an Iraqi government ministry describing lengthy negotiations with an official Russian
delegation that culminated in July 1995, in a deal worth millions of dollars, in the sale of a 5,000-liter
fermentation vessel. The Iraqis claimed that the fermentor would be used to manufacture
single-cell protein (SCP) for animal feed, but before the 1991 Persian Gulf War, Iraq used a
similar SCP plant at a site called Al Hakam for large-scale production of two BW agents, anthrax and
botulinum toxin. It is not known whether the Russian fermentor ordered by Iraq was ever
delivered.
Impact – Prolif
Low economic growth sidelines arms control and causes proliferation
Mike Gallagher, Staff Writer ABQ Journal, Nov. 24 1998
http://www.abqjournal.com/news/russia/1rus11-24.htm
Russia's economic turmoil has raised serious new obstacles to making the world a safer place.
The United States and Russia have signed the Strategic Arms Reduction Treaty II agreeing to vast cuts in
their nuclear arsenals. The U.S. ratified the treaty in 1996 and Russia was expected to do so last spring. But
Russia's economic meltdown and internal political bickering got in the way. Dr. Alexander Pikayev, an
adviser to the Russian Parliament on nuclear issues, said earlier this year that START II was being held
hostage to domestic politics over selection of a new prime minister. Now the concern is that the treaty will be
a hostage to Western financial aid. "It is difficult to make progress when you're not paying your military,
when you're not paying your nuclear scientists," said Sen. Jeff Bingaman, D-N.M. "The economic problems
have overshadowed everything else." There also are concerns about keeping Russian nuclear material
and know-how out of the hands of rogue states such as Libya and Iraq.
Proliferation stems from Iranian manufacturing weaknesses not Russian oil

Victor Mizin, (Russian-Iran Nuclear Connection, MERIA vol. 8 No. 1 March 2004
http://meria.idc.ac.il/journal/2004/issue1/jv8n1a7.html)
Russian cooperation with Iran in developing its nuclear technology, as well as its suspected aid in
developing Iranian missiles, led to one of the rare difficult moments during the Moscow-St. Petersburg
summit in May 2002. Russia resolutely denied any wrongdoing and pledged that its cooperation with
Iran was strictly within the limits of its international obligations and in compliance with international
nonproliferation regimes. President Putin remarked that Western companies, not Russian entities, had
furnished Iran with missile and nuclear technology. As Putin pointed out wryly, "the United States has taken
on the obligation of building a nuclear power station identical to the one in Bushehr in North Korea."(19) At
the same time, he has suggested pressuring Iran to allow further and more extensive international
inspections of the Russian-built nuclear reactor there.(20) The issue of enticing Iran into accepting
further IAEA inspection commitments to their nuclear facilities was reiterated at the St. Petersburg
2003 festivities, and more recently in June and July when Iranian nuclear officials visited Moscow to
discuss their cooperation on nuclear power.(21) Moscow continues to deny vehemently all direct U.S.
accusations of government-sponsored nuclear and missile technology transfers to Iran that would be in
violation of its international nonproliferation obligations. These assurances by Russia have, however,
been repeatedly questioned. Further arguments appeared when reports surfaced in early 1998 that the Russian
FSB was in fact coordinating clandestine missile technology transfers to the Iranians--allegations denied by
Russian officials.(22) The vigorously developed missile industry of Iran is supposed--along with
Russian-supplied aircraft--to provide reliable carriers for potential nuclear warheads. Furthermore,
the mere existence of the Shihab-3 missile program, with its 1300 kilometer range and relatively poor
accuracy (Circle of Error Probable 1-3km), implies that it is most likely meant to carry a strictly WMD
payload.(23) Moscow has always declared that no infringements of the MTCR have been committed,
but did admit the existence of "individual contacts" between Iranian and Russian entities. Through it
all, the Russians refuse to be shut out of the lucrative market of missile technologies.(24) Regarding
Russia's nuclear cooperation with Iran, Putin is, perhaps, quite correct when he underscores that "as
far as energy is concerned, it focuses exclusively on economic issues."(25) Russia expects to reap up to
$10 billion from its Bushehr deal and arms sales to Iran, even if it is currently building the reactor on
credit to be paid by Iran only after the completion of the project. Sanctions and admonitions will not
change Russia's relationship with one of the most demonized states in America's "axis of evil" if no
sound substitute is provided by the United States.
Impact – Prolif
Low economic growth causes a nuclear crisis deterence - cannot stop
Bruce Blair and Clifford Gaddy, Russia's Aging War Machine, Brookings Review, summer
1999 pg. 13
Impact – Prolif – NW
Unchecked Proliferation leads to Nuclear War and Extinction.
Utgoff 02 (“Proliferation, Missile Defence and American Ambitions” Victor A., Deputy Director
of the Strategy,
Forces, and Resources Division of the Institute for Defense Analysis, Survival, 2002 Vol.44,
Iss. 2 p. 87-90,
proquest)
What would await the world if strong protectors, especially the United States, were [was] no longer seen as
willing to protect states from nuclear-backed aggression? At least a few additional states would begin to
build their own nuclear weapons and the means to deliver them to distant targets, and these initiatives
would spur increasing numbers of the world’s capable states to follow suit. Restraint would seem ever
less necessary and ever more dangerous. Meanwhile, more states are becoming capable of building nuclear
weapons and long-range missiles. Many, perhaps most, of the world’s states are becoming sufficiently
wealthy, and the technology for building nuclear forces continues to improve and spread. Finally, it seems
highly likely that at some point, halting proliferation will come to be seen as a lost cause and the restraints on
it will disappear. Once that happens, the transition to a highly proliferated world would probably be very
rapid. While some regions might be able to hold the line for a time, the threats posed by wildfire
proliferation in most other areas could create pressures that would finally overcome all restraint. Many
readers are probably willing to accept that nuclear proliferation is such a grave threat to world peace that every effort should be made to avoid it. However,
every effort has not been made in the past, and we are talking about much more substantial efforts now. For new and substantially more burdensome efforts
to be made to slow or stop nuclear proliferation, it needs to be established that the highly proliferated nuclear world that would sooner or later evolve
without such efforts is not going to be acceptable. And, for many reasons, it is not. First, the dynamics of getting to a highly proliferated world could be very
dangerous. Proliferating states will feel great pressures to obtain nuclear weapons and delivery systems before any potential opponent does. Those who
succeed in outracing an opponent may consider preemptive nuclear war before the opponent becomes
capable of nuclear retaliation. Those who lag behind might try to preempt their opponent’s nuclear programme or defeat the opponent using conventional
forces. And those who feel threatened but are incapable of building nuclear weapons may still be able to join in this arms race by building other types of weapons of mass destruction,
such as biological weapons. [The article continues…] The war between Iran and Iraq during the 1980s led to the use of chemical weapons on both sides and exchanges of missiles
against each other’s cities. And more recently, violence in the Middle East escalated in a few months from rocks and small arms to heavy weapons on one side, and from police
Escalation of violence is also basic human nature. Once the violence
actions to air strikes and armoured attacks on the other.
starts, retaliatory exchanges of violent acts can escalate to levels unimagined by the participants before hand. Intense
and blinding anger is a common response to fear or humiliation or abuse. And such anger can lead us to impose on our opponents whatever levels of
violence are readily accessible. In sum, widespread
proliferation is likely to lead to an occasional shoot-out with
nuclear weapons, and that such shoot-outs will have a substantial probability of escalating to the maximum
destruction possible with the weapons at hand. Unless nuclear proliferation is stopped, we are headed
toward a world that will mirror the American Wild West of the late 1800s. With most, if not all, nations
wearing nuclear 'six-shooters' on their hips, the world may even be a more polite place than it is today, but
every once in a while we will all gather on a hill to bury the bodies of dead cities or even whole nations.
Prolif = Extinction (2/2)

Impact – A2: Econ Growth  Prolif (1/2)

Low economic growth does not stop nuclear armament
Mike Gallagher, Staff Writer ABQ Journal, Nov. 24 1998
http://www.abqjournal.com/news/russia/1rus11-24.htm
"There clearly is a pride the Russians have in being a world power, and their nuclear arsenal is their
only claim to being a world power," he said. Despite its economic problems, Russia has continued to
build nuclear warships, like the nuclear-powered cruiser Peter the Great. The Russians also are
attempting to modernize their intercontinental ballistic missile system. Bingaman said that many of these
projects have been in the works for years. "I think these programs are attributable to several factors, not the
least of which is disorganization in the government," he said. "It (the government) is really not stable enough
to outline what the country's policies should be."
The Russian proliferation problem is caused by economic weakness

Russia's Nuclear Crisis Film transcript, March 21 1999,
(http://www.cdi.org/adm/1228/transcript.html)
Russia's deteriorating economy elevates the uncertainty quotient in a number of very important areas.
Politically, Russia is increasingly unpredictable and the worsening economy situation affects all aspects
of the Russian scene, as the desperate search for revenue streams is exacerbating a number of very
serious problems. For example, it has magnified the proliferation threat across the board as growing
financial pressures raise incentives to transfer sensitive technologies, especially to Iran." (Before Senate
Armed Services Committee, Feb. 2, 1999.) NARRATOR: The director of the Defense Intelligence Agency,
Lieutenant General Patrick Hughes, also finds reasons for the United States to worry about Russia's
worsening economic situation. LG PATRICK HUGHES, DIA Director: "The number of Russian strategic
nuclear warheads will continue to decline, but Moscow will retain a potent strategic arsenal and will
increasingly rely on strategic forces to offset its diminished conventional military capability." (Before
Senate Armed Services Committee, Feb. 2, 1999.)
Economic decline stops missile and missile delivery systems

Eva Conant, Russian Nuclear Summit, 6/2/2000
http://www.fas.org/nuke/control/start3/news/000602-start3-1.htm
Right now, and in the foreseeable future, Russia will not have the economic resources to maintain a big
number of ICBM's. Of course, we can have lots of warheads, the problem is not warheads but delivery
systems. Our old Soviet-made delivery systems are getting old and will have to be scrapped inevitably
and we'll have to build new ones and we don't have enough money to do that. /// opt /// No rocket can
live forever, it has to be scrapped in the end. The reality check for the Russian strategic nuclear deterrent will come somewhere beginning from 2003 to
2010. Mr. Felgenhauer argues Russia is simply using the ABM debate to get more concessions from the United States. The Russian military are actually not
afraid at all of the Americans building a national missile defense. The Russian military knows that in the coming one or two decades such a system will not
be in any way able to negate the Russian nuclear deterrent. Up to now the Russian official on ABM negotiations was to listen to American proposals, say no
to everything and virtually press the United States to break out of the ABM treaty and then expose the United States to the world and to its European allies
as a villain of the peace, as a country that doesn't keep international arms control agreements.Lieutenant Vasily Lata, a researcher with the military academy
of Russia's Strategic Missile Forces, says arms reduction is needed now. He says the service life of both Russia's land-based and sea-based intercontinental
ballistic missiles has run out and Mr. Lata is angry that arms reduction is being linked to what he calls an unacceptable U-S proposal to amend
the ABM treaty. Mr. Lata says, "it's not right to trade the issue of reducing nuclear weapons with the issue of abandoning or altering the ABM treaty. Arms
reduction talks must be held separately from this."Political researcher Ivan Safranchuk says Russia's position is weakened by Mr. Clinton's knowledge that
Moscow's hands are tied because of finances."It is clear what we can afford," he says. "Even an
optimistic estimate shows Russia, by the year 2008, will barely be able to afford fifteen hundred
warheads."
Impact – A2: Econ Growth  Prolif (2/2)

Russia is tightening military spending, decreasing waste
International Herald Tribune June 3, 2008
http://www.iht.com/articles/ap/2008/06/03/news/Russia-Military-Shakeup.php
President Dmitry Medvedev dismissed the chief of the general staff of the Russian armed forces Tuesday, moving
to tighten the Kremlin's grip on the massive military and its purse strings. Medvedev announced the removal
of Gen. Yuri Baluyevsky, who was loyal to the Kremlin but had become an obstacle to a campaign launched
by former President Vladimir Putin to tighten control over military spending. Baluyevsky and other top brass have
clashed with civilian Defense Minister Anatoly Serdyukov, a one-time furniture store manager Putin appointed early last year with a mandate to
clean up the military's finances. While supporters say Putin appointed Serdyukov to cut waste and corruption in a military that mixes communist-
era management with acquisitive post-Soviet capitalism, critics say his brief is to ensure the Kremlin controls the money flows.
Economic problems sideline nuclear arms control

Pipes 98 (Richard, ABQNews [http://www.abqjournal.com/news/russia/1rus11-24.htm] Preventing a Meltdown/
November 24, 1998)
Russia's economic turmoil has raised serious new obstacles to making the world a safer place. The United
States and Russia have signed the Strategic Arms Reduction Treaty II agreeing to vast cuts in their nuclear
arsenals. The U.S. ratified the treaty in 1996 and Russia was expected to do so last spring. But Russia's economic
meltdown and internal political bickering got in the way. Dr. Alexander Pikayev, an adviser to the Russian
Parliament on nuclear issues, said earlier this year that START II was being held hostage to domestic politics over
selection of a new prime minister. Now the concern is that the treaty will be a hostage to Western aid. "It is difficult
to make progress when you're not paying your military, when you're not paying your nuclear scientists,"said
Sen. Jeff Bingaman, D-N.M. "The economic problems have overshadowed everything else." There also are
concerns about keeping Russian nuclear material and know-how out of the hands of rogue states such as
Libya and Iraq.
Impact – A2: AT: Corruption/Bureaucracy

Putin is reducing government meddling and bureaucracy
Reuters June 8, 2008
http://www.reuters.com/article/GCA-Russia/idUSL0824150820080608
Promising to reduce the state's role in the economy, Shuvalov said Prime Minister Vladimir Putin had approved a
decision to cut the number of strategic enterprises controlled by the state. During Putin's 2000-2008 presidency, Russia's
government returned large chunks of the oil industry to state control and also took over some banks, a titanium maker and a car company. "We
don't have a goal of increasing state involvement (in the economy) nor especially a goal of increasing the role of bureaucracy," Shuvalov told the
St Petersburg Economic Forum. Shuvalov, one of the leading liberals in Putin's administration, said the government would reform
the way it ran Russia's big state-controlled corporations by rotating their boards of directors, replacing bureaucrats
with professionals.
Impact – A2: Econ Growth  Crime

There are no “Loose Nukes” for organized crime to proliferate
William C. Martel ,USA Today, March 1997 (“Puncturing the "loose nukes" myth”
http://findarticles.com/p/articles/mi_m1272/is_n2622_v125/ai_19217176/pg_2?tag=artBody
;col1)
Nuclear weapons are not leaking from Russia. Most importantly, there is absolutely no evidence that
nuclear weapons themselves are leaking from Russia. Rumors in 1992 that Kazakhstan sold two tactical
nuclear weapons to Iran have been discredited by U.S., Russian, Iranian, and Kazak officials.
The real threat to U.S. interests is the sale of nuclear technology to rogue states. For example, Russia
continues its $1,000,000,000 nuclear reactor sale to Iran, despite tremendous pressure from the Clinton
Administration. Iran is more likely to develop nuclear weapons with the reactor being rebuilt by Russian
technicians than from "loose nukes." There is no "brain drain" of Russian nuclear scientists. In the early
1990s, there were claims that Russian nuclear scientists would emigrate to sell their skills to the highest
bidders. Aside from unsubstantiated, sporadic rumors of their presence in North Korea and China, there is no
evidence of unemployed Russian scientists building nuclear weapons for rogue states. Although there is
no exodus to stop, the U.S. subsidizes the International Science and Technology Center in Moscow to keep
unemployed Russian nuclear scientists off the streets.
The Russian government is dismantling organized crime

Matt Jones, Russian Organized Crime 2007, (1913 Intel,
http://www.1913intel.com/2007/11/14/russian-organized-crime/)
With the arrest in August of Vladimir Barsukov, leader of the Tambov crime group, the Russian government
took the first step toward cracking down on organized crime — though the move could have been
motivated by internal politics or business. Although ridding Russia of organized crime is probably
impossible, if there ever was a time to begin the process, now could be it. Russian President Vladimir
Putin might just be powerful enough to attack the Russian Mafia and begin to dismantle its operations
from the inside out — with the government happily taking the pieces — and he might be able to do so
without direct retribution against himself. With powerful allies (and members) of the Russian mob operating
at the highest levels of government, Putin would need to begin with internal housecleaning, forcing those
members who abuse their positions for reasons of money and power to choose their loyalty. The most
significant source of power for the Russian mob is its connections within the government, and
destroying those connections would be a huge feather in Putin’s cap
Brain drain leads to nuclear attack on US by Russian mafia

The Baltimore Sun, October 14 1997, (“The threat of of the Russian Nuclear Mafia, p.11,
http://www.nti.org/db/nuclear/1997/n9717165.htm)
According to FBI Director Louis Freeh, Russian organized crime groups, which run extremely complex
criminal operations in the United States, are a threat to US national security. Freeh said: "There is now
greater danger of a nuclear attack by some outlaw group than there was by the Soviet Union during
the Cold War." There is a growing fear that unpaid or underpaid, capable, Russian nuclear scientists
can be easily hired by these groups to construct nuclear weapons. These groups are considered more
dangerous than a government possessing nuclear weapons because they are difficult to locate and
retaliate against. Governments are not mobile.
***Saudi Arabian Oil Disad***

1NC Shell- Saudi Arabia (1/2)

1) Oil prices , commodity investment prooves
AME June 28, 2008 (http://www.ameinfo.com/161763.html)
A plunge in the global equities markets has sent more investors into commodities, bringing oil prices to
a record above $142 a barrel on Friday, according to reports from agencies. August delivery of US light crude
went up 70 cents at $140.34 a barrel by 1514 GMT, while London Brent rose to 33 cents at $140.16, off a record high of $142.13.
2) Alternative energy lowers oil prices

Strand 07 (Jon, The Energy Journal [http://goliath.ecnext.com/coms2/gi_0199-
7309937/Technology-treaties-and-fossil-fuels.html] Technology treaties and fossil-fuels
extraction/ October 1, 2007)
Assume that a treaty will lead to increased international funding of technology developments, which in turn implies a likelihood that a new energy technology will be developed.
alternative technology, once developed, implies a constant marginal energy cost, lower than the
Assume that the
(assumed constant) cost of extracting fossil fuels. (3) Fossil fuels will then become redundant once the
new technology is adopted, and no more fossil fuels will be extracted from then on. (4) We assume that the time it takes to develop such a technology is
stochastic, modeled in a very simple way, as exponentially distributed with constant parameter [lambda](with expected period until development equal to 1/[lambda]). One so far
overlooked implication of such a scenario is that the prospect of developing a new and more efficient energy technology will affect incentives of fossil-fuel producers to extract and
market the resource, in both the short and the longer run. In the model, dealt with in Sections 2-3 below, we assume that the fossil-fuel market is competitive on a global scale, there is
no market uncertainty, and there is initially a zero probability of developing an alternative technology replacing fossil fuels. The initial resource price (prior to any technology treaty)
can then be shown to evolve according to the so-called Hotelling rule, whereby the growth rate for the real resource price (net of extraction cost) equals the real rate of interest, r, in
when the technology treaty is in place, the equilibrium price and
the economy. (5) In Section 2 below we first show that,
extraction path for the resource will both shift as a result. Along the new price path, the net resource price will grow at the higher rate
r+[lambda]. The entire resource price path shifts down, resulting in a higher volume of extraction at any given date until the resource is fully extracted, or until the new technology is
Intuitively, when fossil-fuel producers are made aware of an increased likelihood that their
developed.
resource may become redundant within a limited future time period, the incentive will be to extract it
more quickly. For a given demand function directed toward fossil fuels, with global fossil-fuel demand
a decreasing function of the price, this must mean a lower market price of fuel
3) A decline in oil prices will result in a Saudi coup

Bucholz 97 (Jennifer, University of Michigan [http://www-
personal.umich.edu/~rtanter/S97PS472_Papers/BUCHOLZ.JENNIFER.SAUDI.HTML]
Saudi Arabia as a Potential Rogue State/ June 1997)
All famous revolutions have a leader who becomes the embodiment of the revolutionary movement. For the French he was Robespierre or Danton, for the Americans he was
Washington, for the Iranians he was Khomeni. Who will it be for the Saudis? As of yet, no one. There are many possible leaders: the six thousand princes, the religious leaders within
there must be a spark to start the revolutionary coup in motion.
and outside the regime. But none has yet emerged as The One. Also,
This is typically a national crisis or hardship, or else a very blatantly unacceptable act on the part of
the old regime. For the Saudis, still highly dependent on the ebb and flow of the world oil market, a
catastrophe on the world oil market could be that spark. The lifting of international sanctions on Iraq and subsequent crash
in oil prices or the end of Saudi oil reserves, concurrent with continued dissatisfaction of the Saudis
with their government, would spell the end of the current regime. A quote by an astute American reporter on the Saudi situation
quite accurately relates the tale of the Saudi future: "Riyadh will be able to keep a lid on an increasingly tense and uneasy
society. But if something happens to break that bubble, the odds would shift." (52).
1NC Shell- Saudi Arabia (2/2)

4) Coup allows for the escalation of an arms race with Iran
The Wall Street Journal June 10, 2008
http://online.wsj.com/article/SB121305642257659301.html?mod=googlenews_wsj
, Secretary of State
Last month, while the American people were becoming the personal ATMs of the Organization of the Petroleum Exporting Countries
Condoleezza Rice was in Saudi Arabia signing away an even more valuable gift: nuclear technology. In a ceremony little-noticed in this country, Ms. Rice
volunteered the U.S. to assist Saudi Arabia in developing nuclear reactors, training nuclear engineers,
and constructing nuclear infrastructure. While oil breaks records at $130 per barrel or more, the
American consumer is footing the bill for Saudi Arabia's nuclear ambitions. Saudi Arabia has poured money into
developing its vast reserves of natural gas for domestic electricity production. It continues to invest in a national gas transportation pipeline and stepped-up exploration, building a
solid foundation for domestic energy production that could meet its electricity needs for many decades. Nuclear energy, on the other hand, would require enormous investments in
new infrastructure by a country with zero expertise in this complex technology. Have Ms. Rice, Mr. Bush or Saudi leaders looked skyward? The Saudi desert is under almost constant
Saudi Arabia's
sunshine. If Mr. Bush wanted to help his friends in Riyadh diversify their energy portfolio, he should have offered solar panels, not nuclear plants.
interest in nuclear technology can only be explained by the dangerous politics of the Middle East.
Saudi Arabia, a champion and kingpin of the Sunni Arab world, is deeply threatened by the rise of
Shiite-ruled Iran. The two countries watch each other warily over the waters of the Persian Gulf, buying arms and waging war by proxy in Lebanon and Iraq. An Iranian
nuclear weapon would radically alter the region's balance of power, and could prove to be the match that lights the tinderbox. By signing this agreement with
the U.S., Saudi Arabia is warning Iran that two can play the nuclear game. In 2004, Vice President Dick Cheney said, "[Iran
is] already sitting on an awful lot of oil and gas. No one can figure why they need nuclear, as well, to generate energy." Mr. Cheney got it right about Iran. But a potential Saudi
nuclear program is just as suspicious. For a country with so much oil, gas and solar potential, importing expensive and dangerous nuclear power makes no economic sense. The Bush
administration argues that Saudi Arabia can not be compared to Iran, because Riyadh said it won't develop uranium enrichment or spent-fuel reprocessing, the two most dangerous
nuclear technologies. At a recent hearing before my Select Committee on Energy Independence and Global Warming, Secretary of Energy Samuel Bodman shrugged off concerns
about potential Saudi misuse of nuclear assistance for a weapons program, saying simply: "I presume that the president has a good deal of confidence in the King and in the leadership
We would do well to remember that it was the U.S. who provided the original
of Saudi Arabia." That's not good enough.
nuclear assistance to Iran under the Atoms for Peace program, before Iran's monarch was overthrown in the 1979
Islamic Revolution. Such an uprising in Saudi Arabia today could be at least as damaging to U.S.
security. We've long known that America's addiction to oil pays for the spread of extremism. If this
Bush nuclear deal moves forward, Saudi Arabia's petrodollars could flow to the dangerous expansion
of nuclear technologies in the most volatile region of the world. While the scorching Saudi Arabian sun heats sand dunes instead of
powering photovoltaic panels, millions of Americans will fork over $4 a gallon without realizing that their gas tank
is fueling a nascent nuclear arms race .
5) A Middle Eastern arms race will escalate into nuclear war

Joseph Cirincione, Director of Nuclear Policy at the Center for American Progress,
November 12, 2007, "Apocalypse When?," online:
http://www.nationalinterest.org/Article.aspx?id=15998
Third is the risk of new nuclear nations. I agree with Mueller that the danger here is not that Iran or
North Korea would use a nuclear bomb against America or their neighbors. Deterrence is alive and
well; they know what would happen next. Nor is it that these states would intentionally give a weapon they
worked so hard to make to a terrorist group they could not control. Rather it is the risk of what could
happen in the neighborhood: a nuclear reaction chain where states feel they must match each other's
nuclear capability. Just such a reaction is underway already in the Middle East, as over a dozen
Muslim nations suddenly declared interest in starting nuclear-power programs. This is not about
energy; it is a nuclear hedge against Iran. It could lead tp a Middle East with not one nuclear-weapons
state, Israel, but four or five. That is a recipe for nuclear war.
***Saudi UQ***
UQ – Saudi Econ 
Saudi Econ , GDP growth proves
Arab News June 26, 2008
http://www.arabnews.com/?page=6&section=0&article=111271&d=26&m=6&y=2008
Saudi Arabia’s already robust economic growth outlook has been further bolstered by its decision to add up
to 500,000 barrels per day of crude oil to global markets. The extra crude will push real hydrocarbons GDP
growth up to 9.5 percent this year, while boosting overall real GDP growth to 7.4 percent — the fastest rate
for five years. “Despite the additional supply we still anticipate an average price for Brent of $120 a barrel this year, climbing to $135 a
barrel in 2009 as US demand begins to recover. Based on this outlook, we expect Saudi nominal GDP to expand by a
staggering 45 percent this year, to almost SR2 trillion ($545 billion), putting the Saudi economy ahead of Sweden and just behind
Turkey, in the IMF’s global rankings,” Howard Handy, general manager and chief economist of Samba, said.
Saudi econ strong, oil prices prove

AME Info June 22, 2008
With oil prices at the time of writing over $135 a barrel, there is plenty of liquidity in the country. The Middle East GDP growth is outstripping the global
average (6.1% versus 3.7%), as many countries are hurting from financial problems and rising prices brought on by the hike in oil. Interestingly, in many of
the developing nations, there is less concern among consumers about petrol prices at the pumps because they are government subsidised, while developed
nations are typically feeling the pain. Jadwa Investments has produced capital flow estimates for differing oil price
scenarios and even the least optimistic spells good news for Saudi Arabia. If oil is at $50 a barrel, this will give the
kingdom a capital flow of $5.5 trillion; at $100 it rises to $11 trillion and if the price averages at $150 then Saudi receives $16.6
trillion. The annual GDP for the US is $13.8 trillion, so Saudi has the potential to surpass this on oil
revenues alone. 'It will fuel the boom that is just beginning,' Brad Bourland, Chief Economist and Head of Research at
Jadwa Investment, told delegates at the Saudi Investment Summit in Jeddah last week.
Saudi econ strong, stock exchange proves

Gulf News June 21, 2008
http://www.gulfnews.com/business/money/10222542.html
A recent report shows that Tadawul, Saudi Arabia's stock exchange, surpassed the London bourse to become the
world's second-busiest market for initial public offerings (IPOs) in the first five months of 2008. According to Reuters, the
total of Tadawul IPOs rose 322 per cent from a year earlier to $8.50 billion. This notable increase was on the back of high profile offerings such as the Al
Inma Bank IPO which raised $2.80 billion, the $1.87 billion listing of mobile telecom company Zain and the $1.20 billion IPO of petrochemical company
Petro Rabigh. Though the number one spot was occupied by the New York Stock Exchange, thanks largely to the $19.70 billion listing of Visa,
Tadawul's grand entry on to the world stage is nothing short of spectacular.
Saudia econ strong, oil investment proves

Globe and Mail June 21, 2008
http://www.theglobeandmail.com/servlet/story/LAC.20080621.RCONFERENCE20/TPStory/Business
Canada, some argue, is "flailing" in how it handles this windfall. "We are truly endowed with tremendous energy resources," said Peter Tertzakian, chief
energy economist of ARC Financial. "But does it create wealth?" Production of natural gas is declining, he said. Labour constraints and inflation in the oil
patch prevent investment activity to rise in tandem with oil and gas prices. And the costs of higher energy are dividing rich and poor, as well as deepening a
regional divide in Canada between energy-producing provinces and energy-importing provinces. "We need to start thinking holistically about energy policy,
fiscal policy and environmental policy, all together ... instead of flailing around," Mr. Tertzakian told the conference called Commodities, the Economy and
Money and hosted by the University of Calgary's Haskayne School of Business and the Bank of Canada and sponsored in part by The Globe and Mail.
Decision makers in Canada, including the Bank of Canada, seem to be focused on avoiding a return to the 1970s and '80s, when a global oil supply shock
prompted central banks to cut rates, causing inflation to surge, and eventually leading to a recession. But in Norway and in
Saudi Arabia, where
oil and gas dominate the economy, authorities have instead focused on corralling the foreign exchange
earned in the sales of energy, and investing it outside their borders - alleviating inflation, smoothing
their foreign exchange rates and creating an income stream for future generations.
Saudi econ strong, oil prices prove

BBC June 11, 2008
http://news.bbc.co.uk/2/hi/middle_east/7446923.stm
With the price of oil showing no sign of weakening, the government of Saudi Arabia is planning for a future when the
commodity will eventually run out. The revenues that are being generated are enormous - every day more than 11 million barrels
of oil are pumped. At current market prices that is worth well over $1bn (£510m) daily.
UQ – A2: Saudi Inflation

Saudi inflation is down
http://in.reuters.com/article/asiaCompanyAndMarkets/idINL2859386820080628
Annual inflation in Saudi Arabia eased slightly to 10.4 percent in May down from a more than 30-year high a
month earlier, but rising rental and food costs continued to pressure the world's top oil exporter. The cost of living index for the largest Arab
economy was 115 points on May 31 compared with 104.20 points a year earlier, the official Saudi Press Agency said on Saturday, citing a report
by the Ministry of Economy and Planning.
High inflation wont impact saudi econ and inflation is decreasing

MEED (Middle East Business Intelligence) June 27, 2008
http://www.meed.com/saudiarabia/specialcover/2008/06/special_report_saudi_arabia__prices_rise_as_spending_soa
rs.html
Despite inflation soaring to a 27-year high of 9.7 per cent in 2007, analysts are fairly sanguine about its effect on
the Saudi economy. Inflation is a manageable side-effect of increases in broad money supply driven by
high oil prices, they say. That this liquidity is being channelled into overseas assets and domestic
infrastructure is the main reason for this positive view, as it is seen as laying the foundations for diversified economic activity that
will provide sustainable revenue streams in the long term. But in this time of plenty, Riyadh must be careful not to lose sight of the
plight of the people worst affected by inflation: those on low incomes. The cost of wheat and rice has doubled over the past year and the
rental inflation index rose by 17 per cent between April 2007 and April 2008. The government has taken action to bring
prices down, through food subsidies, building new houses, investing in overseas agricultural businesses and reducing customs duties
on food. And it is rightly avoiding increasing public sector salaries by double figures, which would only exacerbate the problem. Tight
control of costs and spending is the only way that Saudi Arabia will combat rising inflation, and if this can
be delivered, inflation will decrease in the coming years.
UQ – Investment High
Investment in Saudi oil high
Arab News 08 (MENAFN [http://www.menafn.com/qn_news_story_s.asp?StoryId=1093200859] Saudi Arabia-
$80bn plan to raise oil output: Report/ June 18, 2008)
Saudi Arabia is planning to invest $80 billion in increasing its oil output to 12.5 million barrels per day
and expanding its refining capacity by 43 percent to six million bpd within the next few years,
according to an economic report unveiled yesterday. The report, which was issued by the Federation of GCC
Chambers of Commerce and Industry, expects that the gross GCC domestic product will grow by 27.9
percent this year to reach $1 trillion with the increase in oil prices. The federation believes that the Gulf
Cooperation Council of Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain and Oman will achieve a 31.2
percent surplus in their current accounts in 2008, compared to 28 percent last year.

The Economist 08 ([http://www.economist.com/world/africa/displaystory.cfm?story_id=11592833] The puzzle
of oil production/ June 19, 2008)
The kingdom has a fifth of known reserves. It supplies an eighth of the world's oil and remains, crucially,
the only producer with at least some spare capacity. A huge investment plan under way should raise its
capacity from 11.3m barrels a day in 2007 to 12.5m by next year. Noting pleas from George Bush and
Ban Ki-moon, the UN's secretary-general, the Saudis have upped actual production twice in the past month,
raising it by 500,000 barrels a day to its present level of 9.5m.

ME Info 07 (Middle East Information [http://www.ameinfo.com/70555.html] Foreign investment heads sharply
upwards in Saudi Arabia/ May 26, 2007
Saudi Arabian General Investment Authority governor Amr Al-Dabbagh estimates that investment
into the Kingdom last year totalled $3.8 billion. The aim, he says, is to draw in $1 trillion in foreign
direct investment over the next 20 years. Kuwait-based Arab Organisation for Investment Guarantee says
that in 2004 the Kingdom ranked the leading country in the region for attracting direct foreign and
Arab investment. The International Finance Corporation, which acts as the private sector investment arm of
the World Bank rates the Kingdom as the best investment location in the Arab world. In its 'Doing Business
in 2006' report the IFC puts Saudi Arabia ahead of Kuwait and Oman and 38th out of 155 locations
worldwide for investment. IFC ranks countries according to a number of benchmarks. These include starting
a business, dealing with licences, hiring and firing registering property, obtaining credit, protecting investors,
paying taxes, trading across borders, enforcing contracts and closing a business. In just one year the
Kingdom has seen its global investment ranking increase 29 places. Saudi Arabia is reducing the
sectors that are off limits to foreign investors. Retailing, telecommunications and insurance have already
been removed from the list.
UQ – A2: Not Enough Oil (1/2)

Saudi Arabia has massive future oil reserves
Thomas Financial 08 (AFXNews [http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=eab20b48-
3399-4705-8fd0-b5ae9b6aef03] World oil supplies are enough for 'many decades' - Saudi Arabia's Al Naimi, June
22, 2008)
Saudi Oil Minister Ali Al Naimi said on Sunday the world has enough crude to last "many decades"
and that his country will invest massively to allow production of 15 million barrels a day. "The world
has enough petroleum reserves, both conventional and non-conventional, to meet oil demand for many,
many decades to come," Al Naimi told a summit in Jeddah of top consumers and producers. "Concerns
over long-term supply shortages seem to be playing a role in strong futures prices, though I believe these
concerns are badly misplaced," he added. In contrast, US Energy Secretary Samuel Bodman told the
meeting that "production had not kept pace with growing demand for oil, resulting in increasing -- in
increasingly volatile -- prices." Al Naimi said Saudi Arabia's production capacity will rise to 12.5 million
barrels per day (bpd) by the end of 2009 and another 2.5 million bpd could be added if demand
warranted. Projects underway will see "the kingdom's maximum sustained production capacity rise to
12.5 million bpd by the end of next year," he said. It currently has output capacity of 11.3 million bpd. "In
addition, we have identified a series of future crude mega increments totalling another 2.5 million bpd
of capacity that could be built if and when crude oil demand warrants their development," the minister
said. The projects include a 900,000 bpd boost in Zuluf, 700,000 bpd in Safaniya, 300,000 bpd each in Berri
and Khurais and 250,000 bpd in Shaybah, Al Naimi said. The kingdom plans to add two million bpd of
refining capacity over the next five years.
Saudi Arabia is increasing its oil production

NYT 08 (The New York Times [http://www.econbrowser.com/archives/2008/06/saudi_oil_produ_2.html] Saudi oil
production plans/ June 15, 2008)
Saudi Arabia, the world's biggest oil exporter, is planning to increase its output next month by about a
half-million barrels a day, according to analysts and oil traders who have been briefed by Saudi officials.
The increase could bring Saudi output to a production level of 10 million barrels a day, which, if
sustained, would be the kingdom's highest ever. The move was seen as a sign that the Saudis are becoming
increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring
fuel costs have incited demonstrations and protests from Italy to Indonesia. Saudi Arabia is currently
pumping 9.45 million barrels a day, which is an increase of about 300,000 barrels from last month.
Saudi Arabia can continue to produce oil for years

Stier 08 (Kenneth, CNBC [http://www.cnbc.com/id/25281491] Saudi 's Oil Fields on Viagra?/ June 20, 2008
Alarmed by declining production PEMEX, the state oil company, repressurized the field (consider it
Viagra for oil fields), and was able to quickly bring production back to 2 million bpd. But soon
afterwards the field was in steep collapse. “All the way up there was a general sense that basically they had
licked old age,” notes Simmons. More modest production can be sustained for many, many years. There
have been periodic rumors about some Saudi fields having already gone bust. But actual Saudi
production levels are state secrets, or as Simmons says officials are “as silent as the Mafia.” But there is
precious little transparency anywhere in the region. Reserves for all OPEC countries are believed to be
overstated because they are the basis for determining each cartel member’s export quota.
UQ – A2: Not Enough Oil (2/2)

Saudi oil reserves are plentiful
SURIS 04 (Saudi-US Relations Information Service [http://www.saudi-us-relations.org/energy/saudi-energy-
reserves.html] Future of Global Oil Supply: Saudi Arabia/ February 24, 2004)
Saudi Aramco's proved oil reserves of 260 billion barrels, represents a conservative figure, by
established industry (SPE/WPC/AAPG) standards. Significant upward potential for reserves additions
exists. Oil-focused exploration and delineation efforts, application of EOR processes and continual
emphasis on existing and future technologies - custom-fit to the Company's reservoir portfolio - will
certainly engender a major expansion in Saudi Aramco's reserves base in the decades ahead,
commensurate with global market conditions and requirements.
***Saudi Internals – Oil Key***

I/L –Oil Key to Saudi Economy (1/2)

Oil Key to Saudi Economy -- Exports
Government: Saudi Arabia,
http://www.eia.doe.gov/emeu/cabs/Saudi_Arabia/Background.html)
Saudi Arabia is the biggest oil producer in the Organization of the Petroleum Exporting Countries
(OPEC). With one-fifth of the world's proven oil reserves, some of the lowest production costs, and an
aggressive energy sector investment initiative, Saudi Arabia is likely to remain the world's largest net oil
exporter. From January-November 2006, Saudi Arabia supplied the United States with 1.4 million barrels per
day of crude oil, or approximately 14 percent, of U.S. crude oil imports. Between mid-2003 and mid-2006,
Saudi Arabia showed strong economic performance due to high oil prices, increasing oil production
and export earnings, paired with structural reforms, economic diversification, and stable macroeconomic
policymaking. Saudi Arabia remains heavily dependent on oil and petroleum-related industries,
including petrochemicals and petroleum refining. The IMF reported that in 2005, oil export revenues
accounted for around 90 percent of total Saudi export earnings, 70-80 percent of state revenues, and 44
percent of the country's gross domestic product (GDP).
Oil Key to Saudi Economy – Exports

Government: Saudi Arabia,
http://www.eia.doe.gov/emeu/cabs/Saudi_Arabia/OilExports.html)
Saudi Arabia is a key oil supplier to the United States, Europe and Asia. In 2005, Saudi Arabia exported
an estimated 8.6 million bbl/d of petroleum liquids, of which 7.2 million bbl/d were crude, 553,000
wererefined product and 793,000 bbl/d NGLs. According to press reports, in 2006, Saudi had a marginal
increase in exports based on long-term contracts to export just under 7 million bbl/d of crude worldwide.
Asia, including Japan, South Korea, China and India, now receives an estimated 50 percent of Saudi
Arabia's crude oil exports, as well as the majority of its refined petroleum product and NLG exports. Japan
remains the single largest importer of Saudi crude in Asia.
I/L –Oil Key to Saudi Economy (2/2)

Oil Key to Saudi – Oil Based Economy
AFP, 06/13/08 (“Saudis to increase oil production by half-million barrels: report,”
http://news.yahoo.com/s/afp/20080614/ts_afp/ussaudioil_080614031419&printer=1;_ylt=Ai
U2Tr1ES0h7iR6XEtJ8wzqGOrgF)
Concerned that skyrocketing oil prices might induce a worldwide economic slump, Saudi Arabia is
planning to increase oil production next month by about a half-million barrels a day, The New York
Times reported on its website late Friday. Citing unnamed analysts and oil traders who have been briefed by
Saudi officials, the newspaper said the increase could bring Saudi output to a production level of 10 million
barrels a day. The move is seen as a sign that the Saudis are becoming increasingly nervous about both
the political and economic effect of high oil prices, the report said. While they are reaping record profits,
the Saudis are concerned that today's record prices might eventually dampen economic growth and
lead to lower oil demand, as is already happening in the United States and other developed countries,
according to The Times. The current prices are also making alternative fuels more viable, threatening
the long-term prospects of the oil-based economy, the paper said. Saudi Arabia is currently pumping 9.45
million barrels a day, which is an increase of about 300,000 barrels from last month.
Oil Key to Saudi Economy – 75% of Revenue

U.S. Department of State, Feb. 2008 (http://www.state.gov/r/pa/ei/bgn/3584.htm)
Oil was discovered in Saudi Arabia by U.S. geologists in the 1930s, although largescale production did not
begin until after World War II. Oil wealth has made possible rapid economic development, which began in
earnest in the 1960s and accelerated spectacularly in the 1970s, transforming the kingdom. Saudi oil reserves
are the largest in the world, and Saudi Arabia is the world's leading oil producer and exporter. Oil accounts
for more than 90% of the country's exports and nearly 75% of government revenues. Proven reserves
are estimated to be 263 billion barrels, about one-quarter of world oil reserves. More than 95% of all Saudi
oil is produced on behalf of the Saudi Government by the parastatal giant Saudi ARAMCO. In June 1993,
Saudi ARAMCO absorbed the state marketing and refining company (SAMAREC), becoming the world's
largest fully integrated oil company. Most Saudi oil exports move by tanker from Gulf terminals at Ras
Tanura and Ju'aymah. The remaining oil exports are transported via the east-west pipeline across the kingdom
to the Red Sea port of Yanbu. Due to a sharp rise in petroleum revenues in 1974 following the 1973 Arab-
Israeli war, Saudi Arabia became one of the fastest-growing economies in the world. It enjoyed a
substantial surplus in its overall trade with other countries; imports increased rapidly; and ample
government revenues were available for development, defense, and aid to other Arab and Islamic
countries.
***Saudi Internals – Investment***

Links – Alt Energy

Alt energy investment causes drop in Saudi oil prices
http://www.nytimes.com/2008/06/24/business/worldbusiness/24oil.html?_r=2&adxnnl=1&oref=slogin&adxnnlx=12
14690475-/FotiFLuxyx+kAKqLo4XnA
A hastily convened global energy summit meeting led by Saudi Arabia ended largely in disagreement on
Sunday, with only a modest pledge of increased production by the Saudis and no resolution on what other practical steps
should be taken to ease the crisis over soaring oil prices. On Monday, the global oil market shrugged off the news, pushing up
prices. Oil was up $1.38 to settle at $136.74 in New York on Monday. The Saudis, who considered the meeting a success because of the high
attendance, announced a production increase of 200,000 barrels a day and an expansion of their output capacity if needed in coming years. But
news of the immediate production increase had already been absorbed by the world market for oil. Some experts had anticipated that the Saudis
might announce a bigger increase. Saudi Arabia, the biggest oil exporter, is the only country with the ability to significantly increase production
quickly. Rather than finding areas of agreement, participants in the one-day meeting in this coastal city on the Red Sea illustrated the sharply
diverging views on what has caused oil prices to double in the last year to the $130- to $140-a-barrel range. Consumer nations, led by the Britain,
Japan and United States, see more supply as the answer to higher prices. But most producing nations are either reluctant to or unable to pump
more oil, and they say a big reason for the price inflation is speculation. Everyone agreed that surging demand in the developing world was a
major factor. That point was punctuated last Thursday when China, the world’s fastest-growing consumer of oil, announced it was sharply raising
the subsidized prices that its own citizens pay. The price of oil temporarily dropped more than 3 percent on that news alone because of
expectations that demand from China would slow. But the overall demand for oil by China, India and other rapidly developing nations, including
many in the Middle East, is still expected to grow relentlessly, putting enormous pressure on producers to keep pace. If anything, the
Saudi summit meeting made plain the limited options available to push prices down. For King Abdullah of Saudi
Arabia, who called for the meeting just two weeks ago, it was an opportunity to show that his oil-rich kingdom was aware of growing anger and
frustration caused by surging prices in oil-importing countries. It also reflected some alarm by the Saudis that the price
inflation was causing consumer nations to look far more seriously at energy alternatives, which eventually could
hurt the price of oil.
American investment in alternative energy will cause a decrease in oil prices

The Economist June 19, 2008
http://www.economist.com/displaystory.cfm?story_id=11592833
WITH oil prices nudging $140 a barrel, Saudi Arabia stands to receive a windfall this year of up to
$400 billion, double what it earned from selling oil last year. Gloom at the world's petrol pumps, it may be assumed,
can only mean hand-rubbing glee for their biggest supplier. Such is the case with some of the kingdom's rivals in the Organisation of the
Petroleum Exporting Countries (OPEC), the cartel that supplies over one-third of the world's crude. Iran, for instance, has
consistently argued against doing anything to bring down prices. Why, then, have the Saudis mounted
a risky bid to do just that, by boosting oil output and summoning the world's top energy officials to an
emergency meeting in Jeddah on June 22nd? The reasons span history, economics and geopolitics. No one in the
Saudi oil ministry has forgotten what happened after the oil shock in the 1970s. The Arab boycott called in 1973 to protest
against Western backing for Israel tripled oil prices. But it also prompted oil exploration in tricky
places such as the North Sea and conservation measures that reduced demand. The result was a long-
term slump in crude prices and a drop in the Saudis' market share. The Saudis fear that the intensified
search by the West for alternative energy will result in the same thing happening again. But the more
immediate worry is that high oil prices may slow not just America's but the whole world's economy. That would trigger a sharp fall in
demand for Saudi oil. Just as bad, a sharp global slowdown would slash the value of the kingdom's hundreds of billions of dollars in
overseas holdings. No wonder Ali al-Nuaimi, like his predecessors as Saudi oil minister, often cites “customer satisfaction” and “market
stability”.
I/L – Investment K/T Meeting Demand (1/2)

Investment in Saudi oil key to meet demand
Gerth 04 (Jeff, The New York Times
[http://query.nytimes.com/gst/fullpage.html?res=9f07e1d8173cf937a15751c0a9629c8b63] Forecast of Rising Oil
Demand Challenges Tired Saudi Fields/ February 24, 2004)
But some experts are skeptical. Edward O. Price Jr., a former top Saudi Aramco and Chevron executive and
a leading United States government adviser, says he believes that Saudi Arabia can pump up to 12 million
barrels a day ''for a few years.'' But ''the world should not expect more from the Saudis,'' he said. He
expects global oil markets to be in short supply by 2015. Fatih Birol, the chief economist for the
International Energy Agency, said the Saudis would not be able to increase production enough for future
needs without large-scale foreign investment.
Investment in Saudi oil key to the world’s oil supply

Gerth 04 (Jeff, The New York Times
[http://query.nytimes.com/gst/fullpage.html?res=9f07e1d8173cf937a15751c0a9629c8b63] Forecast of Rising Oil
Demand Challenges Tired Saudi Fields/ February 24, 2004)
The I.E.A., an independent agency founded by energy-consuming nations, and Washington see investment
in energy exploration and field maintenance as vital, but such proposals face strong opposition inside
Saudi Arabia. Tensions with the West, particularly the United States, make such investment politically
difficult for Saudi society. For example, an effort by Crown Prince Abdullah, the kingdom's de facto ruler, to
encourage Western companies to invest $25 billion in his country's natural gas industry essentially collapsed
last year. ''Access to Persian Gulf oil reserves, especially Saudi Arabia's, is the key question for the
whole world,'' Dr. Birol said.
Investment key to surplus capacity in Saudi oil

Dhahran 06 (The Leading Arabic International Daily
[http://www.aawsat.com/english/news.asp?section=6&id=5297] Saudi Oil Production Capacity to Reach 12 Million
bpd by 2009: Official/ June 13, 2006)
"At the same time, in keeping with Saudi Arabia’s current oil policy and as a commitment to world oil
markets, we will maintain our surplus production capacity of one-and-a-half to two million barrels a
day, even as our actual production grows. This surplus capability is expensive to develop and maintain,
but over the years it has repeatedly proven its worth, and so we bear this cost to promote market
stability and continued global economic development," said Jum’ah in this year's state-of-the-industry
address through a live direct video transmission from Dhahran to Kuala Lampur for Asia's annual conference
on Oil and Gas.
Investments critical to increasing Saudi Arabia’s oil capacity

Simmons 04 (Matthew, The Institute for the Analysis of Global Security [http://www.iags.org/n0331043.htm]
New study raises doubts about Saudi oil reserves/ March 31, 2004)
Saudi Aramco officials flew especially to Washington to refute Simmons' analysis. In a speech before the
Center for Strategic and International Studies in Washington DC, Nansen G. Saleri, a manager of reservoir
management for Saudi Aramco said Saudi Arabia can maintain production capacity at the current rate of
10 mbd for the rest of this decade and if needed they could increase maximum output by 20-50% within a
decade. His colleague Mahmoud Abdul-Baqi, Saudi Aramco's vice president for exploration also
expressed optimism about the future of their industry. "We have a lot of area to explore and find a lot
of oil and gas. Our track record shows we delivered for the past 70 years and we will continue to
deliver in the next 70 years and beyond." Saudi Aramco says that with more investments it can expand
its capacity to 12 mbd or more.
I/L – Investment K/T Meeting Demand (2/2)
Investment in Saudi oil key to spare capacity and world demand

Fattouh 07 (Bassam, Oxford Institute for Energy Studies [http://www.oxfordenergy.org/pdfs/WPM32.pdf] The
Drivers of Oil Prices: The Usefulness and Limitations of Non-Structural model, the Demand–Supply Framework
and Informal Approaches/ March 2007)
International institutions such as the IMF and IEA argue that the erosion of spare capacity has been the
result of worldwide under-investment in the oil sector and hence they call for removing barriers to
investment in order to restore spare capacity in all parts of the supply chain. Others such as Goldman Sachs
(2005) are more pessimistic about the realization of investments, arguing that “demand destruction will be
needed to recreate a spare capacity cushion in order to return to a period of lower energy prices”.
Saudi Arabia’s declared policy of maintaining a volume of spare capacity of around 2 mbd could be
achieved, but this spare capacity is too little compared to global demand
I/L – Investment K/T Market Stability/Econ

Investment in Saudi oil critical to market stability and its economy
Naimi 06 (Ali I.- Minister of Petroleum and Mineral Resources Kingdom of Saudi Arabia, Third OPEC
International Seminar [http://www.opec.org/opecna/Speeches/2006/OPEC_Seminar/PDF/Ali%20I%20Al-
Naimi.pdf] Saudi Arabia Oil and Gas Investment Outlook and Strategies/ September 2006)
These investments in oil and gas, both upstream and downstream, contribute to market stability and
predictability. This also reassures the world economy especially the economies of the developing
countries of continued flow of energy resources to fuel growth and progress. And while they increase the
value added and returns to the Saudi economy, they also provide attractive opportunities to the local
and international oil and energy industries in the engineering, design, construction and services
arenas. I would therefore like to encourage businesses everywhere to seize these opportunities and build
mutually beneficial, long-term alliances and relationships with Saudi enterprises.
I/L – Investment K/T Averting Energy Crisis

Investment in Saudi oil key to preventing global energy crisis
Simmons 04 (Matthew The Institute for the Analysis of Global Security [http://www.iags.org/n0331043.htm]
New study raises doubts about Saudi oil reserves/ March 31, 2004)
To meet global demand for oil, Saudi Arabia will need to produce 13.6 million barrels a day (mbd) by
2010 and 19.5 mbd by 2020. Both the International Energy Agency and EIA assume Saudi oil output will
double over the next 15 to 20 years. In a new study soon to be released, Matthew R. Simmons, president of
Simmons and Company International, a specialized energy investment banking firm, contends that this is not
likely to happen. He argues that Saudi Arabia's oil fields now are in decline, that the country will not be
able to satisfy the world's thirst for oil in coming years and that its capacity will not climb much higher
than its current capacity of 10mbd. Considering the growth in demand, this could easily spark a global
energy crisis.
I/L – Investment K/T Competitiveness

Investment key to competitiveness of Saudi oil
Looney 04 (Robert, Center for Contemporary Conflict
[http://www.ccc.nps.navy.mil/si/2004/mar/looneyMar04.asp] Development Strategies for Saudi Arabia: Escaping the
Rentier State Syndrome/ March 2004)
To respond positively to these new conditions of competition, Saudi firms and industries will
continuously need to improve their product and process technologies and to respond rapidly to changes
in markets and competition. This in turn will require access to information, knowledge and skills,
strong networking with buyers and suppliers and an effective legal and regulatory framework. The
financial system will have to be greatly strengthened to cope with the rapidly increasing demands
placed on it. Competitiveness will have to show marked improvements for the positive forces of
globalization to offset the negative.
I/L – Investment K/T Maintenance/Expansion

Investments key to maintenance and expansion of Saudi oil projects
Habib 08 (Osama, The Daily Star
l[http://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=3&article_id=93365] Arab investors urge
dismantling of trade barriers/ June 21, 2008)
With windfall profits from record-high crude prices, oil-rich Arab countries are exploring more
investments opportunities in the Middle East while at the same time attracting foreign funds to update
aging infrastructure or build new projects from scratch. The UN Conference on Trade and Development
(UNCTAD) said that Saudi Arabia was the largest recipient of foreign direct investment in the Arab
world in 2006, attracting $18 billion - an increase of 51 percent over 2005.

High oil prices key to investment in Saudi oil
Dourian 08 (Kate, GulfNews [http://www.gulfnews.com/gnqfr/gnqfr12007/economy/10107438.html] Rumbles in
the pipeline/ May 16, 2008)
Yet, such levels of investment require prices to be at a level that allows producers to bring more oil and
gas out of the ground without depressing demand. In this regard, consultants PFC Energy say high oil
prices have rendered the top Opec troika of Saudi Arabia, Iran and Venezuela more resilient to external
shocks than at any time in history because of the exceptional behaviour of their oil-dominated economies.
Nevertheless, Opec's top three producers remain vulnerable to any sharp fall in oil prices, PFC say. For
instance, Saudi Arabia's budget breakeven is currently at around $55 a barrel for US WTI and Iran's at $60 –
with both rising. The message is that oil prices will need to stay at relatively high levels if producers are
to meet their investment spending targets, though few expect the Opec basket price to rise above $70 a
barrel as it did last year. Opec has not said what price level it will defend, though remarks by senior officials
and ministers suggest they would act if it fell below $50 a barrel.
I/L – Demand K/T Investment

Future demand key to ensuring investments in oil
Xuequan 08 (Mu, The China View [http://news.xinhuanet.com/english/2008-06/25/content_8432466.htm] EU,
OPEC says secure oil demand key to spurring investment/ June 25, 2008)
The European Union (EU) and the Organization of the Petroleum Exporting Countries (OPEC) agreed on
Tuesday that secure future demand of oil is key to spurring oil investment to guarantee supply. The EU
and OPEC "recognized the importance of secure future demand for crude and products in spurring
timely investment both upstream and downstream, thus contributing to greater security of supply,"
said energy officials from both sides in a joint statement after a meeting here. The fifth EU Energy
Dialogue, attended by EU Commissioner for Energy Andris Piebalgs and OPEC President Chakib Kheli and
secretary general Abdullah al-Badri, among others, took place in the aftermath of a global summit on oil
prices in Saudi Arabia's Red Sea city of Jeddah Sunday. The summit, which brought together the world's
major oil producers and consumers, ended with a call for more investment and improved transparency in
the oil industry.
I/L – A2: Investors Won’t Invest

Investment climate in Saudi Arabia encourages investors
Saudi Arabia Guide 04 ( ArabDataNet
[http://www.arabdatanet.com/country/profiles/profile.asp?CtryName=Saudi%20Arabia&
CtryAbrv=sa&NavTitle=Foreign%20Investment] Saudi Arabia Foreign Investment/ June
2004)
Offset programs have become a permanent fixture of regional economics. These programs have sought
to remedy the costs incurred by purchases of foreign technology not available in the country. In the offset
agreement, a certain percentage of a contract's value is reinvested into the purchasing country's economy. In
order to facilitate and structure the offset phenomenon, the Saudi Arabian government formed the
Saudi Economic Offset Program (EOP). It has been a means to encourage joint ventures between
foreign companies and Saudi private sector companies. Investing companies have enjoyed favorable
investment incentives, as well as support from the Saudi government. For instance, low cost of oil and
gas inputs can be obtained, and electricity prices are the lowest in the world. Investing companies have
access to cheap labor and minimal business taxes and custom duties. Import duties for raw materials,
intermediate goods, spare parts, and machinery are generally waived.
I/L – A2: Won’t Accept Investments

Saudi Arabia encourages foreign investments
Saudi Arabia Guide 04 ( ArabDataNet
[http://www.arabdatanet.com/country/profiles/profile.asp?CtryName=Saudi%20Arabia&CtryAbrv=sa&NavTitle=Fo
reign%20Investment] Saudi Arabia Foreign Investment/ June 2004)
The kingdom's government encourages foreign direct investment, particularly investment that is tied
to joint ventures with Saudi partners. The Saudi General Investment Authority (SAGIA) has been
created to handle the liberalization of investment, improve the investment climate, and approve
investment proposals. In 2002, the investment authority handed out licenses for $4.78 billion in projects
to US companies. Currently, the Supreme Economic Council is encouraging foreign investment in
communications, insurance, culture, electricity distribution, and advertising, including granting new rights to
foreign newspapers to open branches in Saudi Arabia. In May 2003, Chairman of SAGIA Prince Abdullah
laid out the long-term foreign investment situation from the Saudi point of view. He stipulated that the
kingdom needed $6,7 billion in foreign investment over the next 20 years, divided into the following
sectors: $140 billion in infrastructure projects, 116 billion for the electricity sector, 92 billion in
petrochemicals, 88 billion for water, 60 billion in telecommunications, 53.4 billion for tourism, 50 billion
for the natural gas sector, 28.3 billion for agriculture, and 10.7 billion each for information technology and
education. In the near term, Prince Abdullah has indicated that the kingdom will look for $20 billion dollars
annually in the water, railway, and electricity sectors alone.
***A2: Saudi I/L Turns***

A2: Saudi Dutch Disease – No Link

High oil prices don’t prevent Saudi market liberalization/diversification
ISN Security 2007
http://www.isn.ethz.ch/news/sw/details.cfm?id=18454
According to conventional wisdom, high oil prices would render economic reform in oil-rich countries a poor
chance of success with increases in state income lessening the pressure for such change. In a time of sky-high oil prices, Saudi
Arabia proves that conventional wisdom sometimes misses the mark. Saudi oil export revenues constituted a meager US$34.3
billion in 1998, but rose to US$46.8 billion in 1999 and US$65.5 billion in 2002. SABB, one of the kingdom's largest banks, projects oil revenues
of US$165 billion this year. Even though the Saudi state has thus gradually gained access to a greatly increased
volume of external rent, it has somewhat paradoxically loosened its tight grip on the economy, opened up its
markets for privatization and foreign investment and actively strengthened its private sector. Non-oil portions
of the private sector have grown more significantly in the last six years than oil-based. Export of non-oil-based
products increased at a rate of 20 percent annually between 2000 and 2006. The International Monetary Fund (IMF) is one of the many agencies
that note the new Saudi business climate, in which diversification and privatization seem to be paramount. The
improved business climate is illustrated clearly by incoming foreign direct investment (FDI) related to the Saudi gross fixed capital formation
(GFCF), a common macroeconomic indicator of business activity. The numbers from the World Investment Report from the UN Conference on
Trade and Development (UNCTAD) released in mid-October reveals a baffling development in this regard. Inward flow of FDI as a percentage of
the GFCF increased from a level of 1 percent in the period 1990-2000 to 4.5 percent in 2001, 24.0 percent in 2005, and a staggering 32.1 percent
in 2006. Not only is that more than any other Gulf country, including the United Arab Emirates, it turns Saudi Arabia into the top FDI recipient of
the Arab world with a staggering US$18 billion.
A2: Saudi Dutch Disease – Diversification Now

Saudi diversification , non oil exports proove
http://archive.gulfnews.com/articles/08/06/27/10224140.html
The value of Saudi Arabia's exports of non-oil products during April rose 28 per cent to 10.3 billion Saudi
riyals from 8.1 billion riyals during the same period last year, an increase of 2.2 billion riyals. According to the
latest report of the General Statistics and Information Bureau, the Gulf Co-operation Council (GCC) states rank on top of the list of countries
importing goods from Saudi Arabia in April. The non-Arab Muslim countries of Asia stood second, followed by other Arab countries. The report,
released yesterday, revealed that UAE tops the countries importing goods from the kingdom during the month of April. It was followed by the
two Gulf states Bahrain and Kuwait. The US ranks top among the nations from where Saudi Arabia exported goods in
April. China and Japan come next in second and third positions. The European Union stood first among the group of countries from where
Saudi Arabia imported goods during the month.
Oil Not Key to Saudi Economy – Diversification Now

Mouawad, 12/13/2005 (Jad, New York Times, “Saudi Arabia Looks Past Oil in Attempt to
Diversify,” http://www.nytimes.com/2005/12/13/business/worldbusiness/13saudiecon.html)
The ultimate oil state is seeking to shift its economy away from oil. Saudi Arabia may be experiencing its third oil boom
in three decades but it is also undergoing an economic revolution that its leaders hope will finally insulate it from
the oil producer's curse: the next price collapse. The Saudi kingdom remains the 600-pound gorilla of the global oil market. Given its vast
reserves, Saudi Arabia can keep pumping oil for the next 70 years. Oil, along with Islam's holy cities, Mecca and Medina, provides the country's rulers
with wealth, power and influence. Oil sales account for 40 percent of the economy and about 90
percent of government revenue. But that reliance on a volatile commodity - with big booms but also big busts - is also
a problem that the royal family is determined to overcome. The nation's leaders, of course, have made similar vows before to translate
their vast oil wealth into a more diversified economy. Will this time really be different? There are signs that it may be. Unnoticed by many outsiders, the Saudi private sector has
flourished in recent years, thanks to structural changes started by King Abdullah in the late 1990's when he was crown prince and oil prices were at $10 a barrel. "There's a gold rush
in Saudi Arabia right now," said Mohammed al-Sheikh, a Saudi lawyer associated with the White & Case law firm here in Riyadh, the capital. "You can feel it everywhere in the
economy. Everyone wants to invest here." Driven by a construction boom that is already replacing many of the buildings thrown up
, sprawling shopping malls, paved with white marble and featuring Gucci stores and Starbucks coffee shops,
in the 1970's
have become fixtures of the landscape in Riyadh, Khobar and Jeddah. Analysts at the Samba Financial
Group in Riyadh expect the economy to grow by 6.5 percent this year thanks to record oil prices, which have helped fuel the third
consecutive year of rapid expansion. But the private sector, which also stands apart from the state-run oil industry, has
outpaced the rest of the economy for 7 of the last 11 years and is expected to grow 7.4 percent this year.
"The diversification of our national income and our economy away from oil is key to our well being,"
said Abdullah Alireza, a minister without portfolio and a member of the Supreme Economic Council. "It's absolutely key." The Saudi stock market has become
one of the world's top performers, and growth in its market value for this year is about twice as large as the country's oil revenues.
Oil Not Key to Saudi Economy

Mouawad, 12/13/2005 (Jad, New York Times, “Saudi Arabia Looks Past Oil in Attempt to
Diversify,” http://www.nytimes.com/2005/12/13/business/worldbusiness/13saudiecon.html)
Like most oil producers, Saudi Arabia has found that oil was as much a curse as a blessing. In the 1970's,
the state modernized rapidly; built roads, schools, hospitals and universities; and gave safe government jobs to its people. But when energy
prices collapsed, the state found it could not pay all its bills. "They have learned the lessons from the first
and the second oil booms," said El-Mostafa Benlamlih, the resident coordinator for the United Nations here. "They had lots of redistribution,
lots of consumption, lots of public sector recruitment and lots of waste. I don't think they'll go down
that road anymore." This year, analysts estimate the kingdom will earn between $150 billion and $160 billion from oil sales, a figure exceeded only in 1974 and the
early 1980's. Thanks to its budget surplus, the government raised public salaries by 15 percent, for the first time in two decades; it also laid out a more smartly devised $8 billion
The oil wealth is also trickling down in the economy
public works program to build roads, schools and hospitals over the next five years.
and spreading beyond the elite. While vast disparities in wealth persist, economic output per person is expected to reach $13,600 this year, after averaging
$8,000 throughout the 1990's. But mostly, the windfall has been used to improve public finances significantly. Debt as
a share of annual economic activity has been cut to 51 percent, down from 119 percent in 1999. At the same time, the government
has bolstered its foreign reserves, which now total $177 billion, including $135 billion held by the central bank, according to Samba. Five years ago, foreign
holdings totaled less than $70 billion. This kind of management has even earned Saudi Arabia kudos from the International Monetary Fund, which recently praised the government's
"prudent macroeconomic management, the effective use of oil revenues to invigorate the development of the private sector and the economy's impressive performance."
***Saudi Impacts***
Impact – Coup
Economic growth prevents Saudi Coup
UPI 05 (United Press International
[http://www.metimes.com/Business/2005/11/04/analysis_booming_saudi_growth_eases_coup_fears/4632/]
Analysis: Booming Saudi growth eases coup fears/ November 4, 2005)
United States lawmakers, who have in committee hearings been weighing the prospects of a military or
Islamist coup in Saudi Arabia, may be reassured by new reports of a sprightly economic recovery in
both the oil and non-oil sectors of the Saudi economy. The latest banking projections for the Saudi
economy say that its entry into the World Trade Organization, expected at the Hong Kong WTO meetings in
December, will be eased by boom conditions in the desert kingdom. "Real GDP for 2005 is set to climb 6.8
percent, the highest growth level achieved in the country for the past two decades," says a new report
from the SAMBA group, the Saudi bank that is 30 percent owned by Citibank. "Nominal GDP will grow
29.8 percent, a phenomenal rise by any economic standards, and driven by the rise in oil prices," the report
goes on, assuming that oil prices are likely to remain at or above the 2005 average price of $51 a barrel.
"The Saudi economy is booming and it is at its best performing period ever," the SAMBA report says,
forecasting a surplus on this year's current account of over $100 billion. "The advent of King Abdullah
brought a new climate of hope about the pace of economic reforms and several developments have occurred
early in his reign. Saudi Arabia's accession to the WTO is now visibly close, as the final hurdle, a bilateral
trade agreement with the United States, was reached in September," it said. The recovery of Saudi finances
after a series of deficits brought on by the low oil price has important political implications. Pay
increases for civil servants and the military, along with more money for social programs, seems likely
to damp down the fears in the west of political instability.
Even a small decline in the Saudi economy will result in a coup

personal.umich.edu/~rtanter/S97PS472_Papers/BUCHOLZ.JENNIFER.SAUDI.HTML] Saudi Arabia as a Potential
Rogue State/ June 1997)
This is an example of psychology and deterence theories (18), this time applied to the average Saudi subject.
A member of the private sector who is used to living at a certain level of wealth, as the Saudis before the Gulf
War or in the heyday of high oil prices, may feel greatly deprived when no longer benefiting from such a
favorable economic situation, as the Saudis in the post-Gulf War economic slump. This is a result of the
difference in reference points between the pre-1979 Iranians and current day Saudis (19). Because the
reference point of the oil-rich Saudis is so high, any significant drop in prosperity from that reference
point would be considered deprivation and poverty. This could also be considered an example of
unmotivated bias on the part of the Saudi subjects regarding their economic status (20). In an unmotivated
bias an actor’s perception is shaped by what he expects. For the Saudis of the last forty years, wealth is
an expectation. It is part of their belief about themselves. Because they expect a modest degree of
wealth, they perceive anything less as deprivation and react virulently, as a result of their unmotivated
bias. Thus, while objectively the poverty levels in the Iranian and Saudi examples may not be
equivalent, a suffering Saudi economy and perceived relative poverty could bring about the same
socio-economic effects in a potentially revolutionary situation, as the Saudis are in now.
Impact – Coup
A decline in oil prices will result in a Saudi coup
All famous revolutions have a leader who becomes the embodiment of the revolutionary movement. For the
French he was Robespierre or Danton, for the Americans he was Washington, for the Iranians he was
Khomeni. Who will it be for the Saudis? As of yet, no one. There are many possible leaders: the six thousand
princes, the religious leaders within and outside the regime. But none has yet emerged as The One. Also,
there must be a spark to start the revolutionary coup in motion. This is typically a national crisis or
hardship, or else a very blatantly unacceptable act on the part of the old regime. For the Saudis, still
highly dependent on the ebb and flow of the world oil market, a catastrophe on the world oil market
could be that spark. The lifting of international sanctions on Iraq and subsequent crash in oil prices or the
end of Saudi oil reserves, concurrent with continued dissatisfaction of the Saudis with their
government, would spell the end of the current regime. A quote by an astute American reporter on the
Saudi situation quite accurately relates the tale of the Saudi future: "Riyadh will be able to keep a lid on an
increasingly tense and uneasy society. But if something happens to break that bubble, the odds would
shift." (52).
Impact – Coup – Saudi Instability (1/2)

The Saudi government is the most stable that it has been, due to effective extremist control
CSIS 2008
http://www.csis.org/media/csis/events/080303_hill_islam_summary.pdf
“The Saudi regime has never been stronger than it is today,” argued Thomas Hegghammer in a meeting with Congressional
staffers on March 3, 2008. Yet the Saudi government continues to walk a delicate line as it seeks to steer religious
impulses in the Kingdom toward personal piety and away from political engagement. Hegghammer is a Postdoctoral
Research Associate at Princeton University and a Research Fellow at the Norwegian Defense Research Establishment (FFI) in Oslo.
Hegghammer argued that the ruling family’s religious legitimacy in Saudi Arabia rests on two distinct pillars. The first is Wahhabism, a highly
literal, extremely pietistic movement that is centered around social conservatism and notions of moral purity. The second is pan-Islamism, based
on a notion of Muslims’ responsibility for other Muslims’ welfare and emphasizing intra-Muslim solidarity. Wahhabism has its origins in the
alliance between the Saud family and the preacher Muhammad ibn Abdel Wahhab in the eighteenth century; pan-Islamism is of far more recent
emphasis, dating back only to the 1960s and the conflicts between conservative monarchies and the revolutionary secular nationalist regimes
exemplified by Gamal Abdel Nasser’s Egypt. As Saudi Arabia became increasingly integrated into the world in the 1960s and 1970s, these twin
currents produced three basic impulses in Saudi society. The first was an effort to make the state more avowedly Islamic, much as the Muslim
Brotherhood movement sought to do in many Arab countries. This movement evolved into the “Sahwa” or “Awakening” movement, a non-
violent trend that has enjoyed significant support among Saudi clergy and which the state tightly controls. Another impulse is a turn toward
extreme pietism and a rejection of modern life. The last impulse is jihadism, which calls for using state power to defend Muslims from foreign
encroachment. Most Saudi jihadism follows a “classical” model that only supports Muslims fighting for their own freedom and permits neither
“out of area operations” nor attacks on civilians; some, typified by al-Qaeda, is more unconstrained in its targets and methods. Hegghammer
suggested that the Saudi state has confronted all of these impulses with great energy, generally ceding control to the clergy on moral issues while
retaining control on political issues. To this end, it poured money into clerical coffers, gave the religious establishment increased control over
educational curricula, and gave the clerics more leeway on defining Muslim “wars of liberation,” all while protecting its political prerogatives.
This strategy allowed the government to firmly meet the challenges of the “Awakening” movement. Pietism has been somewhat more of a
challenge, but as a wholly domestic and mostly lower-class movement, it has not explicitly threatened the state. Clearly the most difficult has
been jihadism, which is dangerously close to the twin pillars of state legitimacy yet often exists beyond state
control. The Saudi regime has publicly supported some jihadist causes in the past, although it has rarely supported them officially and has
never supported jihadis of the more expansive, global variety. The Saudi government began cracking down on al-Qaeda in the 1990s, but for the
most part it was not energetic combating jihadis fighting overseas until relatively recently. Hegghammer pointed out that official Saudi opposition
to jihad in Iraq has proven confusing, if not contradictory, for segments of the Saudi public. Hegghammer quoted one Saudi official who
sympathized with this confusion, asking why the regime could send fighters and materiel for the Afghan jihad in the 1980s but now asked its
youth not to do so today in Iraq. The central driver behind Saudi efforts to combat the jihadist threat was al- Qaeda’s mass-casualty bombing
attacks inside Saudi Arabia in May and November, 2003. Rather than the 9/11 attacks, it was only after the 2003 violence that the state recognized
the extent of the jihadi threat to the Kingdom itself. Hegghammer argues that the Saudi government has begun to get a handle on
the situation in the Kingdom, in part because the domestic jihadis badly overestimated their own strength.
They were never able to recruit successfully inside Saudi Arabia, and the regime has successfully
marginalized their support still further by portraying them as revolutionaries. Still, the Saudi government’s response to
jihadi violence is to reemphasize its Islamic credentials rather than walk away from them. For this reason, the Saudi government will continue to
work to alternately coopt and coerce whatever religiously inspired opposition movements emerge in the Kingdom.
Impact – Coup – Saudi Instability (2/2)

Saudi internal security is strong, due to a crackdown on funding for terrorism
CSIS 04
http://www.csis.org/media/csis/pubs/sis_ariskassessment.pdf
Saudi Arabia has taken a number of steps to improve its internal security and support the war on terrorism
since September 11th. Saudi intelligence and the Saudi foreign ministry have conducted a detailed review of Saudi companies and
charities operating in Pakistan and Central Asia. Saudi Arabia and the other Gulf Cooperation Council countries agreed to take new
steps to control the flow of funds and money laundering at the GCC summit meeting on December 31, 2001.20 Saudi Arabia
did make the Combined Aerospace Operations Center (CAOC) at Prince Sultan Airbase available for US use in supporting the war in Afghanistan
and Iraq.21 The Saudi government has arrested a number of individuals the US suspects of supporting Osama
Bin Laden, as well as cracked down on its more extreme Islamists. While it has acted slowly because of the sensitivity
Saudis show to any outside pressure, and rising public anger over the Second Intifada, it issued orders blocking the assets of 66 persons,
companies, groups, and charities on the US watch list for entities linked to global terrorism in late October, 2001.22 Saudi Arabia agreed to sign
the 1999 UN antiterrorism convention aimed at blocking the financial support of terrorists in early November 2001.23 The Foreign Minister,
Prince Saud Al Faisal, promised to punish Saudis criminally involved in al Qaida terrorism in December 2001.24 The government has
acted to freeze bank accounts linked to suspected terrorists, and Saudi intelligence is now monitoring at least
150 accounts for terrorist activity. The Saudi Chamber of Commerce established a task force in January 2002 to develop a financial
and administrative system for Saudi charities to ensure that their funds would not go to extremist causes, and the Saudi Arabian Monetary Agency
is assisting Saudi banks to develop and computerize systems to track money laundering. The Saudi government is also drafting new laws to limit
money-laundering activity.
The Saudi government is cracking down on terrorist activities, recent arrests and security
operations prove
The National June 25, 2008
http://www.thenational.ae/article/20080625/FOREIGN/660039335/1042/OPINION
Saudi police have arrested more than 700 people in the past six months for alleged attempts to revive
and finance networks linked to al Qa’eda, including some that were plotting attacks on oil and security
facilities, Saudi officials said today.Of those arrested, 181 were released for lack of evidence, but 520 persons, including both Saudi
nationals and foreigners, remain in custody, an official statement said. Disclosure of the arrests followed comments by
the interior minister, Prince Naif bin Abdul Aziz, that security forces had found evidence of terrorist
financing.“We have found things … that can be used as evidence against al Qa’eda’s financial
backers,” Prince Naif recently told Asharq al Awsat, adding that he hoped to release the findings of an investigation soon.Gen
Mansour al Turki, an interior ministry spokesman, said the arrests were made in different parts of the country and that some of those
detained had been “recruiting Muslims from outside Saudi Arabia” to join terrorist cells here.“They are serving the al Qa’eda
ideology and it has been proved that they have been in contact with foreign organisations,” he said.
“These people were planning to re-establish al Qa’eda in Saudi Arabia. They have been trying to
publicise al Qa’eda ideology, collect money for terrorists, and trying to recruit Saudis to get involved”
in terrorist activities inside the kingdom.The arrests led some long-time observers to speculate that many of the detainees
are not operatives who would carry out operations but sympathisers willing to support and finance militant networks.Gen Turki said one
of the disrupted cells included people who had been collecting money for suspicious activities in 2003 and 2004, but for one reason or
another had not been arrested at that time. “They are doing the same thing now,” he said, and as a result were detained.Gen Turki
declined to say which countries the detainees are from, but if the past is anything to go by they are likely to be from Egypt, Sudan,
Yemen and Indonesia.Police checkpoints on the roads in Riyadh were noticeably more frequent in recent
nights.Gen Turki said the arrested suspects came from “more than one group” and that some of the organisers were “taking advantage
of the hajj” to recruit militants.The official statement, carried by the government-run Saudi Press Agency, said officials “have
carried out a number of security operations against the deviant groups who have been working for the
service of the country’s enemies targeting the country’s principles, security, economy and way of life”.“Deviant” is
a term Saudi officials use to describe the ideology of al Qa’eda and similar groups.
Impact – Coup= ME Instability

A Saudi coup will result in Middle Eastern instability
Nyquest 03 (Jeffrey, Financial Sense
[http://www.financialsense.com/stormwatch/geo/pastanalysis/2003/0723.html] The Saudi Question/ June 23, 2003)
Aburish says that his book is “an appeal to the West to make plans to contain the damage which will
follow the coming turmoil in Saudi Arabia … by engineering a palace coup which would change the very
nature of the rule of the House of Saud and reduce its kings to figureheads.” Aburish warns the West that a
revolution in Saudi Arabia would have far-reaching economic consequences. Even a brief disruption or
stoppage of oil production could lead to a global depression as well as a confrontation with the Muslim
world. Any U.S. move into the Saudi oil fields would entail the occupation of sacred Muslim soil, and
this could set the entire Islamic world on fire.
Saudi coup will result in Middle Eastern instability

These threats to American interests in Saudi Arabia proper may not be sufficient to irrevocably portray a
Saudi rogue state as a regional hegemon. But the crucial role of Saudi Arabia as a leader of Islamic
nations everywhere, as the geographic and historical protector of Islam, establishes the Saudis as a
keystone in the U.S. security interests regarding Islamic countries. This is even more so in the Middle East
because of its additional geographic proximity to Saudi Arabia. Because the Saudis have managed to
remain moderate thus far, the full extent of this influence has not been tested. However, if the Saudis
were to adopt a wildly radical stance, it could have a significant impact on the policies of other
countries who subscribe to the same social and political code as Saudi Arabia. Just as the communist
U.S.S.R. had almost total hegemonic control over regional satellites because of geographic proximity
and well-propagated social and political ideology, the Saudis could have their own band of satellites,
both within the Middle East and without. Visions of Kuwait, U.A.E., and Oman as the next Poland,
East Germany, and Czechoslovakia and rapidly-developing Indonesia as the next China bring the
Saudis' full hegemonic capabilities into crystal-clear focus.
Middle Eastern instability will escalate and result in extinction

Niall Ferguson 07 (Kurdistan National Assembly of Syria
[http://www.kurdnas.com/en/index2.php?option=com_content&do_pdf=1&id=53] / June 18, 2007 Title: Should we
simply ignore the Mideast?)
As I said, there's no shortage of division in the Middle East. But who gets to rule is less clear. For some
time I have been warning that the next great global conflict will begin in the Middle East, just as the two
world wars had their origins in Eastern Europe. The lethal combination of ethnic disintegration, economic
volatility and an empire in decline (in this case, the U.S.) makes an upward spiral of violence hard to
avoid. Add to that the demographic pressures caused by high Muslim birthrates, the money generated
by vast deposits of oil and natural gas and the risk that the most revolutionary power in the region will
soon possess nuclear weapons — and you have a recipe for Armageddon.
Impact – Coup=Nuclear Terrorism

A coup would result in nuclear terrorism against the world
The issue of dissent in the desert kingdom has been newly revived by two major terrorist attacks on
Americans in Saudi Arabia in the last two years. Saudi terrorists have claimed responsibility for both.
The first was a car bombing at a building used by U.S. personnel to train the Saudi National Guard on 13
November, 1995 (22). Fatalities of the bombing included five Americans, two Indians, and no Saudis. At the
time of the attack, several dissident groups claimed responsibility. Later, Abdulaziz Fahd Nasser, one of
four arrested for the bombing, said that they opposed Saudi Arabia’s close ties with "non-Muslim countries"
and were angered by the regime’s failure to strictly observe Islamic tenets (23). In the following months, the
U.S. State Department received further threats, as announced in this January statement: "The U.S. Embassy
has received new and disturbing reports that additional attacks may be planned against institutions identified
with the United States and its interests in Saudi Arabia." The threats deterred Secretary of State Warren
Christopher’s planned visit to Riyadh to meet with Crown Prince Abdullah, who is leading the country during
King Fahd’s illness. When the two did meet, Abdullah assured Christopher that the two countries would not
abandon their close ties despite suspicion among conservative groups about the U.S.-Saudi relations (24).
Then in late June 1996, as a fulfillment of the threat of promised additional attacks, a bomb went off in front
of a U.S. building in Dhahran, which housed U.S. military personnel. Several U.S. citizens died in the attack
(25). But the bombings of November 1995 and June 1996 were not isolated incidents. The following
message issued 25 February, 1997, by the American Embassy and Consulates in Saudi Arabia provides
very real evidence of the continuing plague of terrorism by Saudis against Americans within Saudi
borders: "The embassy notes with deep concern a recent interview aired on London television on 20
February with well-known terrorist Usama Bin Ladin in which he not only threatened again the U.S.
military in Saudi Arabia but also called for the expulsion of American civilians. At the same time the
Embassy continues to receive reports indicating possible surveillance or probes of U.S. military and
government facilities suggesting that planning for terrorist action against U.S. interests in Saudi Arabia
continues unabated." As voiced by the terrorist Nasser, the reason behind such bombings is primarily
opposition to the Saudi regime’s connections to the U.S., which explains the select targets of the bombings:
U.S. military presence in Saudi Arabia. The bombings are significant to this study for two reasons. First, they
are further evidence of growing Saudi dissatisfaction with the persistently pro-U.S. choices of the regime.
Secondly, they are evidence of the growing prevalence of terrorism as a political means in Saudi
Arabia. Sponsoring of terrorist acts is a basic characteristic of rogue states; indeed, the first list of such
rogue states was the U.S. State Department’s list of states sponsoring international terrorism. Although the
current government does not sponsor such acts, the track record of the dissident groups leads one to
the conclusion that they would have no reservations utilizing terrorism on an international scale if they
were to come to power.
Impact – Coup=WMDs
Emergence of a coup would result with the emergence of WMDs in Saudi Arabia
Now that the general Saudi military capability and conventional weapons supply have been well-
documented, the question remains of Saudi interest in weapons of mass destruction (WMD). Saudi
Arabia’s public reputation, in keeping with the spirit of Islam, is pacifist, so of course they have signed the
Nuclear Non-Proliferation Treaty and the Biological and Chemical Weapons Conventions (31a, 31b, 31c,
31d, 31e, 31f). However, while there is no reason to think that the Saudis possess such WMDs at the current
time, the prospect theory concept of the basement of fear can be used to explain why the Saudis might
pursue the development or acquisition of such weapons in the near future (32). If the Saudis are put in a
position to fear other WMD-possessing states, they might perceive the development or acquisition of
such weapons as their only option. In the current situation, in which Saudi Arabia is at least outwardly an
ally of the U.S. (as evidenced by U.S. support in the Gulf War), such fear would be absurd: the monarchy
knows that it can call upon the U.S. and the UN for military support against regional aggressors. But if the
government were to undergo a coup and change its alignment to anti-U.S. and in agreement with Iraq,
the West’s enemy, a basement of fear situation would be entirely reasonable. For in such a situation, the
Saudis would have relatively few friends in the international realm, and would be ideologically head-
to-head with the U.S. and other WMD-possessing powers. If the Saudis were to enter into such a
situation through a revolutionary coup against the monarchy, the attainment of WMDs would be a
feasible possibility, given the funds that the Saudis have the luxury of spending on their military.
Hence, the desire for and attainment of WMDs, a requirement for being a rogue state, would be entirely
within the reach of a post-coup Saudi Arabia.
Impact – Coup Escalates

A coup in Saudi Arabia would result in U.S. military intervention
World Tribune 05 ([http://www.worldtribune.com/worldtribune/05/front2453676.157638889.html] U.S. fears
prospect of Saudi coup, weighs invasion plans/ November 1, 2005)
The United States has raised the prospect of a military invasion of Saudi Arabia. The House Armed
Services Committee considered the possibility of a Saudi coup and U.S. response during a hearing on Oct.
26. Saudi Arabia, with 200,000 military and National Guard troops, is the largest oil producer and
exporter, with an output of nine million barrels of oil per day, according to Middle East Newsline. The Arab
kingdom is the third largest supplier of oil to the United States, with more than 1.55 million barrels per day.
The scenario was outlined by Michael O'Hanlon, a senior fellow of the Brookings Institution, who cited
a Saudi coup as one of several threats to the United States. "How should the United States respond if a
coup, presumably fundamentalist in nature, overthrows the royal family in Saudi Arabia?" O'Hanlon asked.
"Such a result would raise the specter of major disruption to the oil economy." The response could
include the deployment of three U.S. Army divisions backed by fighter-jets and airborne early-warning
and alert aircraft. In all, the U.S.-led mission could include up to 300,000 troops.
Impact – Coup=Prolif
Saudi Arabian coup leads to nuclear proliferation
Michael O'Hanlon Testimony of October 26, 2005 before the House Armed Services
Committee (panel on regional conflicts for the committee defense
review)http://www.brookings.edu/views/testimony/ohanlon/20051026_arms.pdf
What military scenarios might result in such circumstances? If a fundamentalist
regime came to power and became interested in acquiring nuclear weapons, the United
States might have to consider carrying out forcible regime change. If by contrast the
regime was more intent on disrupting the oil economy, more limited measures such as
seizing the oil fields might be adequate. Indeed, it might be feasible not to do anything at
first, and hope that the new regime gradually realized the benefits of reintegrating Saudi
Arabia at least partially into the global oil economy. But in the end the United States and
other western countries might consider using force. That could happen, for example, if
the new regime refused over a long period to pump oil, or worse yet if it began destroying
the oil infrastructure and damaging the oil wells on its territory—perhaps out of a
fundamentalist commitment to a return to the lifestyle of the first millenium. Since
virtually all Saudi oil is in the eastern coastal zones or in Saudi territorial waters in the
Persian Gulf, a military mission to protect and operate the oil wells would have a
geographic specificity and finiteness to it. The United States and its partners might then
put the proceeds from oil sales into escrow for a future Saudi government that was
prepared to make good use of them.
Impact – Coup=Global Oil Shocks

A Saudi Arabian coup leads to global oil shocks
Michael O'Hanlon Testimony of October 26, 2005 before the House Armed Services
Committee (panel on regional conflicts for the committee defense
review)http://www.brookings.edu/views/testimony/ohanlon/20051026_arms.pdf
How should the United States respond if a coup, presumably fundamentalist in
nature, overthrows the royal family in Saudi Arabia? Such a result would raise the
specter of major disruption to the oil economy. Saudi Arabia, along with the United
States and Russia, is one of the world’s big three oil producers (in the range of 9 million
barrels of oil a day), and is the largest oil exporter (7 million barrels per day, about 20
percent of the world total). It also has by far the world’s largest estimated oil reserves
(260 billion barrels, or nearly a quarter of the world total).17 A sustained cutoff in Saudi
oil production would wreak havoc with the world economy.
Impact – ME Stability General

Middle Eastern stability rests on Saudi financial assistance, a sudden drop in Saudi wealth
will destabilize the region
Foreign Policy in Focus 08
http://www.fpif.org/fpiftxt/4926
These military expenditures place a major toll on the fiscal well-being of Middle Eastern countries. Military
expenditures often total half of central government outlays. Many senior observers believe that debt financing in
Saudi Arabia that has been used in the past to finance arms purchases has threatened the kingdom’s fragile
social pact of distributing oil rents to favored constituents and regions. A very important factor, often
overlooked, is that a number of Middle Eastern states – such as Egypt, Jordan, Tunisia, and Morocco – are
highly dependent on Saudi Arabia for financial assistance. As Saudi Arabia spends more and more on arms
acquisitions, it becomes less generous, leading to serious budget shortfalls throughout the Arab world. The
result is that these arms sales may be causing more instability and thereby threatening these countries’
security interests more than they are protecting them. Even Middle Eastern countries that do not have to buy
their American weapons suffer the economic consequences. For example, U.S. arms transfers cost the Israelis two to
three times their value in maintenance, spare parts, training of personnel, and related expenses. It drains their
economy and increases their dependency on the United States. The implications of these ongoing arms purchases are
ominous on several levels. For example, one of the most striking but least talked about for the Middle East is the
“food deficit,” the amount of food produced relative to demand. With continued high military spending – combined
with rapid population growth and increased urbanization – the resulting low investments in agriculture have made
this deficit the fastest growing in the world.
Impact – Coup – Arms Deal: Key to Relations

US-Saudi arms deals are key to relations and the war on terror
ABC News 08
http://abcnews.go.com/International/wireStory?id=4130306
Coinciding with Bush's trip, the Bush administration in Washington notified Congress on Monday that it will offer
Saudi Arabia the chance to buy sophisticated Joint Direct Attack Munitions or "smart bomb" technology and
related equipment, the State Department said. The administration envisions the transfer of 900 of the precision-guided bomb kits, worth
$123 million, that would give the kingdom's armed forces highly accurate targeting abilities. The proposed deal follows notification of five other
packages to Saudi Arabia, the United Arab Emirates and Kuwait, bringing to $11.5 billion the amount of advanced U.S. weaponry, including
Patriot missiles, that the administration has announced it will provide to friendly Arab nations, State Department spokesman Sean McCormack
said. Administration officials say the total amount of eventual sales as part of the Gulf Security Dialogue is estimated at $20 billion, a figure
subject to actual purchases. The arms packages are an important part of the U.S. strategy to bolster the defenses of
oil-producing Gulf nations, such as Saudi Arabia, against threats from Iran. Saudi Arabia and other Gulf states, which
have majority Sunni Muslim populations, harbor deep suspicions about Shiite Iran's apparent designs to establish itself as a major power.
Congress already has been briefed on all the packages, which also include the sale of the Navy's Littoral Combat system. Lawmakers
mostly see the deals as critical to maintaining relations with war-on-terror allies. Some are opposed to the JDAMs
portion out of concern that it gives Saudi Arabia the ability to attack Israel, but are unlikely to muster the two-thirds majority needed, within an
allowed 30-day period, to block the sales.
Impact – Coup – Arms Deal: US-Saudi Relations Fragile

US-GCC relations are fragile amid mounting tensions over oil prices
http://archive.gulfnews.com/articles/08/06/23/10223052.html
We can sense growing suspicion in the asymmetric relationship between the US and the six Gulf
Cooperation Council (GCC) states due to America's divergent view and position on GCC issues, which
the member states - collectively and individually - deem as either unfriendly or interfering in their domestic affairs. The GCC states
are frustrated at Washington's lack of gratitude and appreciation for their invaluable contribution to
stability and security in the region and for pursuing the path of moderation in the Middle East. As part
of the axis of moderation, the GCC plays a major role in Iraq, ensures energy security and generates
sovereign wealth. But it was all ignored by the US Congress when the US House of Representatives approved a
legislation that would allow the United States to sue the Organisation of Petroleum Exporting Countries (Opec) under its antitrust laws.
New York Times columnist, Thomas Evan, too joined the fray and wrote an opinion article titled "Sue OPEC". With the unprecedented
increase in oil prices which is now hovering around $140 per barrel, only the GCC states can calm the world's fears of rising oil prices.
Saudi Arabia took the initiative and increased its daily oil output by 200,000 barrels and also held a conference to address the significant
relationship between the oil producing and oil consuming countries.
A recent US-Saudi weapons deal risks a Middle Eastern arms race

Foreign Policy in Focus 08
http://www.fpif.org/fpiftxt/4926
President George W Bush
announced during his recent Middle East trip that he is formally serving notice to
Congress of his administration’s decision to approve the sale of bomb-guidance kits to Saudi Arabia.
This announcement follows notification on five other arms deals to Saudi Arabia, the United Arab
Emirates and Kuwait that are part of a $20 billion package of additional armaments over the next
decade to the family dictatorships of Saudi Arabia and other Persian Gulf emirates announced by President
George W. Bush last summer. At that time, the Bush administration also announced taxpayer-funded military assistance totaling an
additional $13 billion over this same period to the Mubarak dictatorship in Egypt. Also part of this package is an additional $30 billion
worth of sophisticated weaponry bound for Israel. Altogether, these arms deals represent a major setback for those
struggling to promote peace and democracy in that volatile region. The Democratic-controlled Congress has the
authority to block any or all of these proposed sales. It could also refuse to approve the military assistance packages, which altogether
total $63 billion. Congress has until February 13 to block the latest portion of the arms package, consisting of 900 Joint Direct Attack
Munitions, or JDAMs, valued at $123 million. In addition to these highly advanced satellite-guided bombs, the
Bush administration’s proposed arms sales to the Gulf monarchies include sophisticated guided
missiles, new naval ships, and upgrades to fighter aircraft for Saudi Arabia and the five other Gulf monarchies.
However, no one among the top House or Senate leadership in either party has yet to come out in
opposition to any aspect of the administration’s plans to dangerously escalate the regional arms race.
Impact – Coup – Arms Deal: US-Saudi Relations 

US-Saudi relations are improving due to security alliances
AEI June 17, 2008
http://www.aei.org/publications/filter.all,pubID.28153/pub_detail.asp
After years of cool relations following 9-11, Washington once again relies on Riyadh as a diplomatic
partner. Not only do U.S. policymakers now consider a strong Saudi Arabia as a counterbalance to
Iran, but State Department officials also look at Saudi authorities as partners in the Middle East peace
process and in supporting nationalist factions in Lebanon against their pro-Syrian counterparts.[32] Saudi authorities even went so far
as to issue religious edicts against Hezbollah for provoking war with Israel in 2006.[33] Each likely successor will maintain
the Saudi security alliance with the United States. But, U.S.-Saudi relations have been strained in recent years, and some
kings may approach their ties to Washington differently than others. In this context, succession will put Saudi Arabia in play. Any U.S.
policy today--from the Middle East peace process to the Middle East Partnership Initiative, which emphasizes civil society, economic
reforms, political participation, and development as part of a broader U.S. public diplomacy effort in the Middle East[34]--depends on
both Egyptian and Saudi goodwill. The departure of both or even one of these states from the U.S. sphere will force significant changes
in the U.S. Middle East posture.
Saudi Arabia will be backed by US in coup

Hermann Fr. Eilts Saudi ambassador, Uncle Sam Supports Saudi Crown
,http://www.unc.edu/depts/diplomat/AD_Issues/amdipl_15/eilts_hart2.html
Subsequent Egyptian air attacks on Saudi border towns and villages in the Najran and Jizan areas, which the
Saudis lacked the military capability to defend, prompted urgent Saudi calls for U.S. assistance. As Hart
recounts, President John F. Kennedy became personally engaged with both Crown Prince (and later King)
Faisal and Egyptian President Nasser in an effort to resolve the dispute.Washington worried that Saudi
Arabia faced a Nasserist-inspired internal insurrection, which in Kennedy’s view could only be avoided if the
Saudis engaged in internal economic and political reform and ended all aid to the Yemeni royalists. In return for
such Saudi reforms and restraints, Kennedy promised American help to protect Saudi Arabia and to mediate
the volatile Egyptian-Saudi tensions. Though indignantly rejecting U.S. innuendoes about possible internal
instability, a vexed but concerned Prince Faisal nevertheless recognized his need for tangible American
support. On the diplomatic level, Kennedy dispatched Ambassador Ellsworth Bunker, a distinguished former
diplomat and businessman, first to Saudi Arabia and later to Egypt, to mediate between the two parties.
Impact – Coup – Arms Deal: Saudi-US Relations = Nuke War w/ Iran

A break in US-Saudi relations would cause Saudi proliferation and conflict with Iran
Randall Parker 03
http://www.parapundit.com/archives/001353.html
Michael A. Levi of the Brookings Institution argues that if the United States breaks with Saudi Arabia, ceases
to guarantee its security, and becomes openly hostile toward it then Saudi Arabia has the money to buy nukes
from either Pakistan or North Korea and plenty of motives to want nuclear weapons: Why would Riyadh
want nukes now? Because of a potentially dangerous confluence of events. The rapidly progressing nuclear
program of traditional rival Iran has no doubt spooked the Saudi leadership. Last fall, dissidents revealed the
existence of a covert Iranian uranium-enrichment program, forcing analysts to drastically revise down their
estimates of how long it might take Iran to obtain nuclear weapons. Reacting to that development, Patrick Clawson,
deputy director of the Washington Institute for Near East Policy, recently wrote that "Saudi Arabia is the state
most likely to proliferate in response to an Iranian nuclear threat" because, he argued, the Saudis fear a
nuclear-armed Iran could have designs on Saudi Arabia, a Sunni monarchy that is home to a large number of
oppressed Shia. We ought to think twice about breaking with the Saudis. Will doing so reduce the amount that
wealthy Saudis donate to terrorist groups? Will doing so reduce the amount of hatred of non-Muslims taught in their
mosques and schools? Will a declaration that the Saudis are our enemies make them spend less money to spread
Wahhabism around the world?
Impact – Coup – Arms Deal: Saudi Relations K/T solve terrorism

Saudi-US cooperation key to the war on terror
Knipe no date cited
(Michael Knipe is a staff writer for the Washington Post, talking about post 9/11 relations)
http://www.washingtonpost.com/wp-adv/specialsales/spotlight/saudi/dialogue.html
However, both Riyadh and Washington now appear to have taken heed of each other's worries and
concentrated their attention on the fact that, as they are the world's largest oil-producing and oil-consuming
countries, there is a vital need for a strong and reliable partnership.
They have, therefore, gone to some lengths to reaffirm their commitment to each other. They certainly
share the view that the world's major problems – the war on terrorism, bringing stability to the Middle
East and energy security – cannot be successfully resolved without their close commitment and
cooperation. In this respect, the U.S. administration regards the accession of King Abdullah a year ago as an
important turning point and believes the relationship is now taking a new course.
Impact – Coup – Arms Deal: Terrorism – WOT Succeeding

The war on terror is succeeding on all fronts.
The Times 6/27 (http://www.timesonline.co.uk/tol/comment/columnists/gerard_baker/article4221376.ece?openComment=true)

And yet the evidence is now overwhelming that on all fronts, despite inevitable losses from time to time, it
is we who are advancing and the enemy who is in retreat. The current mood on both sides of the Atlantic,
in fact, represents a kind of curious inversion of the great French soldier's dictum: “Success against the
Taleban. Enemy giving way in Iraq. Al-Qaeda on the run. Situation dire. Let's retreat!” Since it is remarkable
how pervasive this pessimism is, it's worth recapping what has been achieved in the past few years.
Afghanistan has been a signal success. There has been much focus on the latest counter-offensive by
the Taleban in the southeast of the country and it would be churlish to minimise the ferocity with
which the terrorists are fighting, but it would be much more foolish to understate the scale of the
continuing Nato achievement. Establishing a stable government for the whole nation is painstaking work,
years in the making. It might never be completed. But that was not the principal objective of the war there.
Until the US-led invasion in 2001, Afghanistan was the cockpit of ascendant Islamist terrorism.
Consider the bigger picture. Between 1998 and 2005 there were five big terrorist attacks against Western
targets - the bombings of the US embassies in Africa in 1998, the attack on the USS Cole in 2000, 9/11, and
the Madrid and London bombings in 2004 and 2005. All owed their success either exclusively or largely to
Afghanistan's status as a training and planning base for al-Qaeda. In the past three years there has been
no attack on anything like that scale. Al-Qaeda has been driven into a state of permanent flight. Its
ability to train jihadists has been severely compromised; its financial networks have been ripped apart.
Thousands of its activists and enablers have been killed. It's true that Osama bin Laden's forces have
been regrouping in the border areas of Pakistan but their ability to orchestrate mass terrorism there is
severely attenuated. And there are encouraging signs that Pakistanis are starting to take to the
offensive against them. Next time you hear someone say that the war in Afghanistan is an exercise in futility
ask them this: do they seriously think that if the US and its allies had not ousted the Taleban and sustained an
offensive against them for six years that there would have been no more terrorist attacks in the West? What
characterised Islamist terrorism before the Afghan war was increasing sophistication, boldness and
terrifying efficiency. What has characterised the terrorist attacks in the past few years has been their
crudeness, insignificance and a faintly comical ineptitude (remember Glasgow airport?) The second great
advance in the War on Terror has been in Iraq. There's no need to recapitulate the disasters of the US-led war
from the fall of Saddam Hussein in April 2003 to his execution at the end of 2006. We may never fully make
up for three and a half lost years of hubris and incompetence but in the last 18 months the change has been
startling. The “surge”, despite all the doubts and derision at the time, has been a triumph of US
military planning and execution. Political progress was slower in coming but is now evident too. The
Iraqi leadership has shown great courage and dispatch in extirpating extremists and a growing
willingness even to turn on Shia militias. Basra is more peaceful and safer than it has been since before the
British moved in. Despite setbacks such as yesterday's bombings, the streets of Iraq's cities are calmer and
safer than they have been in years. Seventy companies have bid for oil contracts from the Iraqi
Government. There are signs of a real political reconciliation that may reach fruition in the election
later this year The third and perhaps most significant advance of all in the War on Terror is the
discrediting of the Islamist creed and its appeal. This was first of all evident in Iraq, where the head-
hacking frenzy of Abu Musab al-Zarqawi and his associates so alienated the majority of Muslims that it
gave rise to the so-called Sunni Awakening that enabled the surge to be so effective. But it has spread
way beyond Iraq. As Lawrence Wright described in an important piece in The New Yorker last month, there
is growing disgust not just among moderate Muslims but even among other jihadists at the extremism
of the terrorists. Deeply encouraging has been the widespread revulsion in Muslim communities in Europe -
especially in Britain after the 7/7 attacks of three years ago. Some of the biggest intelligence
breakthroughs in the past few years have been achieved from former al-Qaeda supporters who have
turned against the movement.
Impact – Coup – Arms Deal: Terrorism – WOT Succeeding

War on terror is succeeding with the surge.
The Australian 6/26 (http://www.theaustralian.news.com.au/story/0,25197,23922780-20261,00.html)

VERY personal trait that led (George W.) Bush to make a hash of the first years of the war led him to make a
successful decision when it came to this crucial call (the surge). Bush is a stubborn man. Well, without that
stubbornness, that unwillingness to accept defeat on his watch, he never would have bucked the opposition to
the surge. Bush is an outrageously self-confident man. Well, without that self-confidence he never would
have overruled his generals. In fact, when it comes to Iraq, Bush was at his worst when he was humbly
deferring to the generals and at his best when he was arrogantly overruling them. The surge has produced
large, if tenuous, gains. Violence is down sharply. Daily life has improved. Iraqi security forces have
been given time to become a more effective fighting force. The Iraqi Government is showing signs of
strength and even glimmers of impartiality. Iraq has moved from being a failed state to, as Vali Nasr of
the Council on Foreign Relations has put it, merely a fragile one. The whole episode is a reminder that
history is a complicated thing. The traits that lead to disaster in certain circumstances are the very ones that
come in handy in others. The people who seem so smart at some moments seem incredibly foolish in others.
The cocksure war supporters learned this humbling lesson during the dark days of 2006. And now the
cocksure surge opponents, drunk on their own vindication, will get to enjoy their season of humility. The
reason we have democracy is that no one side is right all the time. The only people who are dangerous are
those who can't admit, even to themselves, that obvious fact. Joe Klein blogs on Time.com: I HAPPILY
acknowledge that I was wrong about the surge. The surge has reduced violence. We should all be thrilled
about that and honoured by the brilliance of those who have served in Iraq. But what we're talking about here
is whipped cream on a pile of fertiliser, a regional policy unprecedented in its stupidity and squalor. Cal
Thomas on Townhall.com: THE main reason progress in Iraq is not receiving more attention is that the
progress is considerable and the big media are not paying attention because they don't like the new story-line.
They prefer "America defeated", not "America victorious" because defeat increases the likelihood of a
Democratic electoral blowout in the fall. A headline in last Saturday's New York Times tells you all you need
to know ... With what sounds like information produced only after an editor was water-boarded, it reads, "Big
gains for Iraq security, but questions linger". If this headline writer were reporting victory in World War II, it
might have read, "America wins; German and Japanese psyches seriously affected". The 1969 moon landing
might have read: "Man lands on moon; will it hurt the lunar environment?" Or, "Adam and Eve marry; gays
demand similar rights" ... Only falling gasoline prices might make the Times feel worse, or perhaps John
McCain discovering the fountain of youth. Tony Blankley in The Washington Times: LAST month, Strategy
Page reported: "Al-Qa'ida websites are making a lot of noise about 'Why we (al-Qa'ida) lost in Iraq'. Western
intelligence agencies are fascinated by the statistics being posted in several Arab language sites. Not the kind
of stuff you read about in the Western media. According to al-Qa'ida, their collapse in Iraq was steep and
catastrophic. If you can read Arabic, you can easily find these pro-terrorism sites and see for yourself how
al-Qa'ida is trying to explain its own destruction (in Iraq) to its remaining supporters." Now, it is
doubtlessly true that our invasion of Iraq (and Afghanistan) helped al-Qa'ida's recruitment. But that is
an old fact. What Osama bin Laden famously said about recruitment is also true: people follow the
strong horse. And the new fact is that as we are winning in Iraq, as we are killing al-Qa'ida fighters
and other Islamist terrorists there by the truckload ... we are proving to be the strong horse after all
and can expect to see a reduced attraction for young men to join the Islamist terrorist ranks.
Impact – Coup – Arms Deal: Saudi Relations K/T Leadership

Saudi-US relations key to leadership
Barker 01
(James Barker was Secretary of State for George H W Bush)
http://www.pbs.org/wgbh/pages/frontline/shows/saudi/interviews/baker.html
Why is Saudi Arabia important? Well, Saudi Arabia is important because the United States has a very substantial
national security interest in ready access to the energy supplies of the Persian Gulf. Saudi Arabia controls
most of those energy supplies. So it has been an ally and friend of the United States for as long as I can
remember. ... You say Saudi Arabia has been central through all of these administrations to our national
security. It's my understanding that, in the 1980s, we, in a sense, made a strategic shift because of what happened in Iran. We encouraged
the Saudis to create a military base complex, if you will, that would help us defend the region. That's very possibly true. I don't
remember specifically that happening. But we have, through the years, in connection with our close alliance with them,
and our national interest in protecting the energy reserves of the Persian Gulf... We've encouraged them to provide
funding for security measures, and to create, to the extent they could, their own security.
A2: Impact Turn – Hrts

Saudi Arabia human rights is increasing.
Embassy of Saudi Arabia 04 (Royal Embassy of Saudi Arabia Washington D.C., press release,
http://www.saudiembassy.net/2004News/Press/ PressDetail.asp?cIndex=193)
[Washington, DC] -- For the first time, Saudi Arabia has established a non-governmental human rights
organization to uphold the basic rights guaranteed to its citizens. The National Human Rights
Association (NHRA), which will implement international human rights charters signed by Saudi
Arabia, will also include a special panel to monitor violations of women's rights. The NHRA consists of
41 members who will work with international human rights organizations and issue periodic reports
on the progress of human rights in Saudi Arabia. Ambassador to the United States Prince Bandar bin
Sultan stated: "The establishment of this human rights organization is just another step in Saudi Arabia's
integrated reform program. Institutions such as these are the foundation for successful and lasting
reforms." The formation of the NHRA follows on the heels of the first-ever human rights conference in
Saudi Arabia which was held in Riyadh last October. There is already a human rights committee at the
Consultative Council, Saudi Arabia's 120-member advisory body. Another government-run human rights
body will soon be established, and it will work to implement government decisions regarding human
rights. Over the past few years, Saudi Arabia has embarked upon a comprehensive economic, educational,
and political reform agenda to promote a vibrant economy and broader civic and political participation of our
citizens. Specific measures taken to implement the reform agenda are discussed below and can be found in
the ISSUES section of this web site, under Human Rights and Reform .
***Aff Generic Oil Disad – UQ/Links***

N-UQ – Alt Energy Up

Investments in alternative energy are increasing
2006)
Still, interest in alternative energies did not cease. “As the curtain slowly descends on the age of oil,”
noticed a Worldwatch study in 1984, “investments in more energy-efficient technologies, in other fossil
fuels, and in renewable energy resources are expanding.”
Investments in alternative energy will reach 1.9 trillion dollars by 2020

Leuffen 06 (Julia, Allianz Knowledge Partnersite
[http://knowledge.allianz.com/en/globalissues/energy_co2/renewable_energy/risk_benefits_renewable_energy.html]
Benefits and Risks of Eco-Energy/ May 28, 2006)
Meanwhile, industrializing countries, such as India and China, will also turn to renewable energies to
satisfy their burgeoning energy requirements. The World Energy Council predicts that by 2010, the
volume of global investment in renewable energies will have reached 625 billion US dollars and could
rise to 1.9 trillion by 2020.
N-UQ – Oil Prices (1/2)

Oil prices will fall, US demand 
http://www.gulfnews.com/business/Oil_and_Gas/10224555.html
Crude oil may fall this week because of rising supplies and declining fuel demand in the US, the country
responsible for almost a quarter of global consumption. Eleven of 24 analysts surveyed by Bloomberg News, or 46 per cent,
said prices will decline through July 3. Nine of the respondents, or 38 per cent, said oil will rise and four forecast little change. "Demand in
the US has certainly been weakening," said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore.
"If there is a clear indication of demand falling in some of the key developing markets, like China, then there
will be more significant pull back in oil prices." US crude oil inventories gained 803,000 barrels to 301.8 million last week, the
Energy Department said in a June 25 report. Fuel consumption averaged 20.2 million barrels a day in the past four weeks, down 2.3 per cent from
a year earlier.
Oil prices , US demand is falling

The Financial Times June 26, 2008
http://www.ft.com/cms/s/0/aa8a1aa4-4317-11dd-81d0-0000779fd2ac.html
Oil prices dropped sharply yesterday as traders reacted negatively to evidence that record retail petrol prices
above $4 a gallon were damaging demand in the US. Nymex August West Texas Intermediate sank $2.45 to settle at $134.55 a barrel,
after touching a session low of $131.95, while ICE August Brent lost $2.13 at $134.33 a barrel after the latest US inventories data showed an
unexpected rise in crude stocks of 800,000 barrels last week, confounding the consensus forecast for a fall of 1.4m barrels. With US retail prices
for diesel up by almost 40 per cent this year and petrol pump prices up by a third, weakness in US demand was expected, but the
pace of decline in consumption appears to have accelerated.
Oil prices and demand are , supply is 

The Associated Press June 25, 2008
http://www.mlive.com/newsflash/index.ssf?/base/business-83/1214402348121850.xml&storylist=autonews2
NEW YORK (AP) — Oil futures fell sharply Wednesday after the Energy Department said the nation's supplies of
fuel and oil were larger than expected last week — evidence that the soaring price for gasoline has sliced into Americans' demand
for fuel. The Federal Reserve's decision to hold interest rates steady had little impact on trading. At the pump, gas prices inched lower
but remain entrenched above $4 a gallon. In its weekly inventory report, the department's Energy Information Administration said
crude oil supplies rose slightly last week. Analysts surveyed by research firm Platts had expected a 1.7 million barrel decline.
Gasoline supplies fell less than expected. And inventories of distillates — which include diesel fuel and heating oil — rose much more than
expected. Demand for gas, meanwhile, fell 2.1 percent.
Oil prices will soon decline, slowing global economy proves

The Economic Times June 25, 2008
http://economictimes.indiatimes.com/Analysis/Oil_may_slip_under_its_own_weight_markets_may_climb_wall_of_
worries/articleshow/3161950.cms
NEW DELHI: As crude oil prices soar upwards of $135 per barrel, sending stock markets across the globe plummeting, investorsâ€™ sentiments
have frayed further. Increasingly deafening global noises surrounding crude oil reaching $200 a barrel are driving investors away from stocks.
The milliondollar question now on every analyst’s mind is: How long can crude oil prices continue to scale new highs? Though experts fears are
not unjustified, our answer is contrary to that. We have reason to believe that crude oil is near its apex and will soon reverse its
upward trend. If we look back in history, we can almost see the inevitable fate of the spiralling oil prices.
Crude oil has been on a secular uptrend since 2003, but it has seen an unprecedented rise of around 100% on a year-on-year basis so far in 2008.
Consequently , oil’s weightage to global GDP has risen from 3% to 6% reaching a level similar to the one that occurred during the oil crisis of the
1980s, which led the world into an economic slowdown. Hence, such a composition is not unprecedented and repercussions not unpredictable. An
ever-rising crude oil prices will bring the global economy to its knees. And a worldwide recession and soaring
oil prices cannot go hand-inhand for long.
N-UQ – Oil Prices (2/2)

Prices and demand are , US supply is 
The Telegraph June 25, 2008
http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/06/26/cnoil126.xml
America's seemingly never-ending demand for oil appears to be abating as a direct result of the surge in prices.
Data from the US Department of Energy revealed a large build-up in oil inventories in the last seven days,
knocking more than $5 off the price of a barrel of oil at one stage. The new figures showed that US crude oil
stocks rose by 800,000 barrels last week, four times the amount expected by a consensus of analysts' forecasts,
and reversing five straight weeks of declining supplies. America is the world's largest energy consumer and there are indications
that record prices are impacting demand and helping push prices lower. The price of a barrel of crude oil was down $3.83 at $133.17 in lunchtime
trading on the New York Mercantile Exchange. In London, Brent crude was down $3.29 at $133.17.
UQ OW’s the Link – Bull Market

The oil market is not sensitive to downturns- it’s naturally a bull market
Cordier and Gross 08 (James and Michael, Optionetics [http://www.optionetics.com/market/articles/19543]
Commodities Roundup: Oil, Boom or Bubble?/ May 19, 2008)
The commodity is crude oil and it is in one of the most recklessly ascending bull markets ever seen in the
history of bull markets. The question is, is now the time to buy in or is this market setting up for a big fall?
Is this a boom that will continue or a bubble that is about to burst?In an attempt to answer this question,
we must first understand the macroeconomic reasons why prices are at current levels. While worldwide oil
demand may not be fully to blame for the most recent spike in crude prices, it most certainly continues to
provide a favorable environment for the bull market in crude. 10 years ago, world oil demand was
about 70 million barrels per day. In 2008, that figure is close to 87 million barrels per day. This figure is
expected to increase about 1 million barrels per year for the next 5 years largely as a result of growing
industrial use in China and India. Worldwide producers seem to be reaching maximum production capacity
with major producer Russia indicating that its production may have “peaked out” in 2007. Crude Oil,
however, answers to many different price determinates in addition to supply and demand. With billions
of new dollars pouring into commodities each year, commodity and hedge funds need a place to put it.
Funds tend to be trend followers and they tend to favor the long side of the market (commodity index
funds are always long the market). Thus, a solid uptrend with a good fundamental demand story and
massive open interest makes a perfect market for funds to “place” equity. Any bullish tidbit of news
becomes an excuse to buy. This is why oil markets have been hypersensitive to any type of bullish news story
in recent months. These waves of capital flowing into energy markets create more buyers than sellers. If
oil producers were eager to lock in profits at these levels, hedge selling would have curbed price gains weeks
or even months ago. But at this point, producers seem content to let prices go where they may.
N/L – Prices not Determined by Supply and Demand

Financial markets key to oil prices, not supply and demand
Arab News 08 ([http://www.arabnews.com/?page=6&section=0&article=109944&d=16&m=5&y=2008] Al-
Naimi Expects Big Oil Demand From Asia/ May 16, 2008)
Proven global oil reserves have risen from 667 billion in 1980 to 1.2 trillion barrels now, even though the
world has consumed some 700 billion barrels in the interim, he said. The Saudi minister reiterated that
financial markets, rather than fundamentals, were influencing current oil prices. “Financial markets
have a logic and mechanism of their own. Such markets are influenced by ever-changing factors and
parameters that transcend markets and boundaries and are often unregulated. Therefore, the short-
term oil prices are more closely tied to the internal logic of the financial markets than to underlying
supply and demand fundamentals.”
High oil prices are not caused by supply and demand fundamentals
Thomas Financial 08 (AFXNews [http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=eab20b48-
3399-4705-8fd0-b5ae9b6aef03] World oil supplies are enough for 'many decades' - Saudi Arabia's Al Naimi, June
22, 2008)
Al Naimi emphasised that record prices were not reflecting the true state of market supplies. The price
of a barrel of crude has doubled from about $70 to nearly $140 over the past year. "Between the second
quarter of 2007 and the second quarter of 2008, global demand rose by an estimated 800,000 (barrels)
to 1.2 million barrels per day. "At the same time, global oil supplies rose between 1.4 and 1.6 million
barrels per day, substantially more than the increase in demand." He added that forward cover -- a key
market measure for how long oil inventories would last if production stopped -- had increased from 52 days
to 54 days over the past 12 months. "Clearly something other than supply and demand fundamentals is
at work here, and a simplistic focus on supply expansion is therefore unlikely to tame the current price
behaviour," Al Naimi said.
N/L – Dollar
Weak US dollar behind oil high oil prices
Noueihed 08 (Lin, Reuters [http://uk.reuters.com/article/oilRpt/idUKL1767484120080617] Refining shortage
cause of high oil price: UAE/ June 17, 2008)
OPEC has consistently said that fundamentals are not to blame and that high oil prices are due to
factors beyond its control such as U.S. dollar weakness, speculation and international politics as well as a
lack of refining capacity. But concerns over globally rising prices have prompted Saudi Arabia to host a
meeting of producers and consumers on June 22 to discuss rising oil. Reports that Saudi Arabia plans to
boost output initially helped ease prices but the effect was offset by U.S. dollar weakness, propelling oil
to a record high of almost $140 a barrel on Monday.
Devaluing dollar responsible for high oil prices

Fox 08 (Scott, Independent Media [http://echochambers.wordpress.com/2008/05/21/petrodollar-inflation-oil-
prices-rise-when-the-dollar-falls/] Dollar Inflation the Primary Cause of Rising Oil Prices, ‘Peak Oil’ a Myth -
PART 1/ May 21, 2008)
There is a direct relationship between Dollar value and oil prices. All crude oil purchases worldwide
have been conducted exclusively in U.S. Dollars for over thirty-five years. [1] When Dollar value falls
via inflation, oil prices rise. [2] [3] [4] This phenomenon could be called Petrodollar Inflation; it
occurred during the 1970’s oil ‘price shock’, and it is occurring right now. [1] Oil is a critical economic and
strategic resource - because every country needs oil to develop and prosper, they also need U.S. Dollars. This
has raised the demand, and value, of the Dollar worldwide for several decades. [1] However, the U.S. Dollar
is continuously devalued (inflated) by Federal Reserve and U.S. government monetary policies. [5] Due
to recent hyper-inflation of the Dollar, oil producing nations are losing money - or rather, wealth - by selling
oil in Dollars. To prevent losses, oil producing nations will sell some or all of their oil in other currencies
(Euros, for example). This further devalues the Dollar, since oil buying countries no longer need them to
purchase oil.
N/L – Gouging
High prices caused by price gouging
Champion 08 (Jaimeson, Workers World [http://www.workers.org/2008/us/oil_prices_0703/] What's really
causing rising oil prices?/ June 26, 2008)
Recently, there has been no shortage of explanations for the meteoric and record-breaking ascent of
the price of oil. But lost amidst all the talk of growing demand in China and speculation in the futures
market is the fundamental contradiction of a natural resource that is essential to the daily lives of
billions of people being owned and distributed by a small handful of private corporations. Increasing
monopolization of the oil industry has enabled oil giants like Exxon Mobil and Royal Dutch Shell to
become price setters. The average cost per barrel of producing oil for a company like Exxon Mobil or
Shell has remained around $30, if not lower, since 2003. In the same time frame, the price of oil has
gone from $30 a barrel in 2003 to over $140 a barrel today. That is the very definition of windfall
profits. The claim by the oil corporations that the price increase reflects the increased cost of oil
exploration and drilling is an outright lie. Exxon Mobil spends more money per year on buybacks of its
own shares than on oilfield exploration and investment. Exxon Mobil raked in $40.6 billion in profit last
year. That figure ranks as the biggest profit margin in the history of capitalism. Royal Dutch Shell raked
in more than $30 billion. In the same year, ballooning energy and food costs pushed billions of workers
deeper into poverty, while 800 million people went hungry. Accumulation of great wealth at the top of the
socio-economic ladder has directly caused misery and starvation at the bottom.
N/L – No Trade Off

No trade off- government investment in energy technology is diverse
2006)
The Federal government (Figure 10) has been the most diversified investor, supporting all seventeen
technologies. Total expenditure in the six years of $5.2 billion has tended toward frontier
hydrocarbons, particularly coal gasification, gas-to-liquids research, and heavy oil studies. While the
level of spending may seem low compared to the private sector, seed-money investments by government can
do the work of billions of dollars in ensuring that private investment follows.
***High Oil Bad General***

High Prices Bad – Econ

High Oil Prices Will Lead to Another Great Depression Within Three Months
Leatherdale 2008 (Linda, Finances Columnist for the Toronto Sun, “Next Great Depression?”,
TorontoSun.com, http://www.torontosun.com/Money/2008/06/22/5952466-sun.html, June 22, 2008)
But while our competition watchdog, finally, laid charges of price fixing in Quebec, and you and I struggle
with pump prices on their way to $1.50 a litre, NOCs subsidize fuel prices for their civilians. That's why
Venezuela enjoys the cheapest gas in the world at 12 cents US a gallon, followed by Nigeria at 38 cents,
Kuwait 78 cents and Saudi Arabia at 91 cents. Energy-guzzling China, the world's new superpower as the
United States self-destructs, also subsidizes prices. Which is why our big North American automakers,
devastated by slumping sales and high gas prices, are showcasing their luxurious gas guzzlers in China,
where an emerging middle class can afford them, and the gas. But even China realizes the damages of out-
of-control oil prices, and this past week hiked its subsidized fuel prices in hopes of softening demand and
bringing oil back down to earth. Which leads to this: While we debate nationalized energy vs free capital
forces, and whether I'm a Marxist or not -- dire warnings are hinting that if we don't stop this madness,
we're heading to the biggest meltdown since the Great Market Crash of 1929 and the next Great
Depression. "A very nasty period is soon to be upon us -- be prepared," Bob Janjuah, a credit strategist for
the Royal Bank of Scotland, wrote in a report that sent shockwaves through the global financial community.
Janjuah is warning that these skyrocketing energy prices are inflicting big damage by fuelling inflation
and paralysing major central banks, who may be forced to hike interest rates at a time economies are
slowing and the U.S. subprime crisis is sending a tidal wave around the world, sparking a global credit
crunch. Janjuah says the crash will hit within three months, with Wall Street's S&P 500 crashing by more
than 300 points as "all the chickens come home to roost" from the excesses of the global boom. Such a slide,
Janjuah warns, would amount to one of the worst bear markets of the past century. "Cash is the key safe
haven. This is about not losing your money and not losing your job," said Janjuah, who last year correctly
called the credit crisis. He added that "globalization was always going to risk putting G7 bankers into a
dangerous corner at some point. We have gotten to that point," thanks to this energy-price shocker. DIRE
WARNING Another dire warning comes from the Bank of International Settlements, which warns
we're headed for the next Great Depression, thanks to a lax monetary policy that gave birth to complex
credit instruments, a strong appetite for risk, record household debt levels and imbalances in the
world's currency system. I'm not alone in warning it may be our own capitalist greed that's killing the
golden goose. Paul Craig Roberts, former assistant secretary to the U.S. Treasury during the Reagan
administration and now associate editor at The Wall Street Journal, writes that "something is wrong here"
when GDP grows while household incomes fall, or "Karl Marx was right that capitalism works to concentrate
income in the hands of a few capitalists." Roberts points out that while people lose jobs and homes, life
savings go up in smoke and energy prices nail the coffin shut -- the top 20 earners among private equity and
hedge fund managers earned an average of $657 million US last year, with four earning more than $1 billion,
while the top 20 CEOs of publicly held companies took home an average $36.4 million. Energy brass are
among this high-paid elite, with a blatant example of greed when former Exxon CEO Lee Raymond, who
was paid $52 million a year, walked out the door with a retirement package worth $400 million. And if you
check out insider trading info, you'll find energy CEOs and executives are cashing out big time. In my
capitalist world, wealth is not hoarded by a greedy few, while hard-working, middle-class citizens get
slaughtered. End of conversation.
High Prices Bad – Econ – Xt Links

High Prices Cause Global Depression
Sato and Okada 2008 (Shigeru and Yuji, Bloomberg News Analysts, “Oil at US$200 Would Trigger Global
Recession, Deutsche Bank Warns”, FINANCIAL POST,
http://www.financialpost.com/most_popular/story.html?id=612878, June 25, 2008)
The global economy would collapse if oil hit US$200 a barrel, said the top energy analyst at Germany's
largest bank. "Two-hundred dollar oil would break the back of the global economy," Deutsche Bank AG's
chief energy economist Adam Sieminski said in an interview on Wednesday in Tokyo. "Next step after
US$200 would be global recession and bad news for everybody." Mr. Sieminski's comments come after
Goldman Sachs Group Inc. forecast oil may rise to between US$150 and US$200 within two years as supply
growth, especially from producers outside the Organization of Petroleum Exporting Countries, fails to keep
pace with demand. Deutsche Bank is due to release its oil-price forecast on June 27. Oil doubled in the past
year, touching a record US$139.89 a barrel on June 16. Crude oil for August delivery was at US$136.84
a barrel, down 16 cents, at 7:08 p.m. Tokyo time in after-hours trading on the New York Mercantile
Exchange. Russia, a non-OPEC producer and the world's biggest oil exporter after Saudi Arabia, faces
its first annual decline in production in a decade. Prime Minister Vladimir Putin pledged to reduce
taxation on the industry to stimulate investment in aging fields and new regions. Output fell 0.9% to 9.76
million barrels a day in the first five months of the year. "Growth last quarter fell on a year-on-year basis,
and this has to do with the policies implemented over the prior year to raise taxes on oil industries,"
Mr. Sieminski said. "This made it difficult for foreign capital to come in. "If Russia could reverse some of
these policies and get their own oil industry back on, this will help very much."
$200 A Barrel In Near Future

Transition Culture 2008 (“Why Planning for $200 Barrel Oil is so Important, or, Why Government is
Failing Us In Times of Transition”, TRANSITION CULTURE: an evolving exploration into the heads, hearts
and hands of energy descent, http://transitionculture.org/2008/05/20/why-planning-for-200-barrel-oil-is-so-
important-or-why-government-is-failing-us-in-times-of-transition/, May 20, 2008)
Strikes me that at this point in time, in terms of our future forecasting, we need to be seriously planning for
a $200 a barrel world, and that planning for anything less is criminally negligent. Whether it is a year
away or 3 years away, fact is we have left ourselves virtually no time to prepare for it at all. At $200 a
barrel, expansions to airports cease to be worth the investment, and one would have to question whether
anyone has questioned how viable it is to build new nuclear power plants at that cost (given the high amount
of embodied energy in the materials). Indeed, planning for $200 a barrel will lead to the asking of some very
hard questions, questions which business as usual will really struggle to answer. $200 a barrel should
become the equivalent to peak oil of what 35oppm is to the climate change campaigners, ie. the line in
the sand. Anything less (or in the case of 350ppm, more) is not acceptable as it condemns us to breakdown
and chaos, to lurching into an avoidable but entirely predictable mess.
High Prices Bad – Econ – Xt Impacts – Comparative Declines

Prices declines don’t hurt economies
The quantitative relationship between oil prices, economic activity and inflation is complex (Box IV.3)
but seems to have weakened over time for a number of reasons. First, the weight of oil and oil products in
price indices has fallen. Second, many economies have raised specific taxes on gasoline, which reduces
the impact of a per-barrel rise in the oil price. Third, the wage formation process has become less
responsive to fluctuations in oil prices. Fourth, heightened competition has helped to reduce the
secondary impact on core inflation from changes in oil prices. In this context, the impact of oil prices on
headline inflation expectations also appears to have become smaller over time, indicating that these tend to
be formed from extrapolations of core rather than headline inflation.
Falling oil prices have minimal impact on economic activity

These impacts would tend to be amplified if supply-side channels were to be taken into account and would
not necessarily apply where the oil price were to fall. Reduced-form econometric evidence points to more
powerful links between oil prices and economic activity and to non-linear reactions which are
conditional on the recent history of oil price shocks. Price increases appear to have a larger impact on
activity than oil price declines. The relatively high estimated impact from reduced-form macroeconomic
models may be due to the inclusion of supply-side channels that can have slower-acting effects on potential
output.
High Prices Bad – Poverty (1/2)

High Oil Prices Drives Nations Into Poverty
Hammond 2008 (Andrew, Reporter for Reuters, “High oil prices hitting poor nations-UK
Minister”, GUARDIAN.CO.UK, http://www.guardian.co.uk/business/feedarticle/7586433,
June 14, 2008)
High oil prices are hitting those least able to afford it, but an imbalance in demand and supply which is
partly behind the price spike could last for years, Britain's energy minister said on Saturday. "The sheer
scale of the price rises speaks of a clear belief that this supply and demand imbalance will continue for
years to come," Malcolm Wicks said in a speech to the Riyadh-based International Energy Forum. He cited
the rapid development of countries such as India and China, coupled with slower oil supply on international
markets, as being mainly behind record prices that neared $140 per barrel last week. Saudi Arabia has called
an unprecedented one-day meeting of oil-producing and consuming nations in Jeddah on June 22, which
could be attended by some heads of state. Britain's Prime Minister Gordon Brown has said he will be there.
Saudi Arabia, the world's biggest oil exporter, has said current prices are unjustifiable but blamed speculators
and a weak dollar. The New York Times reported on Friday that Saudi Arabia is considering raising
production by around 500,000 bpd to stem prices. "There are understandable concerns about speculators
pushing the price higher than the fundamentals would suggest," Wicks said, acknowledging that speculation
plays a role. Poorer countries and the poor generally were hardest hit by expensive energy, he said.
"The dramatic price rise has put pressure on economies. It has put energy security of some countries
under strain, and it is creating real problems for many of those people that are least able to pay for the
energy they need," he said. "In the UK, as elsewhere, we are having to do more than ever to look after those
on lower incomes who are hardest hit by rising fuel costs."
Poverty Is The Biggest Impact That Exists – Its Effects Are The Same As An Ongoing
Nuclear War Against The Poor
Abu-Jamal 1998 (Mumia, Peace Activist, “A Quiet and Deadly Violence,” FLASHPOINTS,
September 19, 1998, available online at
http://www.flashpoints.net/mQuietDeadlyViolence.html, accessed 6/30/07)
This form of violence, not covered by any of the majoritarian, corporate, ruling-class protected media, is
invisible to us and because of its invisibility, all the more insidious. How dangerous is it--really? Gilligan
notes: [E]very fifteen years, on the average, as many people die because of relative poverty as would be
killed in a nuclear war that caused 232 million deaths; and every single year, two to three times as
many people die from poverty throughout the world as were killed by the Nazi genocide of the Jews
over a six-year period. This is, in effect, the equivalent of an ongoing, unending, in fact accelerating,
thermonuclear war, or genocide on the weak and poor every year of every decade, throughout the
world. [Gilligan, p. 196] Worse still, in a thoroughly capitalist society, much of that violence became
internalized, turned back on the Self, because, in a society based on the priority of wealth, those who own
nothing are taught to loathe themselves, as if something is inherently wrong with themselves, instead of the
social order that promotes this self-loathing.. This vicious, circular, and invisible violence, unacknowledged
by the corporate media, uncriticized in substandard educational systems, and un-understood by the very folks
who suffer in its grips, feeds on the spectacular and more common forms of violence that the system makes
damn sure -that we can recognize and must react to it. This fatal and systematic violence may be called The
War on the Poor.
20,000 Die a Day of Poverty

Jeffrey Sachs, Harvard, The End Of Poverty, 2005, p. 19
Every morning our newspapers could report, "More than 20,000 people perished yesterday of extreme
poverty." The stories would put the stark numbers in context-up to 8,000 children dead of malaria, 5,000
mothers and fathers dead of tuberculosis, 7,500 young adults dead of AIDS, and thousands more dead
of diarrhea, respiratory infection, and other killer diseases that prey on bodies weakened by chronic
hunger. The poor die in hospital wards that lack drugs, in villages that lack antimalarial bed nets, in
houses that lack safe drinking water. They die namelessly, without public comment. Sadly, such stories
rarely get written. Most people are unaware of the daily struggles for survival, and of the vast numbers of
impoverished people around the world who lose that struggle.
High Prices Bad – Poverty (1/2)

Poverty Leads to Extremist Groups and Terrorism
Evelyn Leopold, 2001 (Reuters, UN Told Poverty Breeding Ground for Terrorism, November
11,
http://www.commondreams.org/headlines01/1111-01.htm)
UNITED NATIONS - Declaring counter-terrorism a global fight, developing nations warned that world
poverty and desperate living conditions were breeding grounds for extremists and their followers. At
the same time, Secretary-General Kofi Annan, at the annual U.N. General Assembly
debate among more than 150 presidents, prime ministers and foreign ministers,
expressed apprehension that the fight against terrorism would overshadow programs
to combat poverty, disease, and education.
``The number of people living on less than one dollar a day has not decreased,'' since
the Sept. 11 attacks against the United States, he said on Saturday. `` South African
President Thabo Mbeki said it was obvious that the fundamental conflict in the world
today is the deprivation of millions ``co-existing side-by-side with islands of enormous
wealth and prosperity.'' ``This necessarily breeds a deep sense of injustice, social alienation,
despair and a willingness to sacrifice their lives among those who feel they have nothing to loose and
everything to gain,'' he added. Nine Latin American president spoke, most saying they
had direct experience with terrorists, with Colombia's Andres Pastrana and Peru's
Alejandro Toledo having been victims of kidnappings themselves. `Ùnequal distribution
causes frustration and despair ... and generates the conditions that give rise to conflicts and clashes
where different types of fundamentalism are at work,'' Argentina's President Fernando de la Rua said.
French Foreign Minister Hubert Vedrine warned wealthy nations that building up a just
global community `ìnstead of just talking about it or yearning for it, will mean giving
up privileges, sharing wealth and power in new ways, and rewriting certain rules
hitherto held to be inviolable.'' U.S. President George Bush made his first speech at the
United Nations, and then watched speaker after speaker support anti-terrorism
measures he advocated. ``The time for action has now arrived,'' he told world leaders
from all regions..
And, terrorism guarantees extinction. This must outweigh any other policy considerations
Chesney 1997 (Robert, Law Clerk to the Hon. Lewis A. Kaplan, JD from Harvard Law, 1997)
[Loyola of Los Angeles International & Comparative Law Review, November, p. 31-32]
The horrible truth is that the threat of nuclear terrorism is real, in light of the potential existence of a black
market in fissile material. Nuclear terrorists might issue demands, but then again, they might not. Their target
could be anything: a U.S. military base in a foreign land, a crowded U.S. city, or an empty stretch of desert
highway. In one fell swoop, nuclear terrorists could decapitate the U.S. government or destroy its
financial system. The human suffering resulting from a detonation would be beyond calculation, and in
the aftermath, the remains of the nation would demand both revenge and protection. Constitutional liberties
and values might never recover. When terrorists strike against societies already separated by fundamental
social fault lines, such as in Northern Ireland or Israel, conventional weapons can exploit those fault lines to
achieve significant gains. 1 In societies that lack such pre-existing fundamental divisions, however,
conventional weapon attacks do not pose a top priority threat to national security, even though the pain and
suffering inflicted can be substantial. The bedrock institutions of the United States will survive despite the
destruction of federal offices; the vast majority of people will continue to support the Constitution despite the
mass murder of innocent persons. The consequences of terrorists employing weapons of mass
destruction, however, would be several orders of magnitude worse than a conventional weapons attack.
Although this threat includes chemical and biological weapons, a nuclear weapon’s devastating potential is
in a class by itself. Nuclear terrorism thus poses a unique danger to the United States: through its sheer
power to slay, destroy, and terrorize, a nuclear weapon would give terrorists the otherwise-unavailable
ability to bring the United States to its knees. Therefore, preventing terrorists from obtaining nuclear
weapons should be considered an unparalleled national security priority dominating other policy
considerations. A would-be nuclear terrorist’s only real obstacle is the difficulty inherent in acquiring an
adequate amount of weapon-usable nuclear material. In years past, terrorists had little prospect of acquiring
this material. Those few nations that possessed nuclear weapons material kept their caches under the highest
security conditions. The disintegration of the Soviet Union, however, has changed this situation. Presently,
large amounts of unsecured and unaccounted-for weapons-usable material are scattered throughout the
former Soviet Union.
High Prices Bad – Food Prices – Link

High Oil Prices Increase Food Prices
Worth 2008 (Robert, Reporter for the International Herald Tribune, “High oil prices takes
a toll on the Gulf’s middle class”, INTERNATIONAL HERALD TRIBUNE,
http://www.iht.com/articles/2008/02/24/business/gulf.php?page=1, February 28, 2008)
Even as it enriches Arab rulers, the recent oil-price boom is helping to propel an extraordinary rise in
the cost of food and other basic goods that is squeezing this region's middle class and setting off strikes,
demonstrations and occasional riots from Morocco to the Gulf. In Jordan, the soaring price of oil led the
government to remove almost all its costly fuel subsidies this month, pushing the price of some fuels up 76
percent overnight. In a devastating domino effect, the cost of basic foods like eggs, potatoes and
cucumbers doubled or more. In Saudi Arabia, where the inflation rate had been virtually zero for a decade,
it has reached an official level of 6.5 percent, though unofficial estimates put it much higher. Public protests
and boycotts have followed, and 19 prominent clerics posted an unusual statement on the Internet in
December warning of a crisis that would cause "theft, cheating, armed robbery and resentment
between rich and poor." The resurgence of inflation has many causes, from rising global demand to the
monetary constraints of currencies pegged to the weakening U.S. dollar. But one cause is the skyrocketing
price of oil itself, which is creating unheard-of riches for governments in the Gulf even as it helps push
many ordinary people into poverty. "Now we have to choose: we either eat or stay warm," said Abdul Rahman
Abdul Raheem, who works at a clothing shop in a mall in Amman and once dreamed of sending his children to private school. "We can't do both." "We're
not really middle class anymore, we're at the poverty level," he said. Some governments have tried to soften the impact of high prices by increasing wages
or subsidies on foods. Jordan, for instance, has raised the wages of public-sector employees earning less than 300 dinars, or $425, a month by 50 dinars. For
those earning more than 300 dinars, the raise was 45 dinars. But that compensates for only part of the price increases, and people who work in the private
sector get no such relief. The fact that the inflation is coinciding with new oil wealth has fed perceptions of corruption and economic injustice, some
analysts say. "About two-thirds of Jordanians now believe there is widespread corruption in the public and private sector," said Mohammed al-Masri, the
public opinion director at the University of Jordan's Center for Strategic Studies. "The middle class is less and less able to afford what they used to, and
more and more suspicious." In a few places the price
increases have led to violence. In Yemen, prices for bread and
other foods nearly doubled in the past four months, setting off a string of demonstrations and riots in
which at least a dozen people were killed.
High Prices Bad – Food Prices – Prices High (1/2)

( ) Food prices are high and increasing.
Economist 7 (An Expensive Dinner, November 3, http://www.economist.com)
“THE world’s most vulnerable who spend 60% of their income on food have been priced out of the food
market,” is the alarming warning from Josette Sheeran, head of the United Nations’ World Food Programme
(WFP). As the price of wheat, maize, corn and other commodities that make up the world’s basic foodstuffs is
soaring the poorest people in the poorest countries are the hardest hit. And as prices shoot up helping them is
getting tougher too. The WFP’s food costs increased by more than 50% over the past five years. Ms Sheeran
predicts that they will increase by another 35% in the next couple of years too.
For many years the least developed nations have worried about food security, especially countries at war and
those battling droughts and other climatic hardships. Meanwhile the world’s richest nations have produced more
than enough for their needs and spent more time and effort worrying about the problems related to an abundance of
food. These range from the health risks associated with ballooning rates of obesity to subsidies for uncompetitive
farmers, particularly from the European Union. Despite efforts to tackle spending on farm subsidies, over 40% of
the entire EU budget still goes towards supporting agriculture.“
( ) Prices are high and will remain like that.

Economist 7 (An Expensive Dinner, November 3, http://www.economist.com)
Prices will probably remain high for the next year or two while the world is adapting to food scarcity. What
happens next will reveal the resilience of the world’s food-supply system, predicts Ms Sheeran. Her
programme, she says, is battling with a host of adverse circumstances. In addition to higher prices for food
the WFP has to cope with climatic change, a rapidly increasing world population and the decline in the rich
world’s aid budgets. Ms Sheeran refers to this as the post food-surplus era. The fat probably won’t get any
thinner but the effects on the world’s poorest and hungriest could be devastating.
High Prices Bad – Food Prices – Prices High (1/2)

( ) High food prices are here to stay –bearing a direct correlation with fuel prices.
Pitsuwan 6/25 (Vichaya,Writer for Bangkok Post, High food prices are here to stay; 2008)
The world's food crisis is expected to last for another five years, but expensive food is here to stay, Thailand's
National Food Institute predicts. An estimated 805.4 million people in the world are still living below the
standard of daily food intake, said the institute's director, Yuthasak Supasorn. ''The world is still facing a food
crisis situation that is expected to last for another three to five years,'' Mr Yuthasak said at a seminar on global
opportunities for small and medium-sized food producers in Thailand. ''Expensive food prices will remain even
after the crisis is over.'' As long as fuel prices increase, Mr Yuthasak said food prices would also be on the rise
as fuel was involved in every step of food production.
( ) Increase in oil production won’t solve – high food price is inevitable.

Pitsuwan 6/25 (Vichaya,Writer for Bangkok Post, High food prices are here to stay; 2008)
The recent increase in oil production by Saudi Arabia has not not been enough to bring down global fuel
prices as demand has vastly outpaced supply. Analysts now predict that fuel prices would remain high in the
future. ''If fuel prices continue to increase and the the world still suffers from natural disasters, there is the
possibility that food prices will soar by 20 to 50 times in the next 20 years,'' he said. Other factors such as
decreasing farmland caused by urban expansion, competition in farm products and an increasing world population
have all contributed to the expensive food prices. “As the kitchen of the world, Thailand should enjoy the current
situation as it should mean that farm products are in high demand and with better price,'' said Mr Yuthasak. But
according to Paiboon Ponsuwanna, chairman of the Federation of Thai Industries' (FTI) food industry club, rising
production costs from higher fuel prices have trimmed margins. ''Food manufacturers are not much better off
from the better food prices,'' he said. Apart from rice, other food products have seen the gains offset by an
increase in production costs, he said. Thailand is the world's 15th largest food provider and the second largest
provider in Asia Pacific after China. The country's food exports are growing at the same rate as in recent years, at
about 12% a year, with value expected to reach 650 billion baht this year. ''We have maintained the position as the
world's kitchen for so long, but we need to improve ourselves,'' Mr Paiboon said, citing production capacity and
competitiveness as the priorities.
High Prices Bad – Food Prices – Hunger

( ) High food prices starve 100 million people on every continent.
UN 8 (http://www.sciencedaily.com/releases/2008/04/080423095236.htm; April 23)
The World Food Programme (WFP) has said that high food prices are creating the biggest challenge that
WFP has faced in its 45-year history, a silent tsunami threatening to plunge more than 100 million people on
every continent into hunger. “This is the new face of hunger – the millions of people who were not in the urgent
hunger category six months ago but now are,” said WFP Executive Director Josette Sheeran, who is meeting British
Government officials after addressing a UK parliamentary hearing in London. “The response calls for large-scale,
high-level action by the global community, focused on emergency and longer-term solutions,” she said.
Analysis being carried out by WFP supports World Bank estimates that about 100 million people have been pushed
deeper into poverty by the high food prices. WFP expects to release figures next week estimating how many new
people have urgent hunger needs. She said that like the 2004 tsunami, which hit the Indian Ocean leaving quarter of
a million dead and about 10 million more destitute, the food price challenge requires a global response. At that
time, the donor community, including governments, the corporate sector and private individuals, stepped up, giving
a record US$12 billion to help with recovery efforts. “We need that same kind of action and generosity,” Sheeran
said. “What we are seeing now is affecting more people on every continent, destroying even more livelihoods
and the nutrition losses will hurt children for a lifetime,” she said. She said WFP is urging a comprehensive approach where all
parties, from governments to UN agencies to NGOs, all work together. Alongside other partners, WFP will follow a 3-track response:in the short
term, WFP will seek full funding for targeted food safety nets and mother-child health programmes in extreme situations, scale up school feeding
and use it as a platform for urgent, nutritional interventions; in the medium term, WFP will offer its huge logistics capacity to support life-saving
distribution networks – every hour of the day, WFP has 30 ships on the high seas, 5,000 trucks on the ground and 70 aircraft in the sky, delivering
food to the hungry; it will also expand cash and voucher programmes and support local purchases from small farmers, helping them to afford
inputs and sustain livelihoods;and in the longer term, it will support policy reform and provide advice and technical support to governments
engaging in agricultural development programmes; at the same time WFP will pursue local purchase contracts that can help farmers increase
investment and yields. Longer-term solution. “WFP can, if needed and if asked, ramp up to help cool down a nutritional crisis, so that longer-term
solutions can come on board,” Sheeran said. Just as WFP sends an emergency team into the field to deal with a natural disaster, so it has
assembled its top specialists to deploy programmes to mitigate the effects of high food prices among the most vulnerable. Sheeran stressed that
partnerships will play a critical role in fighting this emergency. WFP has been engaging with donor governments, sister UN agencies, institutions
such as the World Bank and International Monetary Fund and other humanitarian actors, including non-governmental organizations to mobilize a
coordinated response. The urgency of the situation is underlined by WFP’s decision to suspend school feeding to
450,000 children beginning in May in Cambodia, unless new funding can be found in time. WFP representatives
in 78 countries around the world are facing similar difficult choices.
High Prices Bad – Corruption/Hrts

High Oil Prices Cause Corruption
Corruption, inefficiency and monopolistic economies worsen the impact, as government officials or
business owners artificially inflate prices or take a cut of such increases. "We don't have free-market
prices, we have monopoly prices," said Samer Tawil, a former economy minister in Jordan. "Cement, rice,
meat, these are all imported almost exclusively by one importer here. Corruption is one thing when it's
about building a road, but when it affects my food, that's different." In the oil-producing Gulf countries,
governments that are flush with oil money can soften the blow by spending more. The United Arab
Emirates increased the salaries of public sector employees by 70 percent this month; Oman raised them 43
percent. Saudi Arabia also raised wages and increased subsidies on some foods. Bahrain set up a $100
million fund to be distributed this year to people most affected by rising prices. But all this government
spending has the unfortunate side effect of worsening inflation, economists say. Countries with less oil to
sell do not have the same options. In Syria, where oil production is drying up, prices have also risen sharply.
Although it has begun to open up its rigid socialist economy, the government has repeatedly put off plans to
eliminate the subsidies that keep prices artificially low for its citizens, fearing domestic reprisals. Even so,
the inflation of the past few months has taken a toll on all but the rich.
Corruption Undermines Human Rights

Ghanaian Chronicle , June 16, 2006, “Human Rights; Corruption undermines human rights-
CHRAJ”,
LexisNexis THE DEPUTY Director of anti-corruption of the Commission on Human Rights and Administrative
Justice (CHRAJ)
Charles Ayamdoo, has stated that corruption, especially in a grand and systemic form, impedes full
realization of human rights, lowers moral standards and drains the nation's resources. According to
him, this situation undermines the enjoyment of economic, social and cultural rights guaranteed in law
and also worsens poverty, hunger, illiteracy and insecurity in the country. "With corruption, the rights
to life, dignity and equality, and all other rights lose their meaning, let alone be realized," he stated. He
noted that corruption and human rights are inextricably interrelated and interdependent, hence the
promotion and protection of human rights cannot be divorced from the fight against corruption, which is a
threat to the rule of law, democratic system of government, individuals and society at large. Mr.
Ayamdoo was speaking at a Center for Democratic Development (CDD) workshop on the theme; "Exploring
and Deepening the Linkage Between Corruption and Human Rights", on Tuesday in Accra to assess the role
of civil society organizations, the media, parliament and other stakeholders in highlighting corruption as a
human rights issue and be fought in that direction. He explained that corruption also affects the enjoyment
of civil and political rights as endemic corruption has caused and deepened egregious human rights
violations through insurrections, coups, civil wars and conflict,
Solving for Human Rights Prevents the Use of WMD’s

Burke-White 04 (William W; Professor of Law at University of Pennsylvania, “Human Rights and National
Security: The Strategic Correlation”; 17 Harv. Hum. Rts. J. 249, Spring, 2004)
A human rights informed foreign policy would still recognize the particular dangers presented by the
proliferation and use of WMD. Obviously, however, the acquisition of WMD by different types of states
presents very different levels of threat to the United States and the global community. As such,
differentiation between acquisition of WMD by threatening and non-threatening states is necessary. A
state's human rights record and practices provide powerful tools for such differentiation. If Sweden, for
example, were to develop a nuclear capability, it would pose little threat to the United States or to global
stability. If, on the other hand, North Korea or Iran further develop such a capability, the threat would
increase exponentially. States that systematically abuse human rights at home have already shown their
willingness to use force against civilians and to take life indiscriminately. Moreover, they have a greater
propensity to engage in aggressive war which might lead to the use of such weapons. When states that
systematically violate human rights domestically acquire WMD they gain the ability to threaten a far
wider region and even U.S. national security directly.
High Prices Bad – Corruption/Hrts – Econ Impact

Corruption threatens econ in oil-exporting countries
Travin 8 (Dmitri, writer for International News Commentary, June 29, http://www.australia.to/international/0,25197,23040467-310,00,00.html)
The corruption factor. All this is characteristic of any country which receives large revenue from the use of
natural resources. Profits accrue to those who in one form or another serve the high-revenue business, and to
those who receive their slice through the state. But in Russia the beneficiaries of this money also includes a
special category: those connected with widespread corruption. Or, to be precise, this special category exists
not only in Russia,but in many resource-rich countries of the third world - Venezuela, Nigeria,Saudi Arabia,
Turkmenistan etc. Following the trial and incarceration ofMikhail Khodorkovsky in 2003, Russian business (especially the oil sector) began to
realise that it was going to have to share its revenues with state employees who could otherwise create serious problems for it. These include not
just officials on whom the development of business depends directly, as was true in the 1990's. Today there are also a lot of state
employees who, although they do not themselves make decisions that benefit companies, can easily destroy
those companies.These include fiscal officials, customs officers, officers of the specialservices, investigators, traffic police, drug
agency employees, people who protect the environment, prevent fires, fight outbreaks of epidemics etc. The very list of the people who
can come and make threats, demanding their share ofthe ‘petrodollar pie', is astonishingly long. Each of these
people has a family. They too take this money and join the consumer race, and by so doing they redistribute petrodollarsto regions and industries
all over the place, some of which are a long way awayfrom Western Siberia. Observers note that today the richest houses in the
elite zones of the Moscow Oblast are not being built by businessmen, but by civil servants, especially those from the
law-enforcement organisations. Nor should the role of the so-called oligarchs be underestimated when calculating
where the petrodollars go. In recent years their capital has increased drastically, as you can see from the list
of billionaires regularly compiled by Forbes magazine. But the distribution of oil money goes far further than the people on this
list.
High Prices Bad – Inflation – Links

High Oil Prices Cause Inflation
Corruption, inefficiency and monopolistic economies worsen the impact, as government officials or
business owners artificially inflate prices or take a cut of such increases. "We don't have free-market
prices, we have monopoly prices," said Samer Tawil, a former economy minister in Jordan. "Cement, rice,
meat, these are all imported almost exclusively by one importer here. Corruption is one thing when it's about
building a road, but when it affects my food, that's different." In the oil-producing Gulf countries,
governments that are flush with oil money can soften the blow by spending more. The United Arab
Emirates increased the salaries of public sector employees by 70 percent this month; Oman raised
them 43 percent. Saudi Arabia also raised wages and increased subsidies on some foods. Bahrain set up
a $100 million fund to be distributed this year to people most affected by rising prices. But all this
government spending has the unfortunate side effect of worsening inflation, economists say. Countries
with less oil to sell do not have the same options. In Syria, where oil production is drying up, prices have
also risen sharply. Although it has begun to open up its rigid socialist economy, the government has
repeatedly put off plans to eliminate the subsidies that keep prices artificially low for its citizens,
fearing domestic reprisals. Even so, the inflation of the past few months has taken a toll on all but the
rich.
Inflation is the fastest growing threat to the global economy
Asian Investor 6/24 (http://www.asianinvestor.net/article.aspx?CIaNID=78981)

Fund managers have taken their most negative stance towards equities in a decade, with a net 27% underweight in the asset class in June, according to the latest
monthly Merrill Lynch survey. “Investors’ fears of stagflation have crystallised as they face up to the possibility that interest rates might
have to rise as the global economy slows,” Merrill Lynch says. Fund managers have acted by reducing exposure to both equities and bonds and moving
into cash. advertisement This month’s survey reflects a world where global growth and profit expectations are deteriorating while fears of higher inflation, and
subsequent higher interest rates, are rising. Just 1% of respondents believe equities are undervalued, down from 25% in March. A net 81% of the panel believes
consensus earnings estimates for the next 12 months are too high. A net 42% of asset allocators are overweight cash, up from a net 31% in May. “The market is
waking up to the idea that global interest rates are too low, in fact they remain below inflation,” says Karen Olney, chief European equities strategist at Merrill Lynch.
“Negative real rates are hardly an antidote to inflation.” Merrill Lynch expects a double rate hike from the European Central Bank (ECB) by October and expects other
central banks to follow. Europe has taken the brunt of investors’ shift away from equities. Over the past 12 months, the Eurozone has moved from most favoured to
least favoured. A net 29% of investors say the Eurozone is the region they will most likely underweight on a 12-month view. Asset allocators have already moved
aggressively out of Eurozone equities. A record net 22% say they are underweight – the most negative stance taken in the past 10 years. Not only has the Eurozone the
least favourable corporate profit outlook, but the quality of earnings have been slipping too. This, in turn, is reducing any perceptions that Eurozone equities are
undervalued. Also fuelling their negative stance are concerns about the currency. A net 71% of asset allocators believe that the euro is overvalued – a particular
concern for a region heavily dependent on exports. Amid these concerns, European fund managers have been moving into cash. A net 34% of European investors said
they were overweight cash in June’s regional survey, up from 3% in April. A growing number recognises that higher interest rates are likely. In February, half of
European respondents believed ECB monetary policy was too restrictive. That number fell to a net 10% this month. The credit crunch is losing its sting as the greatest
single threat to financial market stability. The net percentage of investors citing “credit risk” as the number one threat has fallen from 95% three months ago to 81% in
June. But inflation is the fastest growing concern. A net 65% of respondents cite “monetary risk” as the greatest threat, up from a net 23% in May.
“For the first time in our memory, inflation, not growth is the primary macro driver at the global level, in our
view. The inflation shock has already happened,” says Alex Patelis, head of international economics at Merrill Lynch. “What matters now is
how persistent it is and how markets and policymakers react; at a global level this begs for an accident that will awaken markets
and policymakers to the risks.”
High Prices Bad – Inflation – Links

Sharp global price spikes will doom the global economy
Asian Times Online 7/1 (http://www.atimes.com/atimes/Global_Economy/JG01Dj07.html)

The oil price has doubled in the past year because the US Federal Reserve panicked over risks to the over-
leveraged financial system and flooded markets with excess liquidity. The world is willing to pay arbitrarily
high prices to hedge against inflation, but the cost of inflation hedges drags down the world economy. Last
week's spike in commodity prices and swoon in global stock markets points the way to a deep and prolonged
fall in economic activity. Breaking out of the death spiral still is possible. With mixed emotions, I propose a simple solution. In fact, a crash would not be
an altogether bad thing for the United States. At least it would exorcise the something-for-nothing culture of the past two decades. The baby boomers would not be
able to retire, to be sure, but in America retirement means watching an additional 40 hours of television per week. For all I care they can keep working. For the world's
poorest, though, the consequences would be deadly (see Rice, death, and the dollar, Asia Times Online, April 22, 2008). My proposal draws on the experience of
1979-1984 under similar circumstances, although the parallel is far from complete. By
catastrophic breakdown, I mean a well-defined
chain reaction: # Markets expect economic growth to decline as oil prices rise. # American financial institutions, whose market capitalization has fallen by
almost half in the past year, sustain higher default rates from households and firms, leading to some failures. # Credit availability shrinks as banks come under
pressure, raising the default rate. # The price of household assets (real estate and stocks) continues to decline, destroying their creditworthiness. # Markets expect the
Fed to continue to ease monetary policy and offer unlimited liquidity to all comers, as it did with the mid-March bailout of Bear, Stearns. # Investors turn away from
falling equity markets and buy inflation hedges, pushing oil and commodity prices up further. Monetary ease is a medicine whose side-effects have become worse than
the disease. Blaming "speculators" for rising oil prices is cheap demagoguery. Pension funds have invested hundreds of billions of dollars in commodity index funds
during the past two years to hedge against inflation. The more the Fed debases the dollar, the more money shifts away from the stock market into inflation hedges.
The data leave no doubt of this.
Rising inflation is the biggest threat to global economy
Bombay News 6/1 (http://www.bombaynews.net/story/365931)

European Central Bank Governing Council member Mario Draghi has told a Bank of Italy meeting that the global economy is
threatened by continuing weaknesses in the US economy and rising energy and raw materials prices. He said the greatest
threat to the world economy now comes from the build-up of inflationary pressures and the possible worsening of the
American slowdown. And he claimed the latest figures point to a further acceleration. 'Today the European Central Bank is
keeping monetary policy firmly focused on the objective or price stability over the medium term,' he added. Nevertheless, Draghi said, 'the rise in
domestic prices has remained modest and no wage-price spiral has developed to date.' Data released on Friday showed euro zone inflation surged
to 3.6 percent in May.
High Prices Bad – Inflation – High
Global inflation high
NDTV 7/1 http://www.ndtv.com/convergence/ndtv/story.aspx?id=NEWEN20080055142&ch=7/1/2008%208:34:00%20AM

Inflation is a global problem even Saudi Arabia is suffering from double-digit inflation. The billions of dollars
that Saudi Arabia has earned by selling oil at record prices has not helped with the depreciating dollar adding
to its woes in Jeddah.
Global inflation rising
Business Today 6/30 http://www.businessdayonline.com/analysis/backpage/12163.html

Is inflation a problem? This is one of the key global issues at the moment. In recent years the world economy has boomed, but that boom did not
trigger the type of inflation that one might normally have expected with rapid economic growth. Instead, most headline rates of inflation around
the world have stayed relatively low in recent years. Now, in most countries, headline rates of inflation are rising, despite
intense global competition, as food and energy prices rise.
Global Inflation High Now
News Australia 6/29

(“US Crude Oil Prices At an All Time High”, SILOBREAKER, http://www.silobreaker.com/DocumentReader.aspx?Item=5_874386435, June 29, 2008)
Uncertainty will likely reach new highs in emerging markets this week, as concerns about soaring
global inflation and a still fragile US economy leave investors walking on eggshells. With US crude oil prices
starting the week at an all-time high above $US140, investors wonder when the US Federal Reserve will have to raise interest rates to
fight inflation, possibly reducing the allure of high-yielding emerging-market assets.
High Prices Bad – Inflation Up

Inflation up
Spiegel News Jun 29 (“Entire US financial system is to come under the scrutiny of the IMF”by SPIEGEL
Sunday, Jun. 29, 2008 at 12:53 PM http://www.spiegel.de/international/world/0,1518,562291,00.html accessed June
30, 2008)
But the macroeconomics textbooks are no longer worth much in the age of globalization. Modern
inflation is driven by the global scarcity of resources. Nowadays purchasing power exceeds purchasing
opportunity. Most of all, there is not enough oil, and too few raw materials and food products. These
increasingly scarce resources are becoming the focus of disputes among many people and billions of dollars
are at stake. This is why the price of a barrel of crude oil (159 liters) has increased from $25 (€16) in 2002 to
$135 (€87) in 2008. And it is also why the price of corn has tripled in the same time period, while that of
copper has almost quintupled. If the inflation introduced in the United States is excluded, a small miracle is
revealed, namely something approaching price stability. Adjusted for inflation, prices are in fact rising by
only 2.3 percent.
High Prices Bad – Democracy

High Oil Prices Decrease Democracy
Friedman 2008 (Thomas L., Pullitzer prize author and New York Times Foreign Affairs
columnist, “The Democratic Recession”, NEW YORK TIMES,
http://www.nytimes.com/2008/05/07/opinion/07friedman.html?_r=1&oref=slogin, May 7,
2008)
There are two important recessions going on in the world today. One has gotten enormous attention.
It’s the economic recession in America. But it will eventually pass, and the world will not be much worse for
the wear. The other has gotten no attention. It’s called “the democratic recession,” and if it isn’t
reversed, it will change the world for a long time. The term “democratic recession” was coined by Larry
Diamond, a Stanford University political scientist, in his new book “The Spirit of Democracy.” And the
numbers tell the story. At the end of last year, Freedom House, which tracks democratic trends and elections
around the globe, noted that 2007 was by far the worst year for freedom in the world since the end of
the cold war. Almost four times as many states — 38 — declined in their freedom scores as improved —
10. What explains this? A big part of this reversal is being driven by the rise of petro-authoritarianism.
I’ve long argued that the price of oil and the pace of freedom operate in an inverse correlation — which I
call: “The First Law of Petro-Politics.” As the price of oil goes up, the pace of freedom goes down. As the
price of oil goes down, the pace of freedom goes up. “There are 23 countries in the world that derive at least
60 percent of their exports from oil and gas and not a single one is a real democracy,” explains Diamond.
“Russia, Venezuela, Iran and Nigeria are the poster children” for this trend, where leaders grab the oil tap to
ensconce themselves in power.
Global democratic consolidation prevents many scenarios for war and extinction.
Larry Diamond, senior fellow at the Hoover Institution, December 1995, Promoting Democracy in the 1990s,
http://wwics.si.edu/subsites/ccpdc/pubs/di/1.htm
OTHER THREATS This hardly exhausts the lists of threats to our security and well-being in the coming years and
decades. In the former Yugoslavia nationalist aggression tears at the stability of Europe and could easily spread. The flow
of illegal drugs intensifies through increasingly powerful international crime syndicates that have made common cause
with authoritarian regimes and have utterly corrupted the institutions of tenuous, democratic ones. Nuclear, chemical,
and biological weapons continue to proliferate. The very source of life on Earth, the global ecosystem,
appears increasingly endangered. Most of these new and unconventional threats to security are
associated with or aggravated by the weakness or absence of democracy, with its provisions for legality,
accountability, popular sovereignty, and openness. LESSONS OF THE TWENTIETH CENTURY The
experience of this century offers important lessons. Countries that govern themselves in a truly
democratic fashion do not go to war with one another. They do not aggress against their neighbors to
aggrandize themselves or glorify their leaders. Democratic governments do not ethnically "cleanse" their
own populations, and they are much less likely to face ethnic insurgency. Democracies do not sponsor
terrorism against one another. They do not build weapons of mass destruction to use on or to threaten one
another. Democratic countries form more reliable, open, and enduring trading partnerships. In the long run
they offer better and more stable climates for investment. They are more environmentally responsible
because they must answer to their own citizens, who organize to protest the destruction of their
environments. They are better bets to honor international treaties since they value legal obligations and
because their openness makes it much more difficult to breach agreements in secret. Precisely because,
within their own borders, they respect competition, civil liberties, property rights, and the rule of law,
democracies are the only reliable foundation on which a new world order of international security and
prosperity can be built.
High Prices Bad – Democracy – Xt Link

High Oil Prices Undermine Democracy
Friedman 2008 (Thomas L., Pullitzer prize author and New York Times Foreign Affairs
columnist, “The Democratic Recession”, NEW YORK TIMES,
http://www.nytimes.com/2008/05/07/opinion/07friedman.html?_r=1&oref=slogin, May 7,
2008)
The term “democratic recession” was coined by Larry Diamond, a Stanford University political scientist, in
his new book “The Spirit of Democracy.” And the numbers tell the story. At the end of last year, Freedom
House, which tracks democratic trends and elections around the globe, noted that 2007 was by far the worst
year for freedom in the world since the end of the cold war. Almost four times as many states — 38 —
declined in their freedom scores as improved — 10. What explains this? A big part of this reversal is being
driven by the rise of petro-authoritarianism. I’ve long argued that the price of oil and the pace of freedom
operate in an inverse correlation — which I call: “The First Law of Petro-Politics.” As the price of oil
goes up, the pace of freedom goes down. As the price of oil goes down, the pace of freedom goes up.
“There are 23 countries in the world that derive at least 60 percent of their exports from oil and gas
and not a single one is a real democracy,” explains Diamond. “Russia, Venezuela, Iran and Nigeria are the
poster children” for this trend, where leaders grab the oil tap to ensconce themselves in power.
Oil Props Up Dictatorships and Destroys Freedom

Bacher 2002 (John, author and environmentalist, “Petrotyranny”, GOLIATH,
http://goliath.ecnext.com/coms2/summary_0199-1332353_ITM, March 22, 2002)
Oil consumption is seen by most citizens of affluent democracies as an innocent, almost wholesome activity.
Although oil sometimes receives negative attention -- as it did during the Gulf War and following the Exxon
Valdez disaster -- burning oil as a fuel is seldom viewed as one of the deadly sins. Smoking, littering and
illegal drug use all receive more public censure than filling the tank. The use of oil is generally associated
with progress and comfort. Despite traffic jams, breakdowns and deadly accidents, driving is commonly
viewed as a pleasurable activity. Although slick automobile ads equate personal motor transport with the
Statue of Liberty, the reality is that the power of oil poses a conflict with freedom in a democratic society.
Oil is critical to the support of dictatorships since it provides the most abundant form of wealth for
repressive governments -- income that does not have to be obtained through taxation. The collection of
taxes generally compels a higher degree of consent from citizens than the misappropriation of oil revenues.
When big money is needed for the repressive apparatus of despotism, warrior dictators in the Middle
East need not fear taxpayer revolt because their military schemes are founded on their control over oil.
All dictatorships in the Middle East are supported in some way by oil revenues. Egypt's repressive
government receives a third of its budget from oil. Syria, a significant oil producer in its own right, is further
helped by oil superpower Iran in its sponsorship of terrorism to derail the peace process between Israel and
the Palestinians. While repression is in retreat in the post-Cold War world, the remaining havens of
dictatorship are concentrated in oil-rich states, many of which export war and repression beyond their
borders. Nominal democracies such as Mexico, Colombia, Russia and Peru are aided in their repressive
power by oil exports. Of the five Persian Gulf states that each have more than 70 billion barrels of oil,
the United Arab Emirates, Iran, Iraq, Kuwait and Saudi Arabia -- only Kuwait is rated as "partially free"
by the nonpartisan US humanrights group Freedom House [www.freedomhouse.org]. The rest are ranked
as "not free" (the Freedom House designation for absolute dictatorships). Freedom House's impartiality is
shown by its consistently low ranking for Saudi Arabia, a close US ally Since Freedom House began its
annual national rankings for political rights and civil liberties in 1955, Saudi Arabia has consistently been
given the worst ratings. The Saudi reserves of 258 billion barrels amount to more than double those of any
other country. The United Arab Emirates, another close ally in the pro-US Gulf Cooperation Council, is also
rated by Freedom House as "not free." Other significant oil producers in the rogue's galley of despotic states
include Iraq, Equatorial Guinea, China, Turkmenistan, Sudan, Syria, Libya and Myanmar (formerly Burma).
Only four of the 16 lowest-ranked countries are not tied to the vortex of oil-financed oppression. With the
sole exception of Myanmar, these superoil dictatorships have maintained the most wide-ranging religious
persecution of the post-Cold War period. Dissidents in the superoil states are threatened by the world's
most ruthless security services. All these tyrannies continue to practice capital punishment and use torture.
Some make mutilations part of normal sentencing. Saudi Arabia's religious intolerance falls harshly on
Christians and Shiite Muslims.
High Prices Bad – Democracy – Xt Impact

Democracy Promotion is the only strategy to check global security threats
Larry Diamond, Hoover Institution, Stanford University, December, PROMOTING DEMOCRACY
IN THE
1990S, 1995, p. http://www.carnegie.org//sub/pubs/deadly/diam_rpt.html //. (DRGAF/D5)
On any list of the most important potential threats to world order and national security in the
coming
decade, these six should figure prominently: a hostile, expansionist Russia; a hostile, expansionist
China; the spread of fundamentalist Islamic, anti-Western regimes; the spread of political terrorism
from all sources; sharply increased immigration pressures; and ethnic conflict that escalates into large
scale violence, civil war, refugee flows, state collapse, and general anarchy. Some of these potential
threats interact in significant ways with one another, but they all share a common underlying
connection. In each instance, the development of democracy is an important prophylactic, and in
some
cases the only long- term protection, against disaster.
Un-democratic Institutions Increases the Threat of Nuclear, Chemical, and Biological War
Larry Diamond, Hoover Institution, Stanford University, December, PROMOTING DEMOCRACY
IN THE
1990S, 1995, p. http://www.carnegie.org//sub/pubs/deadly/diam_rpt.html //. (DRGAF/D5)
This hardly exhausts the lists of threats to our security and well-being in the coming years and decades. In the
former Yugoslavia nationalist aggression tears at the stability of Europe and could easily spread. The
flow of illegal drugs intensifies through increasingly powerful international crime syndicates that have
made common cause with authoritarian regimes and have utterly corrupted the institutions of tenuous,
democratic ones. Nuclear, chemical, and biological weapons continue to proliferate. The very source of
life on Earth, the global ecosystem, appears increasingly endangered. Most of these new and
unconventional threats to security are associated with or aggravated by the weakness or absence of
democracy, with its provisions for legality, accountability, popular sovereignty, and openness.
High Prices Bad – Democracy – Global Democracy Down

Global democracy is failing.
India Times 6/30 (http://economictimes.indiatimes.com/View_Point/Democracy_in_the_21st_century/articleshow/3178551.cms)

Recent times have seen an upsurge in voices warning of a looming global crisis of democracy. The
warning cries point to a variety of factors as providing substantive cause for democratic alarm. Some,
for example, highlight the negative political impact of rapidly rising energy prices. Others home in on
the continuing fallout from a military intervention, of Iraq, ostensibly undertaken in the name of
democracy. Yet others point to the international community’s failure to tackle corrupt political elites
more intent on preserving their own power and wealth than promoting better lives for their citizens as
the major cause for concern regarding democracy’s future trajectory.
Impact- Democracy- Terrorism

Democracy is the only way to address the root cause of terrorism
Dr. Larry Diamond, Senior Fellow at the Hoover Institution, Stanford University, and founding
co-editor of the
Journal of Democracy, “Winning the New Cold War on Terrorism: The Democratic-Governance
Imperative,”
Institute for Global Democracy, March 2002
If we are serious about getting at the roots of international terrorism, we must get serious about
fostering development that gives people hope and dignity and improves the quality of their lives. That
requires dramatic improvements in governance, and these will not come without increased
international
incentives and assistance. In real terms, levels of U.S. development assistance have
fallen dramatically since
the 1970s and especially since the end of the last Cold War. It will not work to just
throw money at the
problem in some new "Marshall Plan." No infusion of economic resources, no matter
how massive and
sustained, will in itself generate development because the problem (unlike in Europe
after World War II) is
not simply a lack of resources or functioning infrastructure. The problem is a more
fundamental shortage:
of the institutions and norms of democracy and good governance. Unless we help to develop states that
collect taxes, limit corruption, control crime, enforce laws, secure property rights, provide
education,
attract investment and answer to their own people, countries will not develop and the rage against
the
West will not subside. This is why we must not only substantially increase our foreign
assistance budget, but
also devote a much larger portion of that budget to democracy and good-governance
programs (while
deploying more career aid officials with expertise in these fields).
Terrorism Threatens Human Survival

Alexander 2002 (Yonah, Senior Fellow and Director of the International Center for Terrorism Studies,
2/28/2002) [“Terrorism in the 21st Century”; http://www.wisc.edu/wisconsinpress/terrorism.html]
The September 11, 2001 attacks in the United States have demonstrated that terrorism has unfortunately
become a permanent feature of contemporary life. The safety and welfare of ordinary people, the
stability of state systems, the health and pace of economic development, the expansion of democracy,
and even survival of civilization itself are all threatened by this phenomenon. Today's terrorists are better
organized, more professional, and better equipped than their historical counterparts. Technological
developments offer new targets-and their possible use of chemical, biological, and nuclear violence to
achieve mass disruption or political turmoil is a real possibility. The advent of information warfare and cyber-
terrorism is a new feature of this potential challenge to the very survival of civilization.
Impact- Democracy- Terrorism

Terrorism causes extinction
Pacotti, “Are we doomed yet?”
http://www.salon.com/tech/feature/2003/03/31/knowledge/index.html, March 31,
2003
A similar trend has appeared in proposed solutions to high-tech terrorist threats. Advances in biotech,
chemistry, and other fields are expanding the power of individuals to cause harm, and this has many people
worried. Glenn E. Schweitzer and Carole C. Dorsch, writing for The Futurist, gave this warning in 1999:
"Technological advances threaten to outdo anything terrorists have done before; superterrorism has
the potential to eradicate civilization as we know it." Schweitzer and Dorsch are so alarmed that they go
on to say, "Civil liberties are important for a democratic society; the time has arrived, however, to reconfigure
some aspects of democracy, given the violence that is on the doorstep." The Sept. 11 attacks have obviously
added credence to their opinions. In 1999, they recommended an expanded role for the CIA, "greater
government intervention" in Americans' lives, and the "honorable deed" of "whistle-blowing" -- proposals
that went from fringe ideas to policy options and talk-show banter in less than a year. Taken together, their
proposals aim to gather information from companies and individuals and feed that information into
government agencies. A network of cameras positioned on street corners would nicely complement their
vision of America during the 21st century. If after Sept. 11 and the anthrax scare these still sound like wacky
Orwellian ideas to you, imagine how they will sound the day a terrorist opens a jar of Ebola-AIDS spores
on Capitol Hill. As Sun Microsystems' chief scientist, Bill Joy, warned: "We have yet to come to terms with
the fact that the most compelling 21st-century technologies -- robotics, genetic engineering, and
nanotechnology -- pose a different threat than the technologies that have come before. Specifically,
robots, engineered organisms, and nanobots share a dangerous amplifying factor: They can self-replicate. A
bomb is blown up only once -- but one bot can become many, and quickly get out of control." Joy calls the
new threats "knowledge-enabled mass destruction." To cause great harm to millions of people, an extreme
person will need only dangerous knowledge, which itself will move through the biosphere, encoded as
matter, and flit from place to place as easily as dangerous ideas now travel between our minds. In the
information age, dangerous knowledge can be copied and disseminated at light speed, and it threatens
everyone. Therefore, Joy's perfectly reasonable conclusion is that we should relinquish "certain kinds of
knowledge." He says that it is time to reconsider the open, unrestrained pursuit of knowledge that has been
the foundation of science for 300 years. "[D]espite the strong historical precedents, if open access to and
unlimited development of knowledge henceforth puts us all in clear danger of extinction, then common
sense demands that we reexamine even these basic, long-held beliefs."
High Prices Bad – Leadership

Oil Economies Are Gaining Power And Becoming A Global Power
Reuters 2008 (“Gulf Oil Economies Becoming a Global Force”, THE BRUNEI TIMES,
http://www.bt.com.bn/en/international_business/2008/06/17/gulf_oil_economies_becoming_a_global_force, June 17, 2008)
THE oil-fired economies of the Gulf are an international force to be reckoned with, creating world-
class companies and using their windfall profits to diversify away from oil, a top Middle East consultant
said. Fear of Gulf sovereign wealth funds (SWF) is misplaced, said Jean-Marie Pean, managing director of
Bain and Company Middle East. These funds, with trillions of dollars at their disposal, are pragmatic
not political in their investments. Furthermore, Gulf countries like the United Arab Emirates and Saudi
Arabia are treating world leaders Emaar in construction and real estate, Emirates among airlines and
SABIC in chemicals. During the credit crunch of the past year several Gulf funds have helped to
recapitalise Western banks, but their stakes have been modest as well as very timely. "Unlike the
previous oil booms of the 70s and 80s, this time the region is investing in its own economy and its own
future. I think they do recognise that they are dependent completely on oil and gas so they are trying to
shift away," said Dubai-based Pean, who advises family-owned businesses in the Middle East. "You are
going to see more and more global leaders emerge from this region and the sovereign wealth funds are
going to become a major force, but they will be good corporate citizens and gradually the governance and
transparency is going to become more open," he added.
Gulf States will use oil too hamstring the US

Northam 2008 (Jackie, Economy Writer for NPR, “Geopolitical Alliances Shift With Rising Oil Prices”, NPR,
http://www.npr.org/templates/story/story.php?storyId=91791909, June 23, 2008)
It's asserting its influence both in areas of the former Soviet Union [and] also in Europe. And the basic fact is that today Russia doesn't need ... anything
The United States has also seen a shift in its relations with close allies,
from the United States as it did a decade ago."
such as Saudi Arabia, because of the petroleum windfall. Saudi Arabia currently makes an astonishing
$1.3 billion a day on oil revenues. Greg Priddy, a global oil analyst with the Eurasia Group, says the United
States may not like paying high prices for oil, but can't do much about it. American threats to cut back
consumption and switch to alternative fuels have little impact on the Saudis. "American leverage over
them on energy policy is definitely a lot weaker than it used to be, and a lot of that is ... the fact that
Asian demand is still growing even at triple-digit dollar prices," Priddy says. "And that means that
they're no longer quite as worried about U.S. conservation measures." Priddy says the Saudis may be
looking towards China and other Asian nations for new business relations. But, he says, the Saudis understand they
still need the United States as a protector. "The security relationship is really unique," he says. "They're certainly aware that there's no Asian power that is
going to be able to take up the role that the U.S. has had in the Gulf, you know, as far as the eye can see." Still, Saudi Arabia is using its wealth to expand its
influence throughout the Middle East, including Iraq, says George Friedman of Stratfor, a global intelligence company. Friedman says a key concern for the
Saudis is to keep the region peaceful — and keep the Straits of Hormuz open — so that nothing slows the flow of oil money coming into Saudi Arabia. "All
around the horn, you see the effect of Saudi influence on various Arab players, that they are trying to calm the situation," Friedman says. "One of the most
important things they are doing is making very clear to the United States that they really don't want to hear much talk about attacking Iran." And despite its
dilapidated infrastructure and dismal economic planning, Iran, too, is benefiting from the energy price boom, says Cambridge Energy's Yergin. "Iran
is
able to use its considerable resources in oil and its immense resources in natural gas to seek to forge
bonds with India, China, other countries, in order to counterbalance the efforts of the U.S. and the Europeans to
put pressure on it because of its nuclear program," Yergin says. China, which relies heavily on energy imports to fuel its fast-growing economy, has been on
a diplomatic campaign in the Gulf states to secure access to oil projects — especially in areas, such as Iran, where many Western companies are unwilling to
sign contracts for fear of sanctions by the U.S. Yergin says U.S. leverage to curb such investment is diminishing. It's part of the new world order — created
by the oil price boom.
Leadership Prevents Global Nuclear War

Khalilzad 95 (Zalmay, Defense Analyst at RAND, “Losing the Moment? The United States and the World After
the Cold War”, THE WASHINGTON QUARTERLY: Rethinking Grand Strategy, Vol. 18, No. 2, Pg. 84)
<Under the third option, the United States would seek to retain global leadership and to preclude the rise of a global rival or a return to multipolarity for the
indefinite future. On balance, this is the best long-term guiding principle and vision. Such a vision is desirable not as an end in itself, but because a
world in which the United States exercises leadership would have tremendous advantages. First, the global
environment would be more open and more receptive to American values -- democracy, free markets, and the rule of law. Second, such a
world would have a better chance of dealing cooperatively with the world's major problems, such as
nuclear proliferation, threats of regional hegemony by renegade states, and low-level conflicts. Finally,
U.S. leadership would help preclude the rise of another hostile global rival, enabling the United States
and the world to avoid another global cold or hot war and all the attendant dangers, including a global
nuclear exchange. U.S. leadership would therefore be more conducive to global stability than a bipolar
or a multipolar balance of power system.>
High Prices Bad – Leadership

U.S. Hegemony Weak Due to Oil
Roberts 2008 (Paul Craig, Center for Strategic and International Studies, “The End of U.S. Hegemony”,
THE POPULIST PARTY, http://www.populistamerica.com/the_end_of_us_hegemony, April 16, 2008)
The three-week "cakewalk" war that would be paid for by Iraqi oil revenues is now into its sixth year.
According to Nobel economist Joseph Stiglitz, the cost of the war to Americans is between three and five
trillion dollars. Five trillion dollars equals the entire US personal and corporate income tax revenues for two
years. Of what benefit is this enormous expenditure to America? The price of oil and gasoline in US dollars
has tripled, the price of gold has quadrupled, and the dollar has declined sharply against other global
currencies. The national debt has rapidly mounted. America's hegemony is in tatters. The Bush regime's
coming attack on Iran will widen the war dramatically and escalate the costs. Not content with war with Iran,
Republican presidential candidate John McCain in a speech written for him by neocon warmonger Robert
Kagan promises to confront both Russia and China.
High Prices Bad – China

Oil Prices Will Lead to Competition Between China and US Causing Nuke War
Meacher 2008 (Michael, Guardian.co.uk staff writer, “The era of oil wars”, Guardian.co.uk,
http://www.guardian.co.uk/commentisfree/2008/jun/29/oil.oilandgascompanies, June 29, 2008)
Gordon Brown meeting Britain's oil chiefs to discuss higher North Sea output to bring down prices is prompted by oil prices hitting a
record high of $135 a barrel, twice as high as a year ago and a staggering 12 times higher than a decade ago. The well-sourced website
petrolprices.com is now predicting that petrol will reach £1.50 a litre by September, just 4 months away. Jeff Rubin of CIBC World
Markets is forecasting "oil prices almost doubling over the next five years". That would mean $270 a barrel by 2013. It perhaps explains
why the government is now strongly backing BP to get a big new slice of the oil drilling licences soon to be issued in Iraq, and –
astonishingly – has now also made clear it intends to annex a third of a million square miles of the seabed off Antarctica to pre-empt any
rights to the oil it may contain. The fight for oil has begun in earnest. But is there the oil to go round? The
authoritative International Energy Agency foresees an oil supply crunch within 5 years forcing up
prices to unprecedented levels and greatly increasing western dependence on Opec. And the oil industry
itself in its own report Facing the Hard Truths about Energy, produced by 175 authorities including all the
heads of the world's big oil companies, for the first time predicted that oil and gas may run short by 2015.
The geopolitical implications of this gathering crisis for world oil supply 2010-15 are immense. The risk of
further military interventions and conflicts in the Middle East is clearly high. Total world oil reserves are estimated at 2.5-
2.9 trillion barrels, of which half has now been already consumed, while half of the 51 oil-producing countries reported output declines in 2006. Non-Opec production is expected to
peak and decline within the next five years, driven mainly by burgeoning demand from China and the US, together with restricted output from Iraq. Then in the following five years
Opec's diminishing spare capacity will probably become increasingly unable to accommodate short-term fluctuations, depending on how fast world demand grows and how
extensively Opec invests in new capacity. The latter may well not raise production capacity high enough or quickly enough, whether for political reasons or because internal decision-
making is too slow or the security environment too hostile. There are of course exits from this doom-stricken scenario, though none is at all credible. First, discovery of major new
oilfields could alter the picture. However, though billions have been spent on the search for new fields, discovery peaked in the mid-1960s and the last big ones were found in the
1970s. Only Iraq has undeveloped super-giant oilfields – at West Qurna, Majnoon, and East Baghdad – and the capacity to increase production rapidly to 8-10 million barrels a day;
but ironically the US invasion, designed to produce this effect, has ruled out this outcome for a long way ahead. Already four-fifths of the world's oil supply comes from fields
discovered before 1970, and even finding a field as large as the world's current biggest (Ghawar in Saudi Arabia) – which is anyway almost inconceivable given the huge
improvements in geological knowledge in the last 30 years – would only meet global oil demand for another 10 years. Another option much touted is a large-scale shift to so-called
unconventional oil – the Athabascan tar sands (from Alberta, Canada), extra-heavy oil (from the Orinoco belt in Venezuela), oil shale, and mature source rocks. But the almost
insurmountable problem is recoverability, whether poor quality oil (extra-heavy oil), poor quality reservoirs (oil from source rocks), or both (oil shale). Worse, production may be
uneconomic because of a very low net energy gain, ie it requires almost as much energy to extract the oil as is made available for subsequent use. And the enormous hike in
greenhouse gases generated could produce a turbo climate change effect that would wipe out any benefit from a global post-Kyoto agreement. But even if supply constraints are
ineluctable as the explosion of Chinese growth coincides with falling non-Opec oil production and the beginnings of a slow but remorseless slippage in Opec capacity, the coming
crisis could still be eased by significant demand restrictions. Clearly there is substantial room for energy-saving when half the energy generated every day is wasted and when
propulsion of an average car is only about 20% efficient, heating of a standard oven only 25%, and electricity generated in some power stations only some 35%. The question,
however, is whether improvement can be secured globally on the level and timescale required to push back the crisis more than a few years. Equally, taking the CO2 out of fossil
fuels, especially coal, may be crucial, but a decade at least is needed even to test the carbon capture technology in pilot projects, let alone begin to mainstream it. But the most direct
means of constraining world demand would be the proposed Rimini protocol, which prescribes that oil-importing countries cut their imports to match the world depletion rate (ie
annual production as a percentage of remaining global reserves) now running at about 2% a year. Of course, the fundamental political problem remains that the most powerful oil-
the big powers, so far from seeking major
hungry countries will not agree. If not Kyoto, why Rimini? What is most disturbing of all is that
adjustments of their energy policies on either the supply or demand fronts or making a major switch
into renewables, are actually massively intensifying their competitive struggle short-term for the
limited oil reserves left. Despite an unwinnable war in Iraq, the US is still constructing at least five large permanent military
bases there in order, according to evidence given to a US Congressional Committee, to control access to Gulf oil, including in Saudi and
Iran. As one neocon recently put it, "one of the reasons we had no exit plan from Iraq is that we didn't intend to leave". The US is also
trying to force through a new Iraqi oil law that would give western, primarily American, oil multinationals control of Iraqi oilfields for
the next 30 years. The US maintains 737 military bases in 130 countries under cover of the "war on terror"
to defend American economic interests, particularly access to oil. The principal objective for the
continued existence and expansion of Nato post-cold war is the encirclement of Russia and the pre-emption
of China dominating access to oil and gas in the Caspian Sea and Middle East regions. It is only the
beginning of the unannounced titanic global resource struggle between the US and China, the world's
largest importers of oil (China overtook Japan in 2003). Islam has been dragged into this tussle because it is in the Islamic world where most of these resources lie,
but Islam is only a secondary player. In the case of Russia, the recent pronounced stepping up of western attacks on Putin and claims he is undermining democracy are ultimately
aimed at securing a pro-western government there, and access to Russian oil and gas when Russia has more of these two hydrocarbons together than any other country in the world.
The struggle has also spilled over into West Africa, reckoned to hold some 66 billion barrels of oil typically low in sulphur and thus ideal for refining. In 2005 the US imported more
oil from the Gulf of Guinea than from Saudi and Kuwait combined, and is expected over the next 10 years to import more oil from Africa than from the Middle East. In step with this,
the Pentagon is setting up a new unified military command for the continent named Africom. Conversely, Angola is now China's main supplier of crude oil, overtaking Saudi Arabia
last year. There is no doubt that Africom, which will greatly increase the US military presence in Africa, is aimed at the growing conflict with China over oil supplies. As Joe
efforts by the US and China to use imports to meet growing demand
Lieberman, former US presidential candidate, put it,
"may escalate competition for oil to something as hot and dangerous as the nuclear arms race between
the US and the Soviet Union".
High Prices Bad – Xt China – Leadership

China Working On Relations And Cooperation with Gulf States
Xinhua News Agency 2008 (“China to Promote All Round Cooperation with Gulf States”, China.org.cn,
http://www.china.org.cn/international/2008-06/23/content_15871981.htm, June 23, 2008)
Visiting Chinese Vice President Xi Jinping on Sunday proposed in Jeddah to vigorously push forward
all-round cooperation between China and member states of the Gulf Cooperation Council (GCC). In
his speech at the opening ceremony of a seminar on China-Saudi economy and trade, he said that China
highly regards its relations with GCC member states, including Saudi Arabia, and will push forward
bilateral cooperation between the two sides in various fields. Meanwhile, China will further improve
the mechanism or collective cooperation with GCC and strengthen dialogues on politics, trade and energy,
especially the negotiations on the free trade zone between the two sides, so as to yield positive results at
an early date and raise the bilateral cooperation of mutual benefit to a new high, he added. Xi noted that
GCC has become China's eighth largest trading partner, with a mutual trade volume of 58 billion US dollars
in 2007, up 30 percent in two consecutive years. Last year, China imported over 40 million tons of crude
oil from GCC member states, Xi said. Chinese enterprises have set up many joint ventures with their GCC
counterparts in recent years, and have been active in many industries in GCC countries, such as
infrastructure, he added. The GCC, headquartered in the Saudi capital of Riyadh, groups the United Arab
Emirates, Oman, Bahrain, Qatar, Kuwait and Saudi Arabia. The Chinese leader also expressed his heartfelt
thanks on behalf of the Chinese government and people for the sympathy and aid GCC member states
have offered to China's earthquake-hit Sichuan province. It shows the deep affection of the people in
Gulf countries for the Chinese people, Xi said. China will always stick to peaceful development, and the
opening-up strategy of mutual benefit and win-win solution in a bid to build a harmonious world of lasting
peace and common prosperity, said the Chinese vice president.
China will use oil to undermine US leadership
Leverett 8 (6/30, brookings inst., http://www.brookings.edu/articles/2005/winter_energy_leverett.aspx)

The bid by the China National Offshore Oil Corporation (CNOOC) to acquire Unocal earlier this year
triggered not only a hostile reaction in the U.S. Congress but also growing interest and debate within
the foreign policy community about the rapid growth in China's energy demand and the prospect for
competition between the United States and China for access to global oil and gas resources.1 Henry Kissinger
has gone so far as to argue that competition over hydrocarbon resources will be the most likely cause for
international conflict in coming years.2 China's hunt for oil is clearly influencing its foreign policy toward its neighbors, such as Russia, Japan, and the
Central Asian states, and toward regions as far afield as sub-Saharan Africa and Latin America.3 As China seeks access to global energy
resources, its status as a rising power is already enabling it to exercise influence in ways that make it
more difficult for the United States and the West to achieve their goals on a number of issues. The
potentially explosive combination of a China less willing to passively accept U.S. leadership and the
prospect of competition between China and other states for control over vital energy resources poses
particularly critical challenges to U.S. interests in the Middle East. Chinese engagement in the Middle East has expanded
economically, politically, and strategically over the last several years. Since the late 1990s, Beijing's policies toward the region have been closely linked to the objectives of the three
major, state-owned Chinese energy companies—the China National Petroleum Corporation (CNPC), the China National Petrochemical Corporation (Sinopec), and CNOOC—to seek
access to Middle Eastern oil and gas, frequently on an exclusive basis. Since 2002, the Middle East has become the leading arena for Beijing's efforts to secure effective ownership of
critical hydrocarbon resources, rather than relying solely on international markets to meet China's energy import needs. There is every reason to anticipate that China will continue
China will likely keep working to expand its ties to
and even intensify its emphasis on the Middle East as part of its energy security strategy.
the region's energy exporters over the next several years to ensure that it is not disadvantaged relative
to other foreign customers and to maximize its access to hydrocarbon resources under any foreseeable
circumstances, including possible military conflict with the United States. It seems doubtful that Chinese energy companies'
fledgling efforts to lock up petroleum resources will succeed in keeping a critical mass of oil reserves off an increasingly integrated and fluid global oil market. Nevertheless,
China's search for oil is making it a new competitor to the United States for influence in the Middle
East. If not managed prudently, this competition will generate multiple points of bilateral friction and
damage U.S. strategic interests in the region.
High Prices Bad – Environment – Marine Species

Oil Threatens Marine Species
Dabbs 2008 (W. Corbett, Environmental Professor at American University, “ Oil
Production and Environmental Damage”, THE MANDALA PROJECTS,
http://www.american.edu/TED/projects/tedcross/xoilpr15.htm#r0, June 17, 2008)
Although much of the world depends on the production or the trade of oil to fuel its economies, these
activities can cause severe damage to the environment, either knowingly or unintentionally. Oil
production, and/or transportation, can disrupt the human population, and the animal and fish life of the
region. Oil waste dumping, production pollution, and spills wreak havoc on the surrounding wildlife
and habitat. It threatens the extinction of several plants, and has already harmed many land, air, and
sea animal and plant species. The effects of oil on marine life are cause by either the physical nature of
the oil (physical contamination and smothering) or by its chemical components (toxic effects and
accumulation leading to tainting). Marine life may also be affected by clean-up operations or indirectly
through physical damage to the habitats in which plants and animals live. The animals and plants most
at risk are those that could come into contact with a contaminated sea surface: marine animals and
reptiles; birds that feed by diving or form flocks on the sea; marine life on shorelines; and animals and
plants in mariculture facilities. Runoffs from petroleum processing and petrochemical plants have
dumped tons of toxic wastes into nearby waters. Gas and oil pipelines have stanched many creeks and
rivers, swamping prime pastures and cropland. Furthermore, entire bays and lagoons along coasts have been
fouled by oil spills and runoff of toxic chemicals.
Marine Species Key to Survival- They perform critical life cycle functions
Current Science 2006 (5(10), 9-10, p.574, http://www.ias.ac.in/currsci/sep102006/573.pdf)
Aquatic ecosystems sustain life on earth, regardless of mankind’s understanding of the biology, chemistry
and geology involved. Wetlands inhabit a transitional zone between terrestrial and aquatic habitats, and
are influenced to varying degrees by both. They differ widely in character due to regional and local
differences in climate, soil, topography, hydrology, water chemistry, vegetation and other factors. Wetlands
provide habitats and support a diverse range of biodiversity (e.g. in 1 m2 of coral reef there can be up to
3000 species). Wetlands undertake important biological and ecological processes, including life support
systems, i.e. water and carbon cycles. Hence, they are important for hydrological functions, and
economic, social, spiritual and cultural development.
Species Loss Threatens Human Existence

Schlickeisen 2000, (Roger, President of Defenders of Wildlife and the Natural Resources
Defense Council,
May 24, Federal News Service
A 1998 survey by the American Museum of Natural History confirmed that a majority of scientific experts
believe that we are in the midst of a mass extinction of living things. These scientists agree that: the loss of
species will pose a major threat to human existence in this century; during the next 30 years as many as
one-fifth of all species alive today could become extinct; this so-called "sixth extinction" is the fastest in
the Earth's 4.5 billion-year history, but unlike prior mass extinctions, is primarily the result of human
activity and not natural causes; biodiversity loss is a greater threat than the depletion of the ozone layer,
global warming or pollution and contamination
High Prices Bad – Environment – Arctic Tundra

Oil Drilling Devastates the Arctic Tundra
Biomes Living World 2008 (“Tundra: Oil Drilling/Mining”, THINKQUEST.ORG,
http://library.thinkquest.org/C0113340/text/impact/impact.tundra.environment.oil.html, June 19,
2008)
Mining and drilling has also destroyed some areas of the tundra. Mining and drilling is popular in arctic
tundra areas because they tend to be rich in mineral resources. Minerals are extracted from the ground of the
arctic tundras in Russia, Greenland, and Canada. Around these sites not only is the land ravaged, but harmful
dusts and gases are produced which cause air pollution. When dusts settle on neighboring ponds, lakes, and
streams these waters become uninhabitable by fish, animals and even people. Oil drilling is popularly
supported all over the world. Some arctic areas, like in Canada near the Mackenzie Delta and in Alaska in
Prudhoe Bay, oil drilling is big business. Unfortunately, oil drilling, like mining, hurts the tundra. It
pollutes the air, water, and ground. Both mining and drilling take land away from the arctic tundra
animals. This is because they both produce large amounts of noise pollution , which drives animals
from their homes. Plants cannot even survive around mining and drilling sites because of the pollution.
Parts of the Russian tundra are an excellent example of arctic tundra land being destroyed by mining.
Nickel mines there have become so contaminated that all surrounding plants have died off and the soil
has washed away. The greatest threat that oil mining poses on the tundra is oil spillage. If an oil leak occurs
on the sea or ground, the consequences can be devastating. Oil pollutes the ground and water and kills
animals that come in contact with it. An oil spill can ruin a biome as fragile as the tundra. No plants or
animals will return to an area where an oil spill has occurred for decades or even longer.
Arctic Species Key to Biodiversity

Jacquot 2007 (Jeremy Elton, Science and Technology Writer for TreeHugger, “Arctic
Predators Hit Hard by Climate Change”, TREEHUGGER,
http://www.treehugger.com/files/2007/05/arctic_predator_global_warming.php, May 28,
2007)
Although Arctic foxes once numbered in the thousands in Norwegian mountain and northern coastal
areas, their population since then has plummeted and it now stands at just 100. Yoccoz and Ims have
discovered that the number of new Arctic fox offspring born into a litter correlates directly with the number
of Norway lemmings present in the ecosystem. Indeed, the lemming is also a key species like others in the
Arctic tundra, one whose presence or lack thereof can have a drastic effect on the entire food chain
from vegetation to large predators.
The Loss of Biodiversity Guarantees Extinction

Cary Fowler and Pat Mooney, Senior Officer at UN Food and Agriculture Organization and
Staff Member at
Rural Advancement Fund International, 1990
[Shattering: Food, Politics and the Loss of Genetic Diversity]
Whilst many may ponder the consequences of global warming. perhaps the biggest single environmental
catastrophe in human history is unfolding in the garden. While all are rightly concerned about the
possibility of nuclear war. an equally devastating time bomb is ticking away in the fields of farmers all
over the world. Loss of biodiversity in agriculture- silent, rapid, inexorable- is leading us to rendezvous
with extinction- to the doorstep of hunger on a scale we refuse to imagine. To simplify the environment as
we have done with agriculture is to destroy the complex interrelationships that hold the natural world
together. Reducing the diversity of life. we narrow our options for the future and render our own
survival more precarious. It is life at the end of the limb. That is the subject of this book.
High Prices Bad – Environment – Arctic Tundra – Xt Link

Drilling Threatens Endangered Species in the Arctic Tundra
Alaska Newspapers Inc. 2008 (“Endangered Whales Home Proposed for Oil Development”, THE
TUNDRA DRUMS, http://thetundradrums.com/news/story/1954, April 8, 2008)
The Bush Administration today took the first step toward opening up 5.6 million acres in the Bering
Sea off Alaska to oil and gas leasing. The proposal, published in today’s Federal Register by the
Department of Interior’s Minerals Management Service, would allow oil development in an area north of
the Aleutian Islands near Bristol Bay that has been designated critical habitat for the North Pacific
right whale, according to a written statement from the Center for Biological Diversity. The North Pacific
right whale, once ranging from California to Alaska and across the North Pacific to Russia and Japan, was
decimated by commercial whaling and is now the most endangered large whale in the world. Perhaps
fewer than 50 individuals remain in a population that visits the Bering Sea each summer to feed, according to
the statement. “Drilling in Bristol Bay would be drilling through the heart of the most important
habitat of the most endangered whale on the planet,” said Brendan Cummings, CBD oceans program
director. “If the North Pacific right whale is to have any chance of survival, we must protect its critical
habitat, not auction it off to oil companies.” In July 2006, approximately 36,000 square miles of the Bering
Sea were designated as critical habitat for the right whale under the Endangered Species Act. The designation
came as a result of a lawsuit brought by the Center. More than half of the area proposed today for leasing is
within right whale critical habitat, according to the statement. Ironically, the leasing proposal by the Minerals
Management Service was made the very same day that a different federal agency, the National Marine
Fisheries Service, published a final rule in the Federal Register that reaffirms the designation of critical
habitat for the North Pacific right whale in the lease area. Last month the Fisheries Service formally
recognized the North Pacific right whale as a distinct species under the Endangered Species Act.
Previously the whale had been considered the same species as right whales in the North Atlantic.
Today’s critical habitat designation protects the same areas in the Bering Sea as the 2006 designation of
critical habitat, but transfers this habitat protection to the newly recognized North Pacific right whale.
Oil Kills Tundra Ecosystems

National Geographic 2008 (“Tundra Threats”, NATIONAL GEOGRAPHIC,
http://science.nationalgeographic.com/science/earth/habitats/tundra-threats.html, June 28, 2008)
Another concern is that about one-third of the world's soil-bound carbon is in tundra permafrost. As this
frozen soil thaws, its organic contents begin to decay, releasing carbon dioxide, a greenhouse gas. The tundra
is also slow to repair itself from physical disturbances, such as vehicular tracks. Cutting greenhouse gas
emissions by switching to alternative energy uses is key to protecting Earth's tundra habitats. The melting of
the permafrost as a result of global warming could radically change the landscape and what species are able
to live there. Ozone depletion at the North and South Poles means stronger ultraviolet rays that will harm the
tundra. Air pollution can cause smog clouds that contaminate lichen, a significant food source for many
animals. Exploration of oil, gas, and minerals and construction of pipelines and roads can cause
physical disturbances and habitat fragmentation. Oil spills can kill wildlife and significantly damage
tundra ecosystems. Buildings and roads put heat and pressure on the permafrost, causing it to melt.
Invasive species push aside native vegetation and reduce diversity of plant cover.
High Prices Bad – Environment – Offshore Drilling

Offshore Drilling Kills the Aquatic Ecosystems
Braverman 2008 (Beth, CNNMoney.com Contributing writer, “Bush: Lift Ban on Offshore Drilling”,
CNNMoney.com,
http://money.cnn.com/2008/06/18/news/economy/bush_speech/index.htm?section=money_latest, June 18,
2008)
John McCain called for a lift in the offshore drilling ban Tuesday. McCain's plan would let individual states
decide whether to explore drilling possibilities off their shores. Critics of offshore drilling claim the practice
harms aquatic ecosystems by eroding wetlands, contaminating the water with chemicals, polluting the
air, killing fish and dumping waste. Presumptive Democratic candidate Barack Obama called McCain's
offshore drilling plan "short-term political posturing." Obama prefers a profits tax on oil companies and
investment in renewable energy sources.
Offshore Drilling Ruins Biodiversity in Alaska

Cohn 2002 (Jeffrey P., Author of the History of the Endangered Species Act, “Biodiversity: Offshore Oil
Peril”, DEFENDERS OF WILDLIFE,
http://www.defenders.org/newsroom/defenders_magazine/fall_2002/biodiversity_offshore_oil_peril.php, Fall
2002)
Not so, warns Charter, who specializes in offshore oil and gas issues for the conservation group
Environmental Defense. “We are sacrificing the natural environment to produce oil and gas," he says.
“[The administration’s plan] is an industry wish list. If we allow oil companies to drill off the northern Alaska
coast, they will eventually create political pressure to drill on land in ANWR too. Oil development is totally
incompatible with wilderness values." Environmentalists are not so sure. They fear that if a large blowout
similar to one in 1969 off the California coast near Santa Barbara occurred off Alaska’s North Slope, it could
trap oil for months under sea ice, where it would be difficult for cleanup crews to reach. The oil could
also collect around the edges of ice sheets and breathing holes used by seals, bowhead whales and other
marine mammals. Further, offshore operations require onshore facilities to process the oil and gas and to
house workers. They also require networks of roads, pipelines, waste disposal sites and runways, all of
which disrupt the environment and wildlife. Environmentalists fear any offshore drilling around
Alaska threatens the wildlife that abounds in the frigid North. Arctic waters are renowned for such
marine mammals as bowhead and beluga whales and ringed, spotted and bearded seals. Researchers
have shown that whales avoid oil rigs, Robards says, which could cause them to abandon prime feeding
areas. Whales are particularly sensitive to the noise of drilling operations and the seismic waves from
air-gun explosions that industry uses to detect oil and gas deposits. Some biologists fear that noise and
oil spills could also cause female polar bears to abandon their newborn young thus disrupting the
biodiversity of Alaska’s wildlife.
Loss of Biodiversity Leads to Planetary Extinction.

Diner 1994 (Major David, Instructor at the Judge Advocate General School, Winter 1994, MILITARY LAW
REVIEW, p. lexis
By causing widespread extinctions, humans have artificially simplified many ecosystems. As biologic
simplicity increases, so does the risk of ecosystem failure. The spreading Sahara Desert in Africa, and
the dustbowl conditions of the 1930s in the United States are relatively mild examples of what might be
expected if this trend continues. Theoretically, each new animal or plant extinction, with all its dimly
perceived and intertwined affects, could cause total ecosystem collapse and human extinction. Each
new extinction increases the risk of disasters. Like a mechanic removing, one by one, the rivets from an
aircraft's wings, mankind may be edging closer to the abyss.
High Prices Bad – Environment – Wetlands

Oil Pollution Kills Wetlands
Boesch 74 (Donald F., Federal Water Pollution Agency Predoctoral Fellow in water pollution research, “Oil
Spills and the Marine Environment”, FORD FOUNDATION,
http://www.fordfound.org/archives/item/0216/text/123, 1974)
Mammals have been affected by some spills (), however. Possible effects include suffocation by oil,
disruption of insulation abilities of fur coats, and poisoning from ingested oil. In addition to pinnipeds
(seals, walruses, etc.) and cetaceans (whales and dolphins), other mammals occupy coastal marine habitats.
Sea otters are recovering from near extinction along the West Coast of the U.S. Commercially valuable fur
bearers, mainly muskrats, inhabit coastal wetlands in Louisiana and are susceptible to oil pollution from
the production fields, although fur production has not declined there ().
Wetlands Key to Ecological Sustainability

Boesch 74 (Donald F., Federal Water Pollution Agency Predoctoral Fellow in water pollution research, “Oil
Spills and the Marine Environment”, FORD FOUNDATION,
http://www.fordfound.org/archives/item/0216/text/123, 1974)
Tidal wetlands are characteristic of many estuarine shores throughout the world and include salt marshes
dominated by grasses in temperate climates, and mangrove swamps dominated by trees in the tropics.
The great value of wetlands in coastal ecosystems is generally accepted, if not always well understood.
They serve as habitat, feeding, or nesting grounds for shore birds, fish, and other wildlife. Tidal
wetlands have been shown to be among the most productive environments on earth, and it is this great
productivity that supports much of the life in estuaries through a food web based on vascular plant debris
(detritus). Wetlands also play a considerable role as geological agents and are important to shoreline
stabilization.
Biodiversity Worse Than Economic Collapse and Nuclear War

Chen 2000 (Jim, Prof. of Law and Vance K. Opperman Research Scholar) 9Minn. J. Global
Trade 157)
The value of endangered species and the biodiversity they embody is "literally ... incalculable." What,
if anything, should the law do to preserve it? There are those that invoke the story of
Noah's Ark as a moral
basis for biodiversity preservation. Others regard the entire Judeo-Chhstian tradition,
especially the biblical
stories of Creation and the Flood, as the root of the West's deplorable environmental
record. To avoid getting
bogged down in an environmental exegesis of Judeo-Christian "myth and legend," we
should let Charles
Darwin and evolutionary biology determine the imperatives of our moment in natural
"history." The loss of
biological diversity is quite arguably the gravest problem facing humanity. If we cast the question as
the contemporary phenomenon that "our descendants [will1 most regret" the "loss of genetic and
species diversity by the destruction of natural habitats" is worse than even "energy depletion,
economic collapse, limited nuclear war, or conquest by a totalitarian government." Natural
evolution
may in due course renew the earth with a diversity of species approximating that of a
world unspoiled by
Homo sapiens - in ten million years, perhaps a hundred million.
High Prices Bad – Environment – Coral Reefs

Offshore Drilling Harms Marine Life and Coral Reefs
Simon 2008 (Sarah, News Author for MTV, “How Would Offshore Oil Drilling Affect You?”, MTV,
http://www.mtv.com/news/articles/1589684/20080619/id_0.jhtml, June 19, 2008)
Environmentalists also oppose the president's call for offshore drilling. While Bush called current restrictions
"outdated and counterproductive," opponents claim that developing coastal oil reserves will harm the
environment. Critics note that offshore drilling poses the risk of oil spills that would negatively affect
marine life, destroy ecological habitats and damage coral reefs. Conservationists voice a similar objection
to drilling in the Alaskan Wildlife Reserve, one of our nation's last remaining untouched wilderness areas.
Oil Spill Clean Up Kills Coral Reefs

American Chemical Society 2007 (“Oil Spill Clean Up Agents Threaten Coral Reefs”, EcoEarth.Info,
http://www.ecoearth.info/shared/reader/welcome.aspx?linkid=81141&keybold=oil%20spill, July 30, 2007)
Called the 'rainforests of the sea,' coral reefs are an endangered ecosystem and are disappearing at an
alarming rate due to numerous threats, including over-fishing, global warming and pollution, particularly
oil spills. Besides hosting a rich diversity of marine organisms, these habitats are also potential sources
of life-saving medicines and food for humans. Scientists looking for better ways to protect this important
habitat have recently focused on the environmental impact of oil dispersants, detergents used break down
oil spills into smaller, less harmful droplets. In the new report, Shai Shafir and colleagues evaluated the
effects of both crude oil and six commercial oil dispersants under laboratory conditions on the growth and
survival of two important species of reef corals. The dispersants and dispersed oil droplets were significantly
more toxic to the coral than the crude oil itself, the scientists report. The dispersants caused "significant
harm," including rapid, widespread death and delay in growth rates, to the coral colonies tested even
at doses recommended by the manufacturers, they add. "Decision-making authorities should carefully
consider these results when evaluating possible use of oil dispersants as a mitigation tool against oil pollution
near coral reef areas," the report said.
Reefs Key to biodiversity
Shah 8 (Anup, “Biodiversity”

http://209.85.141.104/search?q=cache:DaGJp8UOPnEJ:www.globalissues.org/EnvIssues/Biodiversity.asp+%22Coral+Reefs%22+biodiversity&h
l=en&ct=clnk&cd=3&gl=us)
The variety of life on Earth, its biological diversity is commonly referred to as biodiversity. The number of species
of plants, animals, and microorganisms, the enormous diversity of genes in these species, the different ecosystems
on the planet, such as deserts, rainforests and coral reefs are all part of a biologically diverse Earth. Appropriate
conservation and sustainable development strategies attempt to recognize this as being integral to any approach.
Almost all cultures have in some way or form recognized the importance that nature, and its biological diversity has
had upon them and the need to maintain it. Yet, power, greed and politics have affected the precarious balance.
One type of ecosystem that perhaps is neglected more than any other is perhaps also the richest in biodiversity -- the
Coral Reefs. Reefs are useful to the environment and to people in a number of ways. However, all around the world,
much of the world's marine biodiversity face threats from human and activities as well as natural. It is feared that
very soon, many reefs could die off.
High Prices Bad – Environment – Coral Reefs – Xt Impact (1/2)

Reefs Key to biodiversity
Burke 98 (Lauretta, United Nations

http://www.oceansatlas.org/servlet/CDSServlet?status=ND0zMTc5NCY2PWVuJjMzPSomMzc9a29z)
Coral reefs are among the most biologically rich ecosystems on earth. About 4,000 species of fish and 800 species of
reef-building corals have been described to date. However, experts have barely begun to catalog the total number of
species found within these habitats. Coral reefs have often been described as the Rainforests of the Sea. Coral reefs
resemble tropical rainforests in two ways: both thrive under nutrient-poor conditions (where nutrients are largely
tied up in living matter), yet support rich communities through incredibly efficient recycling processes. Additionally,
both exhibit very high levels of species diversity. Coral reefs and other marine ecosystems, however, contain more
varied life forms than do land habitats. All but one of the world's 33 phyla (major kinds of organisms) are found in
marine environments-15 exclusively so. The most species-rich reefs are found in a swath extending through
Southeast Asia to the Great Barrier Reef, off northeastern Australia.
Reefs key to biodiversity
EPA 7 (HTTP://WWW.EPA.GOV/CLIMATECHANGE/EFFECTS/ECO_CORAL.HTML)
Coral reefs provide our oceans with the highest biodiversity of any marine ecosystem. Corals are formed from the
skeletons of plants and animals that secrete limestone (calcium carbonate), and harbor more than 25 percent of all
known ocean fish. Just as fish find refuge in the reefs, many marine organisms live inside the corals, adding up to
nearly a million species of fish or other marine life that make up a coral reef ecosystem. Coral reefs are also a
significant food source for many coastal communities, and serve important functions as atoll island foundations,
coastal protection structures, and sources of beach sand. They have economic value for recreation and tourism and
support emerging opportunities in biotechnology. Climate change is one cause of coral reef degradation. Many coral
reefs are surviving at or close to their temperature tolerance levels, so rising sea surface temperatures are creating
more hostile conditions for the corals. As temperatures rise, corals expel the colorful organisms that live inside them
and appear “bleached.” Although these organisms re-colonize the corals once temperatures return to a more tolerable
range, repeated or prolonged bleachings have proven to be fatal for some reefs, primarily due to the loss of nutrients
that the organisms provide for the coral. Atmospheric carbon dioxide (CO2) reacts with seawater to form carbonic
acid, leading to increased acidity in the oceans. This higher acidity—or more accurately, reduced alkalinity, because
the oceans are unlikely to ever become truly acidic—hampers the ability of corals to build their calcium carbonate
skeletons, slowing or in some cases even halting their growth. More acidic waters may also weaken existing coral
structures, leading to erosion of reefs (IPCC, 2007a, Kleypas et al., 2006). Since the beginning of the Industrial
Revolution, the ocean's surface has become more acidic—by about 0.1 pH unit—and since 1980 about one-third of
all human emissions of CO2 have been stored in the oceans. The current rate of oceanic CO2 uptake far exceeds the
rate at which nature can restore the system to normal conditions. Researchers project that over the next few
centuries, ocean pH will decline faster and to a lower (more acidic) value than any experienced in the last several
hundred million years A doubling of atmospheric CO2 concentrations above pre-industrial levels is expected to
reduce calcium carbonate formation in some coral species by 20-60 percent, and many reefs could reach critical
states by 2070.
High Prices Bad – Environment – Coral Reefs – Xt Impact (1/2)

Reefs key to biodiversity
Sebens 96 (Biological conservationist http://www.ingentaconnect.com/content/els/00063207/1996/00000076/00000002/art83216)

Coral reefs are threatened by numerous anthropogenic impacts. These unique tropical environments harbor a high
diversity of corals, reef invertebrates, fish and other animals and plants. In most taxa, the species diversity of reef-
associated organisms is poorly understood. High coral mortality has been associated with natural events such as
hurricanes, predator outbreaks and periods of high temperature, but has also resulted from excess nutrients in
sewage and from specific pollutants. Reef corals and associated organisms are also threatened by the possibility of
global warming which will result in rising sea levels and periods of increased temperature stress, and which may
also bring increased storm frequency and intensity. Although the recent extensive episodes of coral bleaching in the
Caribbean and E Pacific cannot be causally related to global warming, the close link between bleaching and
temperature suggests that global warming will result in severe changes in coral assemblages. Major reef destruction
has followed outbreaks of the predatory crown-of-thorns starfish Acanthaster planci in the Pacific. Although this is
part of a natural disturbance cycle, altered land use patterns and reduction of predators on this seastar by human
activities may have increased the severity of outbreaks. Recreational and commercial use of reefs has also increased,
and has caused extensive damage. A widespread loss to reef biota is the reduction in fish populations from intense
overfishing. Improved understanding of ecological processes on reefs combined with concerted conservation efforts
has managed to protect some extensive areas of reef.
High Prices Bad – Environment – Pipelines

Pipelines Prone to Leaks Which Cause Catastrophe to the Environment
Gumbel 2006 (Andrew, Los Angeles News Writer, “Burst Oil Pipeline Causes “catastrophe” in Alaska”,
THE INDEPENDENT, http://www.independent.co.uk/environment/burst-oil-pipeline-causes-catastrophe-in-
alaska-469797.html, March 14, 2008)
A burst pipeline in Alaska's North Slope has caused the Arctic region's worst oil spill, spreading more
than 250,000 gallons of crude oil over an area used by caribou herds and prompting environmentalists
again to question the Bush administration's drive for more oil exploration there. The leak was first
spotted by a British Petroleum worker 11 days ago, and was reported to have been plugged a few days later.
Initial hopes expressed by BP that the spill was limited to a few tens of thousands of gallons proved to be
over-optimistic. Alaska's Department of Environmental Conservation has steadily increased its estimate of
the size of the spill, the latest estimate putting it at around 265,000 gallons. The leak, whose cause is
unknown, occurred in a remote part of the most sparsely populated state in the United States, and it remains
to be seen what damage, if any, it has done to ecosystems. It does, however, give grist to groups who have
challenged Washington's assertion that oil can be prospected and shipped while leaving only the gentlest of
"footprints" on the landscape. "This historic oil spill is a catastrophe for the environment," Natalie
Brandon, of the Alaska Wilderness League, said in a statement. "Tone-deaf politicians in Congress should
now stop trying to push for more drilling through sneaky manoeuvres ... The fact that the oil spill occurred
in a caribou crossing area in Prudhoe Bay is a painful reminder of the reality of unchecked oil and gas
development across Alaska's North Slope." The biggest battle has been over the fate of the Arctic National
Wildlife Refuge, also on the North Slope, which the White House wants to open up. The initiative,
championed from the moment the Bush administration took office in 2001, has been consistently blocked by
Congress but is periodically revived. A second battle, meanwhile, is taking place in a previously untouched
corner of the National Petroleum Reserve on the North Slope. The Bush administration has allowed oil
companies to prospect for oil and gas in an area covering 389,000 acres. Environmental groups have
responded with a federal lawsuit, filed last Friday, in which they contend that the Department of the Interior
has violated the Endangered Species Act and other laws in an area noted for its flocks of migratory geese. It
is not just environmentalists who oppose the administration's plans. Several prominent energy analysts, as
well as Washington politicians, argue that the likely yield in unexplored areas of the North Slope is not large
enough to justify the intrusion. Alaskan politicians and industry lobby groups are heavily in favour of
expanding exploration as it would bring jobs and other benefits to the state economy. The Bush
administration, meanwhile, argues that further domestic exploration is essential if the United States wants to
decrease its dependence on oil and gas from the Middle East. Accidents and leaks have periodically
occurred on the North Slope, and along the trans-Alaska pipeline that takes crude from Prudhoe Bay
across two mountain ranges to the port of Valdez on the shores of the North Pacific. Saboteurs blew up a
section of pipeline shortly after it opened in the 1970s, starting a major spillage. A hunter accidentally fired
into the pipeline five years ago, causing $7m (£3.6m) worth of damage.
Pipelines Are at Great Risk of Leakage

Friends of the Earth International 2005 (“Baku-Ceyhan Oil Pipeline- Risky Oil for the Rich”, Friends of
the Earth International, http://www.foei.org/en/publications/link/mining/38case.html, No Date)
The danger of oil leakage from the pipeline is significant, through earthquake as well as possible
sabotage actions. In Turkey, the pipeline would traverse major fault lines, six watersheds, and two sites
protected under national legislation. In Azerbaijan, the pipeline would cross 21 major rivers, impact a
sensitive desert ecosystem and traverse unstable land with high seismic activity. In Georgia, there are six
major river crossings in areas with unstable land prone to landslides. Campaigners are also concerned
about the pipeline’s contribution to global climate change. The oil transported along the pipeline, once
burned, will contribute 185 million tons of carbon dioxide to the atmosphere every year. The pipeline
will pass through politically unstable regions, including the Armenian enclave in Azerbaijan and Kurdish
areas in Turkey. The presence of oil and money is very likely to increase conflict and human rights
violations in these areas. It is already clear that local people’s opinions are hardly being considered. In
Turkey 30,000 people live along the route of the pipeline. These people have not been properly consulted,
despite the World Bank’s special guidelines for this purpose. Many of these inhabitants are economically
dependent on their land, and compensation for its use by the consortium has been non-existent or too low. In
some cases, construction started before the compensation was granted.
Impact- Pipelines
Pipelines Contribute to Global Climate Change
The danger of oil leakage from the pipeline is significant, through earthquake as well as possible sabotage
actions. In Turkey, the pipeline would traverse major fault lines, six watersheds, and two sites protected
under national legislation. In Azerbaijan, the pipeline would cross 21 major rivers, impact a sensitive desert
ecosystem and traverse unstable land with high seismic activity. In Georgia, there are six major river
crossings in areas with unstable land prone to landslides. Campaigners are also concerned about the
pipeline’s contribution to global climate change. The oil transported along the pipeline, once burned,
will contribute 185 million tons of carbon dioxide to the atmosphere every year. The pipeline will pass
through politically unstable regions, including the Armenian enclave in Azerbaijan and Kurdish areas in
Turkey. The presence of oil and money is very likely to increase conflict and human rights violations in these
areas. It is already clear that local people’s opinions are hardly being considered. In Turkey 30,000 people
live along the route of the pipeline. These people have not been properly consulted, despite the World Bank’s
special guidelines for this purpose. Many of these inhabitants are economically dependent on their land, and
compensation for its use by the consortium has been non-existent or too low. In some cases, construction
started before the compensation was granted. Clearly, spending public and private money on projects like the
Baku-Tblisi-Ceyhan oil pipeline will hardly benefit local people, and will only increase ‘the paradox of
plenty’.
Pipelines Fuel Human Rights Violations and Increase Conflict

The danger of oil leakage from the pipeline is significant, through earthquake as well as possible sabotage
actions. In Turkey, the pipeline would traverse major fault lines, six watersheds, and two sites protected
under national legislation. In Azerbaijan, the pipeline would cross 21 major rivers, impact a sensitive desert
ecosystem and traverse unstable land with high seismic activity. In Georgia, there are six major river
crossings in areas with unstable land prone to landslides. Campaigners are also concerned about the
pipeline’s contribution to global climate change. The oil transported along the pipeline, once burned, will
contribute 185 million tons of carbon dioxide to the atmosphere every year. The pipeline will pass through
politically unstable regions, including the Armenian enclave in Azerbaijan and Kurdish areas in Turkey.
The presence of oil and money is very likely to increase conflict and human rights violations in these
areas. It is already clear that local people’s opinions are hardly being considered. In Turkey 30,000
people live along the route of the pipeline. These people have not been properly consulted, despite the
World Bank’s special guidelines for this purpose. Many of these inhabitants are economically dependent
on their land, and compensation for its use by the consortium has been non-existent or too low. In some
cases, construction started before the compensation was granted. Clearly, spending public and private
money on projects like the Baku-Tblisi-Ceyhan oil pipeline will hardly benefit local people, and will
only increase ‘the paradox of plenty’.
Impact- Pipelines
Pipelines Provide Great Risk to the Environment
Rainforest Action Network 2008 (“Ecuador: New Oil Pipeline Threatens Fragile Ecosystems and
Communities From Amazon Rainforest to Pacific Coast”, Rainforestweb.org,
http://www.rainforestweb.org/pages/ocp.php, June 28, 2008)
The pipeline would transport heavy crude from the country's eastern rainforest region to the Pacific Coast,
placing fragile ecosystems and dozens of communities along the 300-mile route in jeopardy.
The pipeline route chosen by the OCP consortium affects 11 protected areas, and cuts through the middle
of the Mindo Nambillo Cloudforest Reserve and the surrounding ecologically sensitive forests. This
area is home to more than 450 species of birds--46 of which are threatened by extinction --and has been
designated the first "Important Bird Area"of South America by Birdlife International. The pipeline also
represents a threat to the area's burgeoning ecotourism industry, which is expected to bring in $600 million
over the next 20 years. In order to fill the new pipeline, Ecuador would have to double its current oil
production, setting off an unprecedented boom in new oil exploration that could lead to the irreversible
loss and destruction of some the country's last remaining old growth rainforest and territories of
isolated indigenous peoples. Hundreds of new oil wells and flow lines would be built from existing oil
concessions along with facilities necessary to process and refine the heavy crude for transport across the
country.
Oil Pipelines Threaten Local Communities

Rainforest Action Network 2008 (“Ecuador: New Oil Pipeline Threatens Fragile Ecosystems and
Communities From Amazon Rainforest to Pacific Coast”, Rainforestweb.org,
http://www.rainforestweb.org/pages/ocp.php, June 28, 2008)
These activities threaten protected areas such as Yasuni National Park, Cuyabeno Wildlife Reserve, and
the Limoncocha and Panacocha Biological Reserves. This project would also fuel the search for additional oil
reserves covering 2.4 million hectares of frontier forest, the majority of which falls on the ancestral territories
of Achuar, Shuar, Huaorani, Quichua, Shiwiar, and Zapara indigenous communities. Many of these
communities have vowed to never permit oil development on their land. A dramatic increase in oil
production of this magnitude also threatens communities who live along side the country's principle oil
refineries in the coastal province of Esmeraldas. These communities, the majority of which are Afro-
Ecuadorian, have some of the highest rates of cancers, respiratory, skin, and stomach ailments in all of
Ecuador as a result of constant air, water, and soil contamination from the adjacent refineries.
Prominent Ecuadorian and international environmental and human rights organizations are calling for the
cancellation of the OCP project and a moratorium on all new oil exploration in the country's Amazon region.
CONAIE, the powerful national indigenous organization whose nonviolent uprisings have led to the ousting
of two presidents in the last five years, is joining environmental groups and local communities in filing for a
legal injunction in the coming weeks to void the OCP contract with the government. The Ecuadorian
government, the OCP consortium, and the financiers have failed to fully assess or disclose the long-term
impacts of the new OCP pipeline on ecologically and culturally sensitive areas in the Amazon region or the
coast. The government is attempting to silence all public debate on these concerns by closing the public
review process a mere three weeks after the release of the 1,500-page Environmental Impact Assessment and
pushing ahead with the licensing of the project by early June. Construction is set to begin in six weeks.
Ecuador's oil exports are primarily destined for consumption in the United States, particularly in California.
Not only does this pipeline threaten fragile areas and local communities, it further increases our
reliance on oil - the main fossil fuel responsible for climate change. We must call on the involved
financial institutions to stop bankrolling destruction of the Amazon and environmental injustice and urge
them to invest in renewable energy alternatives not Amazon crude!
Impact- Pipelines
Higher Oil Prices Lead to a an Increase in Oil Pipelines
Wikinvest 2008 (“Oil Prices”, Wikinvest: investing, simplified,
http://www.wikinvest.com/concept/Oil_Prices, June 25, 2008)
Smaller companies highly leveraged on oil include Parker Drilling Company (PKD)--the major players are
often diversified outside of oilfield services.
Oil and Gas Pipeline companies build supply pipelines and stand to gain from increased construction
when oil prices are high. They include Williams Companies (WMB) and Enbridge.
Industrial gases companies such as Praxair (PX) will benefit because hydrogen, which they sell, is necessary
for the extraction of heavy and non-conventional oil (i.e. tar sands, shale oil), and production of these types
of oil increases as prices rise.
***Russian Oil Disad Answers***

N-UQ – Russian Econ (1/3)

Next ten years will be difficult for Russian economy
Pravda June 25, 2008
http://newsfromrussia.com/russia/economics/25-06-2008/105590-russian_economy-0
Russia’s Finance Minister Aleksei Kudrin stated at a recent press conference in Moscow that the upcoming
ten years would be quite a difficult period for the national economy. The reduction of crude output and the
unstable pension system will create serious problems in the Russian economy, the minister said. Aleksei Kudrin stated
that the extraction of black gold increases by two percent in the country during the economic growth of eight percent. The share of the oil and gas
sector in the nation’s GDP, which currently makes up 21 percent, will drop to 14.5 percent. “The share of the oil and gas sector in
the GDP and the maintenance of oil and gas revenues, which contribute greatly to our current living,
decreases every year,” the minister said. “We will have to start spending the reserve fund, and we will continue spending it till 2022.
The national pension system will experience instability during these ten years. They will be the most difficult years for the
Russian economy,” the minister said. The demographic situation will become one of the most serious challenges for the Russian economy,
the minister added. The number of citizens involved in the economy will reduce by one million people, which will affect the pension system.
Aleksei Kudrin said that the government will most likely have to make complicated and unpopular decisions to solve the problem. The head of
the Finance Ministry said Russian companies would suffer from the reduction of their revenues during the upcoming three years, which in its turn
will affect income tax funds.
Russia econ , slow GDP proves

http://in.reuters.com/article/asiaCompanyAndMarkets/idINL2423701220080624
Russian economic growth slowed to 7.7 percent in May from 8.4 percent in April and stood at 8.4 percent in January-May,
Russian news agencies quoted Deputy Economy Minister Andrei Klepach as saying on Tuesday. "There was some gross domestic
product (GDP) growth slowdown due to seasonal factors," Klepach was quoted as saying. The month had fewer
working days than May 2007 due to public holidays. Klepach said it was too early to judge whether the slowdown was a
trend, adding that this would be clear after half-year figures. The Economy Ministry expects the GDP to expand by 7.6
percent in 2008 compared with 8.1 percent growth in 2007. Klepach oversees long-term economic forecasting in the ministry, which will publish
the official estimate in the state of economy report later this week. Russia's statistics office releases GDP data on a quarterly basis. Russian
officials are locked in a debate whether the $1.7 trillion economy is overheated and is heading for a hard landing -- an abrupt slowdown -- which
typically follows a period of rapid growth.
Russian econ slowing, declining oil prices prove

The Messenger June 10, 2008
http://www.messenger.com.ge/issues/1623_june_10_2008/1623_econ_one.html
Russia’s economic growth looks set to slow over the next decade, Goldman Sachs chief economist Jim O’Neill said over the
weekend. “Oil prices will definitely not do what they’ve done the past 10 years, and that’s not going to be great
news for Russia,” Bloomberg quoted him as saying at the St Petersburg International Economic Forum on June 8. Russia’s economy is currently the tenth
biggest in the world and it grew by 8.1 percent last year, according to Reuters. However O’Neill predicts that Russian GDP will grow 3.3 percent annually between
2010 and 2015 before dropping off to 2.9 percent for the five years after 2015.
Russian econ is overheated, inflation is 

Sergei Balashov June 9, 2008
http://www.russiaprofile.org/page.php?pageid=Business&articleid=a1213032947
According to the latest reports of the International Monetary Fund (IMF) and the World Bank,
Russia
might have to do more than establish the funds to keep inflation in check and
balance the economy. While
the IMF warned against overheating of the economy, the World Bank issued a report stating that
the
economy is already overheated, as the GDP growth rate has amounted to eight percent, which is
higher than
its long term potential,with the producing capacities outmatched by the growing
aggregate demand
spurring inflation and creating a risk of further growth below the estimated
potential. The report states that
following eight years of decline, consumer price inflation accelerated to 11.9 percent in 2007, and is
projected to reach anywhere from 12 to 14 percent in 2008, according to World Bank’s lead
economist for
Russia Zeljko Bogetic.

Russian econ growth is slowing, oil prices set to fall
The Financial Express June 8, 2008
http://www.financialexpress.com/news/Russia-economic-growth-to-slow-says-Goldmans-ONeill/320310/2
Jun 8 Goldman Sachs Group Inc. Chief Economist Jim O’Neill said Russia’s economic expansion will slow in the decade
from 2010 as gains in the oil price decelerate, a prediction that clashes with the government’s forecasts. Russia’s gross domestic product will
likely grow 3.3% a year from 2010 to 2015 and 2.9% a year during the following five years, making the Economy the world’s eighth biggest by 2020, up from 10th
`Òil prices will definitely not
now, O’Neill said. The country’s GDP will total $3 trillion in 2020, doubling its share to 4% of the world total, he said.
do what they’ve done the past 10 years, and that’s not going to be great news for Russia,’’ O’Neill said in an interview
today at the St. Petersburg International Economic Forum. First Deputy Prime Minister Igor Shuvalov said in St. Petersburg today that Russia’s Economy will become
the world’s sixth biggest by the end of this year. ``Russia has become a fully fledged member of the club of the biggest economies of the world,’’ he said. The
Economy expanded 8.1% last year. Russia is already the world’s seventh-biggest Economy by purchasing power parity, Prime Minister Vladimir Putin said on May 8.
Purchasing power parity accounts for differences in the exchange rates of national currencies. Unadjusted, Russia’s Economy is the world’s 10th biggest. It
is
``dangerous’’ to believe that the oil price will rise as quickly in the next decade as it has in this one, O’Neill
said, adding that Russia’s growth won’t slow as much if the government bolsters property rights and the rule of law. O’Neill coined the BRIC acronym in 2001 to
describe the growth potential of Brazil, Russia, India and China, whose economies are expected to surpass those of most developed countries.
Russian econ growth slowing, shrinking population proves

http://www.reuters.com/article/GCA-Russia/idUSL0824150820080608?pageNumber=1&virtualBrandChannel=0
ST PETERSBURG, Russia (Reuters) - A senior Russian official tried on Sunday to allay foreign investors' worries
about lawlessness and growing state control, pledging to reduce Moscow's role in the economy and to
respect private property. Foreign investors listed the weak rule of law, a lack of independent courts and corruption as their most serious concerns
about Russia in a survey published last week by a government-run investment advisory council. "We have to repeat again and again -- protection of property
rights is the top and most important task of the state," First Deputy Prime Minister Igor Shuvalov told Russia's most important annual business conference in a
keynote speech. Several big Western multinationals have suffered legal challenges to aspects of their Russian operations, including BP's Russian venture TNK-
BP, Telenor's partly-owned cellphone operator Vimpelcom and French retailer Auchan. Promising to reduce the state's role in the economy, Shuvalov said Prime
Minister Vladimir Putin had approved a decision to cut the number of strategic enterprises controlled by the state. During Putin's 2000-2008 presidency, Russia's
government returned large chunks of the oil industry to state control and also took over some banks, a titanium maker and a car company. "We don't have a goal
of increasing state involvement (in the economy) nor especially a goal of increasing the role of bureaucracy," Shuvalov told the St Petersburg Economic Forum.
Shuvalov, one of the leading liberals in Putin's administration, said the government would reform the way it ran Russia's big state-controlled corporations by
rotating their boards of directors, replacing bureaucrats with professionals. "We have serious plans in this regard," he said. "We will form them in a way that will
make them absolutely transparent." SHRINKING POPULATION Recent events show how far there is to go. Russia's top state-controlled oil company Rosneft>
last week renewed its board, re-appointing Deputy Prime Minster Igor Sechin -- a close Putin ally -- as chairman and Kremlin chief of staff Sergei Naryshkin as
deputy chairman. Economists
say Russia's shrinking population is a brake on growth and Shuvalov said the
country had to become more attractive to live in, with better education and health services and more
modern skills in its workforce. Shuvalov repeated an aspiration set by Putin that Russia was set to become the world's sixth largest economy this
year if figures were adjusted to equalize purchasing power. In absolute terms, Russia is the world's 11th biggest economy, just behind Brazil, according to World
Bank figures for 2006, the latest available on its website.
Jim O'Neill, the Goldman Sachs economist famous for predicting five years ago
said the main
that Brazil, Russia, India and China would join the world's top economies by 2050 and giving them the collective name of "BRICs",
brake on Russia's growth to 2020 would be its declining population. "Having a lot of people working is
very important (for economic growth) and Russia has not got the same advantage as other BRICs," O'Neill told the
forum.
Russian econ is overheating, rising inflation and unemployment prove

Gulf Times June 3, 2008
http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=222136&version=1&template_id=48&parent_id=28
MOSCOW: The cushion of soaring oil prices has helped Russia weather global financial instability but signs of
overheating are multiplying, the IMF and World Bank said in separate reports here yesterday. While major Western powers are reeling from a global
credit crunch, Russia’s economy is expected to see stellar growth of almost eight% in 2008 on high commodity prices and a domestic credit boom, the International
Monetary Fund said in its report. But with inflation soaring, the risk of overheating cannot be ignored, it said. The rate of price growth has almost doubled since early
2007 and inflation
is likely to be running at 14% by the end of the year, almost four times the current eurozone
level, the IMF said. “The near-doubling of inflation since last year goes well beyond what can be explained by
global increases in food and energy prices,” said Poul Thomsen, head of the IMF mission in Russia. Making similar warnings, the World Bank
said the Russian government was partly to blame for inflation through its high spending and ineffective attempts to control rising prices through limiting exports. A
particular danger is the growing price of food, which threatens to push 1.7mn more Russians into poverty and make 6mn more vulnerable, the World Bank report said.
Other signs that the economy may be overheating include unemployment at 6.1%, its lowest level since 1994,
the World Bank said. Wages are growing more quickly than productivity, threatening the competitiveness of
exports already suffering from the appreciation of the ruble, warned Zeljko Bogetic, lead economist for the World Bank in Russia. In
2007, real or inflation-adjusted wage growth of over 16% was more than triple the gain in labour productivity, he said.

Russia econ growth slowing, inflation and decreasing value of ruble prove
Bloomberg June 2, 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=axKBXVsNZZzM&refer=home
June 2 (Bloomberg) -- Russian inflation may accelerate to 14 percent this year and the risk of the economy
overheating is mounting, an International Monetary Fund official said. Consumer prices rose an annual 14.3 percent in April, a five- year high, stoked by
global food price increases and rising domestic wages. The economy grew 8 percent in the first quarter, the Economy Ministry said in a preliminary estimate on April
17. Gross domestic product rose 8.1 percent for all of 2007. ``The
risk is that inflation gradually increases to such a level that it
requires a sharp tightening of monetary policy that could cause a slowdown in growth,'' Poul Thomsen, head of the IMF
mission in Russia, told reporters in Moscow today. The risk of the economy `òverheating'' is increasing, he said. The economy may expand 7.8 percent this year
because oil prices will remain high and the IMF doesn't expect any ``serious impact'' on Russia from global financial-market turmoil, Thomsen said. In 2007 inflation
picked up to 11.9 percent, overshooting the government's target by more than three percentage points. `Ìf demand grows by 15 percent in real terms in an economy
with potential growth of around 7 percent, you are rapidly using up what spare capacity is available out there and you will see growth of inflationary pressures,'' he
The government should re-focus monetary policy on controlling inflation by increasing the
said. Increasing Risk
flexibility of the ruble's exchange rate, Thomsen said. Any delay may hurt growth, he said.
Russian econ growth  and oil production 

The Christian Science Monitor May 28, 2008
https://www.lexisnexis.com:443/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T39617
03075&format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T3961695499&cisb=22_T39617
03049&treeMax=true&treeWidth=0&csi=7945&docNo=1
Russian oil profits, taxed by the state, have been accumulating in a special 'stabilization fund' that now totals about $130 billion. Earlier this year the government
put another $32 billion into a sovereign wealth fund that is expected to begin investing in Russian infrastructure and social welfare schemes. "Russia's
economy so far can't absorb the oil cash that's coming in. That, not increasing oil output, is our biggest
worry," says Sergei Glaziev, head of the National Institute for Development, a Moscow think tank. "We urgently need to
diversify our economy away from this dependence on natural resources." Others say Russia's gas-and-oil sector can continue to grow, but only if there are
massive new investments and critical reforms to an industry that under Putin became dominated by two state-owned behemoths, Gazprom and Rosneft. Both
companies have accumulated huge debt in an ongoing campaign to take over formerly private assets that have returned nearly half of Russian oil and gas reserves
to state control in recent years. "Ten years ago the bulk of our oil resources were held by private companies, and growth rates were very high," says Michalkova.
"Growth rates have become sluggish for complex reasons lately, but political interference and battles over ownership have not
been helpful." Major investments will be needed to eke out further production from the largely exhausted
Soviet-era oil fields of western Siberia, experts say. "Production costs have more than doubled in the past six years, and the current tax regime makes
additional output at older fields unviable," says Valery Nesterov, an energy expert with Troika Dialog. Even if new finds are made in Russia's uncharted east, they
are likely to be much smaller, more remote, and difficult to access. "In the early '80s a typical new oil field held reserves of up to 50 million tons, but today a
company celebrates if it finds a field with 3 million tons," says Mikhail Krutikhin, an analyst with Russian Energy, a Moscow-based consultancy. "Therefore we
need more small oil companies, which are best for operating small fields. But Russia has a few giant companies, whose fixed costs and attitude are all wrong.
Russia's new president, Mr. Medvedev, has talked about a need to encourage small business, but Krutikhin is skeptical given Medvedev's background as former
chairman of Gazprom. "To reinvigorate our oil and gas industry, Russia needs dramatic tax reform, antitrust measures, and strong support for small enterprises,"
says Mr. Krutikhin. "But Medvedev comes from Gazprom, which is the biggest enemy of small business in Russia, so I really don't have any high expectations."
Despite good indications, Russia’s econ is failing

Newsweek May 7, 2008
http://www.newsweek.com/id/135877
On paper, Russia's basic economic indicators appear quite healthy: growth has averaged 7.5 per year for the last eight years, the country's massive debts have been
replaced with a $150 billion stabilization fund, and its trade balance shows a healthy surplus of $72.5 billion last year. The Russian stock market's RTS index has
grown by a staggering 1,922 percent between 2000 and 2007. But in truth, the Russian economy as a whole is an edifice with feet of
clay. The bling and glitter of the capital obscures a harsh reality: the architecture of Russia's economy is no more solid than that of an inflatable children's castle at
fairground, with energy and commodity prices the wind that keeps it inflated. Yes, the Russian economy has been growing fast. But little of that growth has
spilled over into the real Russian economy. Rather, the boom has, in many ways, held back Russia's non-
commodities economy from growing: rampant inflation, spiraling real-estate prices and higher labor costs,
bureaucratic corruption, expensive credit and bad governance have combined to stifle the competitiveness of
many Russian businesses. "Russia's macroeconomic performance has been stellar," says economic analyst Anders Aslund. "But Russia's oil surplus is so
huge that it hides flaws in economic policy; the longer oil prices remain high, the worse economic policy will become. Booms breed complacency and corruption."
N-UQ – Production Down

Nationalism and high taxes have decreased Russia’s oil production
Macalister 08 (Terry, The Guardian [http://www.guardian.co.uk/business/2008/jun/12/bp.oil] Production decline
does not mean oil is running out, says BP/ June 12, 2008)
Some of the difficulties of access were in nations such as Venezuela, Russia and in the Middle East that
have adopted clear policies of resource nationalism where the state has grabbed assets from
independent oil companies. However, Hayward also noted that 92% of the US is off limits - for
environmental reasons - and he said the Arctic needed opening up. Production volumes had been falling in
Russia due to a tax system that means the vast bulk of the revenues has gone to the Kremlin since the
price of oil rose above $30 a barrel.
Russia’s physical oil supply can’t keep up with demand
Weir 08 (Fred, The Christian Science Monitor [http://www.csmonitor.com/2008/0528/p01s04-wosc.html?page=1]

Has Russian Oil Output Peaked?/ May 28, 2008)
The Kremlin often touts Russia's image as an "energy superpower," but now the country's oil
production is declining. Some say Russia may have already reached peak oil output. Underscoring the urgency of the issue, Prime Minister
Vladimir Putin's new cabinet made its first order of business on Monday the approval of a package of measures to relieve the oil-production crisis. "It's a
good first step," says Natalia Milchakova, an oil and gas analyst for Otkritiye, a Moscow-based brokerage firm. But she adds that "rapidly
slowing" oil production, which was growing by more than 10 percent five years ago, isn't "something that
can be quickly fixed with political declarations." As the world's second-largest oil exporter, Russia joins a growing number of top
oil suppliers wrestling with how to address declining or peaking production. Like Venezuela and Mexico, Russia is heavily dependent on oil, which
accounts for more than two-thirds of government revenue and 30 percent of the country's gross domestic product. Now, Moscow
is trying to
remedy a situation caused in part by outdated technology, heavy taxation of oil profits, and lack of
investment in oil infrastructure. The Presidium of the Cabinet, as it is officially known, in its inaugural
meeting Monday approved tax holidays of up to 15 years for Russian companies that open new oil fields
and proposed raising the threshold at which taxation begins from the current $9 per barrel to $15. Oil
companies welcomed the measures, but experts say that after almost two decades of post-Soviet
neglect, which have seen little new exploration, it may be too little, too late. After rising steadily for
several years to a post-Soviet high of 9.9 million barrels per day (bpd) in October, Russian oil production
fell by 0.3 percent in the first four months of this year, while exports fell 3.3 percent – the first Putin-era drop.
Russia's proven oil reserves are a state secret, but the Oil & Gas Journal, a US-based industry publication, estimates it has about 60 billion barrels – the
world's eighth largest – which would last for 17 years at current production rates. Energy Minister Viktor Khristenko recently admitted the decline, but
"The
suggested it might be overcome by fresh discoveries in underexplored eastern Siberia or in new Arctic territories recently claimed by Russia.
output level we have today is a plateau, or stagnation," he said. But Leonid Fedun, vice president of Russia's largest private oil
company LUKoil, went one step further in an interview with the Financial Times last month. "Russian oil production has peaked and
may never return to current levels," he said. That poses problems for Russia, which has talked of expanding beyond its main oil market –
Europe – to China, Japan, and the US. In 2006, then-President Putin approved construction of an $11 billion pipeline across Siberia to the Pacific Ocean to
oil analysts
carry eastward exports. Putin and his successor, Dmitri Medvedev, have insisted Russia can meet demand by increasing output but
around the globe are pessimistic that oil supplies can meet rising consumption in the coming decade.
Production Declines inevitable

Bernama, 06/11/2008 (“Expert: Oil industry at peak production,”
http://biz.thestar.com.my/news/story.asp?file=/2008/6/11/business/21515281&sec=business)
“New discoveries are getting much lower. We have climbed high on the ‘oil leader’ and yet we must descend
one way or another,” he said in his keynote address at the 13th Asia Oil and Gas Conference 2008 here. “It may be
too late for a gentle descent, but there may still be time to build a thick crash mat to cushion the fall.” Aleklett, also
a leader of the Global Energy Systems Research Group and Uppsala Hydrocarbon Depletion Study Group, said
many oil-producing countries, including Russia, had already passed their peak, suggesting that the world’s
peak production was now imminent. “The demand for oil from countries that are importers is forecast to increase
from current import levels of 50 million barrels per day to 80 million barrels,” he said. “Saudi Arabia, Russia and
Norway, today’s largest oil exporters, will experience a decline in their export volumes of the order of four
million to six million barrels per day by 2030.” Hence, Aleklett said, the projected shortfall could not be offset
by exports from other region.
Scholars Lab File Title
N-UQ – Investment Down (1/4)

Re-nationalization decreases investment
Aron 7 (Leon- American Enterprise Institute, The American [http://www.american.com/archive/2007/january-
february-magazine-contents/russia2019s-oil-woes/] Russia’s Oil Woes/ January 2007)
By choosing re-centralization and re-nationalization over liberal reforms in energy markets, and
opting for state control over direct foreign investment, Russia may stop itself from raising enough
capital to sustain the current level of energy production and transportation, much less to expand it.
“Energy superpower” is likely to become an even more distant dream than it is today.
US Investment low
However, U.S. suppliers of oil and gas field equipment have established a modest beachhead in Russia.
U.S. exports of oil field machinery and equipment accounted for 9% of U.S. all goods exports to Russia
in the first 10 months of 2005, one of the largest export categories. As noted earlier, potential growth of
both oil and natural gas production in Russia is limited by the lack of full introduction of the most
modern western oil and gas exploration, development, and production technology. Similar to U.S. trade
with Russia, U.S. investments there, especially direct investments, have increased since the dissolution of
the Soviet Union, but the levels are far below their expected potential. Even so, as of the end of 2003, the
United States was Russia’s second largest source of foreign direct investment, largely concentrated in energy,
communications, engineering, and transportation.22

Russia’s economic policies and governmental regulations make foreign investment
impossible
In this context, however, Russian economic policies and regulations have been a source of concerns. The
United States and the U.S. business community have asserted that structural problems and inefficient
government regulations and policies have been a major cause of the low levels of trade and investment
with the United States. While they consider the climate to be improving, potential investors complain that
the climate for investment in Russia remains inhospitable. They point to lack of effective intellectual
property rights protection, burdensome tax laws, jurisdictional conflicts among Russian federal,
regional and local governments, inefficient and corrupt government bureaucracy, and the lack of a
market-friendly commercial code as impediments to trade and foreign investments. And, more
specifically, the forced breakup of Yukos has clouded prospects for private investment.
Russia’s environmental regulations discourage foreign investment

Aron 07 (Leon- resident scholar and director of Russian studies at the American Enterprise Institute, The
American [http://www.american.com/archive/2007/january-february-magazine-contents/russia2019s-oil-woes/]
Russia’s Oil Woes/ January 2007)
Moreover, Russia has begun to pressure the existing foreign operators of oil and gas fields into
renegotiating their agreements. Last September, the authorities were suddenly so concerned about
environmental and ecological “violations” that they threatened to halt the construction, led by Royal
Dutch Shell, of the world’s biggest liquefied natural gas plant on Sakhalin Island in the Far East. Known as
“Sakhalin-2,” the project is the largest direct foreign investment in Russia, estimated to cost Shell and its
Japanese partners $20 billion. Projected annual output is 70 million barrels. At the same time, pressure was
also brought to bear on ExxonMobil’s offshore Sakhalin production (“Sakhalin-1”) just as it was about
to start shipping. That project was expected to cost $17 billion and produce 88 million barrels of oil
annually. There is no Russian participation in Sakhalin-2, while Rosneft has only a 20 percent stake in
Sakhalin-1. Now that oil and gas are so much more expensive than when the original deals were struck, the
Kremlin wants a larger share of profits—or all of them. It is now widely assumed that the government will
pull the license of Russia’s second-largest oil company, half-owned by the British, unless the three
principal Russian owners agree to sell their shares to Gazprom. That firm, TNK-BP, is developing the
Kovykta, a giant gas field in eastern Siberia. The latest addition to the Kremlin’s hit list is Russia’s largest
remaining private company, Lukoil, one-fifth of which is owned by ConocoPhillips. The company, which
pumps 18 percent of Russia’s daily production, has been charged by the Ministry of Natural Resources with
unspecified “violations” in the development of oil fields and is threatened with the recall of almost two dozen
licenses. These moves are bound to make foreign direct investors think twice before going into Russia—
and if last July’s float of Rosneft’s shares on the London Stock Exchange is an indicator, harvesting stock
markets might not work either. Intoxicated as they were with high oil prices, investors’ response to the
largest initial public offering in Russian history (and the sixth-biggest in the world)[8] was less enthusias-
tic than Moscow had hoped for. The interest from international institutional investors, such as insurance
companies, was weaker than an offering this large would normally produce.[9] The three biggest
accounts belonged to the entities clearly seeking to refurbish their Kremlin loyalty credentials: BP (10
percent of the offering), the Malaysian state oil company Petronas (9 percent), and the China National
Petroleum Corporation (4 percent). The offering produced half the revenues expected.

Geographical issues and lack of profit scare foreign investors
Banerjee and Tavernise 02 (Neela and Sabrina, The New York Times
[http://query.nytimes.com/gst/fullpage.html?res=9406E3DE1339F937A15752C1A9649C8B63&sec=&spon=&page
wanted=3] Why U.S. Oil Companies and Russian Resources Don't Mix/ November 14, 2002)
But the risks of going into such areas are enormous, and the required investment is huge. Many
reservoirs are in places that are icebound much of the year, like the planned Northern Territories Project
in the Russian northwest Arctic, which holds an estimated 4.27 billion barrels of oil, as well as the
Verkhnechonsk, Talakan and Yurubchen reservoirs in eastern Siberia. Oil companies going into new zones
would have to build practically all the facilities needed. Oil from northern Caspian Sea fields, for instance,
would need to be moved out by pipelines that are yet to be built. Then there are the perennial headaches
of pumping oil in Russia. The pipeline system is controlled by a government agency, Transneft, that
limits exports to 30 percent of production. The Russians ship much oil by rail, so transportation costs are
high. Any remaining oil is sold at home, at prices far below world levels -- a condition that would
severely limit a Western company's return on investment. Russia is also notorious for changing the
laws for Westerners in the middle of the game, or blocking projects, creating a level of uncertainty that
makes foreigners nervous.
Hostile environment and infrastructure costs discourage investment in Russia

Today, then, Russia is a key focus for investment by the international oil and gas industry. But even
without taking into account its political environment, it is a very challenging place to do business, not
least because of its vast size and harsh environment. Siberia regularly records the lowest temperatures
of any place on the planet, Antarctica not excluded. Even in summer it is scarcely a welcoming
environment. Supposing that hydrocarbons can be located, developed and produced in such a hostile
environment, they need to be transported thousands of kilometers to consumers. Offshore exploration
and production is still in relatively early stages, and operations in the Barents Sea or offshore Sakhalin
are regularly hampered by storms and seriously restricted for up to half the year because of thick ice
cover. While infrastructure may be well-developed in the mature producing regions of western Siberia and
the Volga- Urals basin, in the promising areas of Sakhalin, the Barents Sea and eastern Siberia, only the
largest prospects are economic because of the huge cost of developing infrastructure from scratch.
New legislation discourages foreign investors in Russia’s oil sector

The Associated Press 08 ([http://abcnews.go.com/Business/IndustryInfo/wireStory?id=4571950] Russian
Duma OKs Limiting Foreign Invesment/ April 2, 2008)
Russia's lower house of parliament on Wednesday backed restrictions limiting foreign investment in
key sectors such as oil and gas, aerospace and mass media. The legislation, which also would increase the
powers of Russian security services in business transactions, has raised concern among foreign investors.
The State Duma passed the bill in its final reading 384-55. It now goes to the upper house, the Federation
Council, where passage is likely, and to the president for his signature. The legislation stipulates that
private foreign companies would need authorization to buy more than 50 percent of a Russian
company in one of 42 "strategic" sectors. A commission made up of Russian economic and security officials
would review such deals.

Inflation in Russia discourages investment
Mityayev 08 (Oleg, Russian News & Information Agency [http://en.rian.ru/analysis/20080507/106805663.html]
President Medvedev's economic challenges/ May 7, 2008)
Russia's new president, Dmitry Medvedev, has inherited many economic problems, such as Russia's
dependence on raw materials, monopolies, red tape and corruption, which are spurring prices and hindering
economic development. On the other hand, he has a powerful instrument of tackling these problems, oil
prices, which have soared to $120 per barrel. But Medvedev will also have to deal with other, no less
formidable economic challenges. Russia seems to have been developing quite well despite this chronic
problem. However, the growth of prices accelerated last year and reached nearly 12% compared with
9% in 2006 and the planned 8.5% in 2007. The Russian government and Central Bank hope to stop
inflation at 10% in 2008, although it has already reached 6.3% in the first four months. Experts
predict yearend inflation at between 12% and 18%, which will discourage investment.
UQ OW’s the Link

The Uq overwhelms the link, Russia’s econ growth is too strong to be affected by quickly
falling oil prices
Asian Investor June 24, 2008
http://www.asianinvestor.net/article.aspx?CIaNID=78979
Few other markets have made it close to Russia’s level – with Korea at 11.5 times, Thailand at 12.1 times or even Malaysia at 13.2 times. Yet
Russia’s low P/E ratio is coupled with some of the most profitable corporates in “all of the emerging market
universe”, and with a return-on-equity of close to 20%, it is more attractively priced that China, India or Chile, according to
Helfer. With a new president, Dmitry Medvedev, and his predecessor Vladimir Putin staying on as prime minister, the question of political
stability has been answered, Helfer says, and "that risk is now behind us". The new government's "objective is to return Russia
into an economic superpower – and to do that well, they need to continue to grow. So growth is the key operative,” he says. In fact,
Russia’s GDP growth in real terms has accelerated and taken over Brazil, China and India this year. Other
pluses working in Russia's favour are: robust current and fiscal accounts; the lowest level of unemployment
in a decade; and steadily rising domestic consumption and investments, which have gradually overtaken the
export sector as the largest contributor to Russia’s GDP. Even if oil prices dip below $80 per barrel, which is a
highly unlikely scenario for the medium term, Russia’s fiscal account will be in no risk of a budget deficit, says Helfe
No I/L – Oil Not Key
Oil Not key to Russian Economy – Tech Market

Satinsky, 06/13/06 (Daniel, B.E.A Associates, “The Growth of Russia's IT Outsourcing
Industry: The Beginning of Russian Economic Diversification?,”
http://www.sras.org/news2.phtml?m=651)
Satinsky emphasized the importance of these nascent business leaders for Russia as a country: "The industry
is not just significant in terms of what it does, but for the interaction and practical experience working
with international markets that is creating the human capital necessary for Russia to play a role in
technology in the world. This is a laboratory where that capital is being formed." The skilled
professionals working in this industry, concluded Satinsky, are contributing to a growing middle class within
Russia and are essential for the future growth of a high tech sector in Russia: "This growth of human
capital could fuel further economic growth and help transform Russia’s role in the world economy."
Oil Not key to Russian Economy – Telecommunications

Mokhoff, 11/17/03 (Nicolas, “Russia seeks technology investment to diversify economy,”
http://www.eetimes.com/story/OEG20031117S0044)
While investment in oil and other natural resources continues to play a central role, panel sessions and
the keynote address emphasized investment in other sectors such as telecommunications and information
technology. Indeed, the conference theme, "Toward Diversification of the Russian Economy," sought to
generate investment in Russia's technology infrastructure. "Sixty percent of Russian IT companies are from
the private sector," said keynoter Leonid Reiman, Minister for Communications and IT. "This sector is
growing at from 15 to 40 percent each year. There are even three Russian telecom companies on the New
York Stock Exchange." Intel Capital invested in a Russian company for the first time this year. "We want to
help make Russia more competitive globally. It's good for Russia, for us and the world," said Steve Chase,
president of Intel Russia.
No I/L – Russian Econ Resilient

The Russian economy is resilient
M and C Buisness, April 9 8, (http://www.monstersandcritics.com/news/business/features/article_ 1398923.php
/Russia_an_island_of_stability_amid_turbulent_markets)
Moscow - Like a teenager at the wheel of his diamond encrusted Mercedes, Moscow feels invulnerable, set
to swerve past the US housing slump and slam through the global credit crunch. And today's precious
fuel prices have armed Russia's economic heavy foot. 'Nothing bad, nothing awful will happen,'
Vladimir Bragin, an analyst at Trust Bank, said blithely. 'If Russian oil prices remain relatively high, there'll
be no problem.' Russia's economy in blush is underpinned by plentiful commodities, strong growth
spurred by a consumption and investment boom and a banking system that is largely insulated from
the paucity of money that has threatened lenders in other markets. 'This is an unusual global
slowdown in the sense that it hasn't hit Russia's main export commodities,' agreed Rory MacFarquhar, a
managing director at Goldman Sachs, which 'very bullish' on commodities predicted last week that oil prices
could spike as high as 175 dollars per barrel in the long-term. But neither is Russia's economy susceptible
to collapsing as in 1998 from a sudden drop in oil prices, economists in the capital said. 'For Russia this
is all gravy. This money is all going straight into government accounts,' said MacFarquhar. Now
approaching the 10th anniversary of the financial crisis, the singe of cautiousness marking Russia's financial
authorities after watching their nation's savings vaporize in 1998 has left Russia best positioned to weather
through. The government has culled huge current account and budget surpluses from taxes on oil into
the so-called state Stabilization Fund, representing 170 billion dollars taken out of the investment cycle to
mitigate the relationship of world oil prices on Russia's growth. 'With most of this oil windfall is taxed
away and stashed away now, the effect of oil prices is not as strong as seven years ago,' said Yaroslav
Lissovolik, Deutsche Bank's chief economist in Russia. Addressing the World Economic Forum in Davos,
Finance Minister Alexei Kudrin ebulliently proclaimed Russia 'an island of stability,' perhaps teasing other
economic leaders caught out in the storm.
Russian economy resilient

Lucio Vinhas de Souza, May 16 8, Center for European Policy Studies,
(http://www.euractiv.com/en/enlargement/russia-economic-rebirth/article-172431)
This economic revival has made Russia an economic and political power and a country that can no longer
be ignored, says de Souza. Russia's economic performance after the implementation of structural
reforms remains impressive, argues de Souza, with a functioning market economy having been
established. This means the macroeconomic framework has become more robust than it was in the
1990s, he observes. Despite structural reform slowing down in certain sectors, it has not stopped altogether, the author adds. De Souza believes the resumption of
economic growth in Russia is down to the effects of economic and structural reform, as well as recent high energy prices. For him, the changing nature of the
Russian economy can mostly be seen in the way the country has withstood the financial instability
which has swept global financial markets. De Souza is suitably impressed by Russia's economic
performance since 1999 compared with similar economies from the Commonwealth of Independent States –
which gathers the former Soviet republics – both in terms of GDP and inflation.
I/L Turn – Brink Card – Both Inflation and Dutch Disease

Russia’s economy is vulnerable- runaway inflation and energy sector dependency
Moscow News June 6
(“Russia’s Roaring Economy not out of the Forest” Source: mnweekly.ru Publication date: 6/6/2008
http://www.freshplaza.com/print.asp?id=23184 accessed June 30, 2008)
The government is aware that there is a trade off between growth and inflation and therefore most of the
stabilization fund won't be spent immediately, despite some sectors needing heavy investment. Putin will
play a prominent role in the economy in his new post of Prime Minister, and perhaps there is no other person
better qualified for the task of bringing inflation down to single digits, since this was one of Putin's stated
goals as president. Investors are often discouraged by high inflation as the instability it causes makes
future profits insecure, so taming inflation is job one. In St. Petersburg, two conferences will be held on
inflation ("New challenges on the world food market" and "Energy - Global players and arbiters"). This
shows the government's priorities in these sectors, which are the primary causes of inflation in Russia. Global
Challenges and Opportunities The rising price of energy products appears extremely beneficial for
Russia's economy. The revenue from exports is already massive and this has helped fuel growth in the
last eight years. Any further increase will certainly be an opportunity but could also present serious
challenges. Russia has been accused of being dependent upon its natural resources for growth. The
World Bank and IMF claim that the energy sector makes up approximately twenty percent of GDP.
The economy is therefore vulnerable to changes in this sector, although an oil price decrease looks
unlikely, and the government has recognized the necessity of diversification.
I/L Turn – Oil Bad – Russian Dutch Disease

Dutch Disease
A) Oil Undermines Diversification
IHT, 01/24/2007 (International Herald Tribune, “Russia's oil habit keeps the economy from
diversifying,”
http://cerna.keei.re.kr/nea%5Ce_trends.nsf/ByView02/2AEDB400F9F13A73492572880021
8DDF?OpenDocument&viewname=02)
Ironically, part of the reason industry is being held back is due directly to Russia's huge energy
earnings. The flow of energy revenue into Russia has seen the ruble appreciate by some 10 percent against
the dollar over the past two years, sending up companies' ruble-denominated costs. "This means new
companies that can make new products and diversify the economy are appearing at a much slower
rate. They can't compete with imports," said Yevgeny Gavrilenkov, chief economist with the Troika Dialog
investment bank. If prices for oil and gas remain high, the prospect of dwindling reserves as a force to
diversify the economy is unlikely to bother Kremlin policy makers for some time to come. Some
economists argue there has been a structural shift to higher prices and that oil at under US$30 per barrel is a
thing of the past.
B) Diversification Key to Growth

Enskog, 02/06/2008 (Dorothee “Russia's Economy Continues Strong Growth,”
http://emagazine.credit-
suisse.com/app/article/index2.cfm?fuseaction=OpenArticlePrint&aoid=228284&lang=EN)
Russia has posted annual economic growth between 6 and 8 percent over the past five years. What are
the main drivers behind this growth? Soaring commodity prices and the rise of emerging markets like
India and China are indisputably the main growth drivers. Are such growth rates sustainable? Russia's
growth rate has the potential to remain strong if the necessary structural reforms, such as modernizing the
country's judiciary and bureaucracy, are carried out. To tackle the widespread corruption is also essential. But
the country can theoretically continue to grow even without these structural reforms, albeit at a slower pace,
thanks to its vast reserves of natural resources such as oil and gas. Has the middle class benefited from this
economic growth? Undoubtedly yes. It's unequivocal that the broad population has benefited from the past
decade's economic growth. It can however be argued that the depth and breadth of the wealth distribution has
not been as fair as it could have been. Is Russia's economic dependence on commodities such as oil and gas a
problem in the longer term? It will depend on the development of commodity prices. These have declined in
relative value over the past 100 years, but rapidly risen over the past seven years with energy prices being a
major lever. Russia's energy supply is an important asset, though a diversification of its economy would
be good to sustain a broader growth base.
I/L Turn – Oil Bad – Russian Dutch Disease – Link Xt (1/2)

Oil hurts Russian economy – Dutch Disease
Evans, 5/02/08 (Ambrose, Pritchard International Business Editor, “Russian economy
succumbs to the oil curse,”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/04/ccview104.xml)
In a good year, prices double. This is the curse of commodity wealth, the "Dutch Disease" that eats at the
competitive foundations of an economy and incubates a parasite culture. No doubt Russia's scientists,
engineers, and cyber talent, will enrich the country, but first it must overcome the toxic effects of oil at
$90 a barrel. "We can no longer afford to buy Russian equipment," said Yevgeny Ivanov, head of Polyus
Gold. "The prices here are one and a half times higher than abroad so we're having to break our rigid rule and
turn to foreign-made machinery. It is bad news for Russian firms. The commodity super-cycle is catching up
with us through higher prices. It is a disheartening picture," he said. "There's no infrastructure, no power,
no roads. Electricity costs twice what they pay in Alaska and Canada. We face a Soviet bureaucracy
passing decrees that make you weep," he said. The government has declared an infrastructure emergency.
Russia has hit the limits of durable growth on today's rickety foundations.China has built 25,000 miles of
highways since 1988, Russia a few hundred. President Vladimir Putin has ordered a $1 trillion blitz on
ports, highways, power grids, and water plants over seven years. Some 2,600 miles of road are planned each
year, starting with the St Petersburg "High-Speed Diameter" and the $3bn Helsinki Expressway. Bouygues
and Bechtel are battling for the first tender. Around $200bn is to come from state coffers: the rest from
industry and banks. Taken together, the scheme is the biggest project in the world outside China. Finance
minister Alexei Kudrin said the railways alone would need $440bn by 2030. "We are prepared to guarantee
foreign investors a high level of return," he said. Hence the pinstripe and Blackberry brigade descending on
Moscow. There were no visible tourists on my BA flight from London. Two thirds of the aircraft was
business class, a telling sign. The infrastructure edict comes late. The economy is already over-heating.
Inflation has hit 12pc, despite Soviet price controls on food. Factory gate prices are up 25pc. Yet the all-
conquering rouble rises, strapped to oil. This is double strangulation. "The government must bring down
inflation, there is no other way," said Andrew Bosomworth, head of PIMCO in Europe. "Interest rates [7pc]
are negative in real terms. It will encourage borrowing until the cows come home," he said. Car sales rose
67pc last year to $53bn, imported Audis and Renaults by the look of it. The current account surplus will
shrivel to 2.6pc of GDP this year, down from 9.5pc two years ago. The oil bonanza is draining into
shopping malls. "We believe the trade surplus will disappear before the end of 2009," said Danske Bank.
The slippage is ominous with oil, gas, and metals near historic highs. They make up 80pc of exports. "
Russia has all the classical symptoms of the Dutch Disease," said a World Bank report.
Russian oil dependence strangles the economy

Brooke, 06/25/03, (James, Ney York Times, “Russian Economy Builds on 3 Years of
Growth,”http://query.nytimes.com/gst/fullpage.html?res=9D0CE3D6123BF936A15755C0A
9659C8B63&sec=&spon=&pagewanted=print)
But beneath Russia's encouraging numbers, many analysts say, is an overdependence on oil and gas
income. ''On first sight, everything is good,'' Christof H. Ruhl, the World Bank's chief economist in Russia,
said in an interview. ''But that does not mean that they will double in 10 years. There is a lack of
diversification. This high growth is still tied to high oil prices.'' With oil and gas sales accounting for
about half of exports and about half the national budget, oil and gas contributed to a 23 percent jump in
Russia's world trade in the first five months of this year, compared with the similar period in 2002. Because
of high oil prices, Russia now exports almost double what it imports. ''The economy remains
vulnerable to a downturn of oil prices,'' Anne O. Krueger, first deputy managing director of the
International Monetary Fund, said Friday in a news conference here. While saying that Mr. Putin's goal of
doubling the economy was realistic, she warned of ''excessive regulation and corruption'' and its ''drag on
private sector development.'' James A. Baker III, the Reagan-era secretary of state, expressed similar
sentiments in a speech here last week to American and Russian business leaders. ''Russia, in short, has come
far,'' he said. ''But huge challenges remain. Russia's core manufacturing sector remains in decline, with
much of its infrastructure obsolete.''
Turn – Oil Bad – Russian Dutch Disease – Link Xt (2/2)

Oil Hurts Russian Economy – Dutch Disease
Filippov, 06/07/04 (Yuri, RIA Novosti political commentator, “Russia To Help Cool Down
Oil Markets,” http://www.cdi.org/russia/johnson/8243-3.cfm)
The point is that Russia is no Kuwait or Saudi Arabia, for whom oil is the only ticket to the global
economy and where growing oil prices are always welcomed. Unlike these countries, Russia is not an
OPEC member and considers itself to be a large, industrially developed nation. Oil is important, but
not crucial for Russia's economic ambitions. When oil prices are too high, investment in sectors other
than raw materials becomes relatively unprofitable, thereby creating disproportions in the Russian
economy and contaminating it with "the Dutch disease", which as everyone knows begins with a short
boom and ends in a prolonged crisis. The only efficient vaccine against this disease for Russia can be
moderate oil prices, and in this respect its interests coincide with those of oil importers.
Dependence on Russian oil bad- undermines attempts at democratization

Smith 06 (Keith, Center for Strategic and International Studies
[http://www.csis.org/media/csis/pubs/060403_russian_energy.pdf] How dependent should we be on Russian Oil and
Gas?/ April 23, 2006)
While Europe is now re-evaluating its growing dependency on Russian energy imports, the U.S.
continues to count on increased Russian supplies to fill the energy gap created by declining domestic
and Canadian production, and by political instability in Venezuela, Nigeria, and the Middle East. Energy
Secretary Samuel Bodman has stated that the U.S. will import 10 to 20 percent of its natural gas needs from
Russia in the next few years. Increasing our dependency on an authoritarian Russia that uses energy to
regain control over its neighbors cannot be good policy, particularly when the Putin government continues
to centralize control over energy resources in the Kremlin and when the business climate in Russia becomes
less, rather than more, transparent. EU countries and the United States previously ignored the petro-
politics of the Kremlin as long as they were confined to the former communist states of Eastern and
Central Europe, but now it is now clear that the policy is being used in an attempt to influence U.S.
and Western European security policies. Moscow’s cutoff of gas shipments to Ukraine and much of
Europe in January is merely the most recent instance of many in which oil and gas shipments have
been shut off or reduced to Russia’s energy customers for political and economic reasons. This action,
taken in the dead of winter by Russia’s government-owned and directed Gazprom, has served as a wake-up
call to Western Europe. The business climate for Western energy investors is becoming less, rather than
more transparent. The Baltic Sea gas pipeline deal, put together with the help of former German Chancellor
Gerhard Schröder, illustrated the opaque connection of former intelligence officers from Russia and Germany
putting together deals that will weaken the energy security of the region. The only thing that remains
transparent is the Kremlin’s intention to use energy for geopolitical gain and to reverse
democratization trends in the former Soviet republics. Russia’s energy companies have become clear
instruments of foreign policy. Dmitry Medvedev, Gazprom’s chairman, is the country’s first deputy prime
minister; Also, Igor Sechin, chief of the Kremlin administration, is CEO of Rosneft, Russia’s fastest growing
energy company. While Lukoil and other Russian companies are free to buy control of U.S. energy assets,
such as Getty Petroleum, American companies are limited to the role of minor shareholders in Russian
energy companies. Why should we allow ourselves to become more dependent on Russia when the Putin
government is undercutting U.S. security interests in Uzbekistan and other Central Asia states, in the
Middle East, including Palestine, and is undermining the new democratic states of Ukraine, Georgia,
and Moldova? A serious move toward reducing domestic energy demand and increased use of
alternative energy sources is smarter policy than becoming more dependent on a Kremlin that uses
foreign energy dependency to project its geostrategic interests.
I/L Turn – Oil Bad – Russian Dutch Disease – Impact – Investment

Oil Hurts Russian economy -- Lack of Investment
Pravda, 6/22/05 (“Petrodollars to ruin Russian economy despite high oil prices: Russia is
not able to sell more than it sells at the moment, although oil prices continue their way up”,
http://english.pravda.ru/main/18/89/357/15687_petrodollars.html)
The growing amount of petrodollars against the background of increasing oil prices, may eventually
damage the Russian economy. Experts pointed out the problem long ago, but the question was left
unnoticed, until it attracted the attention of the Russian president. Vladimir Putin acknowledged during
yesterday's meeting with the Mexican president in Moscow that the growing volume of petrodollars was not
very helpful in the struggle against poverty. “It helps as much as it replenishes the budget,” Putin specified.
The inflow of petrodollars creates certain difficulties for both the Central Bank and the government of
Russia in terms of restraining inflation on the set levels. It also leads to the excessive strengthening of
the national currency, which does not make for the successful activity of Russian exporters and the
processing industry, Vladimir Putin said. Experts of the Russian Ministry for Economic Development and
Trade share Putin's opinion on the matter. According to latest analytical reports, which the ministry released,
the growth of world prices on oil does not exert a positive influence on the Russian economy. The
analysis showed that the Russian economy benefits from increasing oil prices best, when the prices reach the
level between 30-38 dollars per barrel. Higher prices on oil do not affect the economic growth, experts say. t
is the Russian fuel and energy complex, which created such circumstances. Despite the incredibly favorable
conjuncture on the world market of oil, investments in modernization and enlargement of production
capacities (the mining and the processing) are lessening. In fact, a lot of Russian oil companies make their
profits from high prices on raw materials without having an eye for the future at all. Vladimir Putin pointed
the issue out, when he said that oil companies have been paying little attention to the mining and processing
of oil lately. The Russian president particularly said that oil companies do not invest much in the creation of
new production capacities – building oil refineries, for example. Moreover, the above-mentioned trend
determines high prices on fuel in Russia. It is worth mentioning that Russia can not gain the maximum
profit from currently favorable price conditions because of insufficient investments to increase the oil
extraction. Consequently, Russia is not able to sell more than it sells at the moment, although oil prices
continue their way up. In addition, the incapability to increase its share on the world market of oil deprives
Russia of an opportunity to dictate its conditions to other oil powers. ”It is the market that determines prices
on any goods. However, we cannot exert a serious influence on it,” Vladimir Putin said. Furthermore,
Russian oil companies' limited extraction capacities make the national economy dependent on fuel
prices. The fuel and energy complex - the foundation of the Russian economy - will not be able to increase
either the oil output or the oil export if oil prices start sliding.
I/L Turn – Oil Bad – Russian Dutch Disease – Impact – Moral Hazard
Oil Dependence is a moral hazard – Prevents Broad Economic Reforms Key to Growth
Matthews, 05/07/08 (Owen, Newsweek, “Economy of Clay: Moscow is flush with oil money. But the new President
Dmitry Medvedev needs to do more than just redistribute it to bring his nation back to fiscal health,”
http://www.newsweek.com/id/135877)
But in truth, the Russian economy as a whole is an edifice with feet of clay. The bling and glitter of the
capital obscures a harsh reality: the architecture of Russia's economy is no more solid than that of an
inflatable children's castle at fairground, with energy and commodity prices the wind that keeps it inflated.
Yes, the Russian economy has been growing fast. But little of that growth has spilled over into the real
Russian economy. Rather, the boom has, in many ways, held back Russia's non-commodities economy
from growing: rampant inflation, spiraling real-estate prices and higher labor costs, bureaucratic
corruption, expensive credit and bad governance have combined to stifle the competitiveness of many
Russian businesses. "Russia's macroeconomic performance has been stellar," says economic analyst Anders
Aslund. "But Russia's oil surplus is so huge that it hides flaws in economic policy; the longer oil prices
remain high, the worse economic policy will become. Booms breed complacency and corruption."
I/L Turn – Oil Bad – Russian Inflation

Internal Link Turn:
A) High oil prices fuel Russian inflation
ARVEDLUND, 2005 (Erin E, “Russian Inflation Magnifies Sting of Welfare Changes,”
http://www.nytimes.com/2005/02/01/business/worldbusiness/01inflation.html)
The reasons behind creeping inflation are many: oil, Russia's prime export and a quarter of gross
domestic product, is hitting record prices, and the country is awash in export revenue, money that has
flowed to companies and workers right down the chain.
B) Continued inflation kills Russian economic growth

Moscow Times, 5-30 (“Inflation Threatens an Era of Growth,” online: http://www.cdi.org/russia/johnson/2008-
106-31.cfm)
Prime Minister Vladimir Putin says Russians can live with double-digit inflation for years, but it is a
claim that may be put to the test if the government does not act urgently to contain soaring costs.
After eight years as president, Putin has passed on to Dmitry Medvedev stewardship of a booming
economy. But it could prove to be a poisoned chalice. The country is facing sky-high inflation driven by
food prices that threatens to undermine many of the Putin-era successes.
It is not a Russian phenomenon, of course. Across the globe, food costs have escalated on the back of years
of underinvestment in agriculture, poor harvests and higher demand for grain from emerging economies, such
as China. Tens of thousands of people across the world marched on May 1 against the rising cost of food and
falling wages and pensions. In Russia, too, there are signs of growing unrest as inflation starts to bite.
Real inflation is believed to be higher than the official figures, and a recent poll indicated that about 67
percent of Russians identify inflation as the most urgent issue facing the country today.
Inflation rose for the first time in years in 2007, hitting 11.9 percent. The Economic Development Ministry
remains hopeful that inflation will be contained at 10.5 percent this year, while economists say it could reach
11.5 percent to 14 percent. Even the figure of 14 percent is arguably optimistic, given that consumer prices
have risen by 7.5 percent so far this year.
While prices have risen rapidly for some time now, particularly in higher-end segments of the economy, such
as property, it was only last fall that the specter of inflation truly reared its head. With State Duma and
presidential elections fast appearing, the authorities got down to work fast on growing food prices.
But their efforts which included price caps on food and hikes on several import and export tariffs have been
widely derided by economists as populist and cosmetic. With a new government installed this month, hopes
have been kindled that the bureaucrats will now start to take substantive steps to tackle inflation.
For sure, the government is taking inflation seriously. But officials have shown a deep-rooted disinclination
to do anything that would alienate the population and threaten economic expansion.
Over the past 18 months, the country has seen a significant increase in money supply; the ruble has
depreciated against the euro and the yen, and the government has pursued an aggressive spending program as
it seeks to uphold economic growth, which has averaged at more than 7 percent in the last eight years.
It is no coincidence that inflation has struck in the middle of a debilitating international financial crisis
that has rocked confidence in the global financial sector and brought the United States to the brink of
recession.
I/L Turn – Oil Bad – Russian Inflation Up

Russia econ overinflated, on the brink
Kennedy June 27 (“Asia's Emerging Markets Have Crashed--Will Economies Follow?”
http://www.clusterstock.com/2008/6/emerging-asia-markets-have-crashed-will-economies-follow-
Jonathan Kennedy | Jun 27, 08 9:45 AM accessed June 30, 2008)
Part of the "safe harbor" theory was the thesis that emerging-market economies would steam along even as
the US economy slumped. This was (is) important not only for investors in emerging markets, but those who
do business in them--the globally diversified companies that many analysts tout as immune to a US
slowdown. And so far, emerging market economies have held up. The collapse of their stock markets,
however, suggests that an economic downturn might not be far off. What might kill these economies? Three
possibilities: Inflation. Inflation in China, Russia, and other emerging markets is out of control. China and
India has increasingly been changing policies to try to rein this in, and other countries will likely follow. We
doubt emerging market central bankers have the magic touch that will eliminate the business cycle that has
forever eluded their developed-market peers. US and Europe slowdown. Decoupling was a happy theory, but
it's also a fanciful one. Emerging markets buy stuff from--and make stuff for--massive economies that are, at
best, slowing. Hard to see how that won't hit emerging markets.
I/L Turn – Oil Bad – Russian Inflation – I/L
Russian inflation destroys their economy.
Moscow Times 5/30 (http://www.cdi.org/russia/johnson/2008-106-31.cfm)

It is a point made by his boss, Finance Minister Alexei Kudrin, time and time again. The keeper of the
country's purse strings, Kudrin has navigated the country through eight years of prosperity and has fiercely
opposed the government's tendency to support big-spending programs, which would ensure continued high
growth. The government has also poured money into pensions and state sector salaries, further measures
that fuel inflation. With global growth under threat because of the financial crisis, Russia is selling itself to
foreign investors as a place where the rewards are still rich. It is a silver lining that many believe the country
can ill afford to ignore. Indeed, economists are already predicting that Russia's growth will slow this year,
although the effect will be much less than in the West, as banks see overseas funding dry up, resulting in
fewer loans. A split in the government on the pace of growth spilled into the public in April when Kudrin and
Economic Development Minister Elvira Nabiullina squared off over whether the economy was overheating,
the state at which growth becomes unsustainable. Kudrin's conclusion, that the economy is overheating, is
shared by many economists. "Inflation has really been able to run away … because the economy is
simply growing too fast," said Rory MacFarquhar, chief economist and a managing director at Goldman
Sachs. He said the economic growth could be slowed to a more sustainable rate by reining in government
spending and curbing credit growth. But it appears that Kudrin is fighting a losing battle. Putin has outlined
massive investment for transportation infrastructure this month, and more is to come. Oil, meanwhile, has
soared to more than $135 per barrel, delivering windfall profits for the state. "As long as the price of oil is
so high, this is an argument that Kudrin cannot win," said Martin Gilman, former representative of the
International Monetary Fund in Russia. If inflation cannot be contained, however, the economy faces a
very real risk of slowdown. Problems will arise if inflation reaches 15 percent to 20 percent, the level at
which it could start to dent investor confidence, said Oleg Vyugin, chairman of MDM Bank and the
former head of the Federal Service for Financial Markets. "If inflation is kept under current limits and it is
manageable, then it is possible to avoid [damaging the economy]," Vyugin said. "But if businesses see that
the government is not in a position to control inflation, then there will be serious damage."
Oil Kills Russian Economy- Inflation

B) Inflation kills the economy
Alison, 06/08/2008 (Sebastian, Bloomberg, “Inflation Is Biggest Threat to Global Economy,
Executives Say,”
http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=a.keTd1NB52c#)
June 9 (Bloomberg) -- Inflation is now the biggest threat to the global economy as the credit crisis starts to
recede, according to executives and officials who met in Russia over the weekend. `Ì don't think anyone has
found a silver bullet to deal with inflation,'' Ernst & Young LLP Chief Executive Officer James Turley said in
a Bloomberg Television interview in St. Petersburg yesterday. ``Consumers are losing confidence. The
liquidity crisis and the credit crisis will work themselves through.'' Turley was among 2,300 businesspeople
and politicians who gathered in Russia's former imperial capital a day after crude oil prices staged their
biggest increase ever. The surge reinforced concern that central banks will need to either raise interest rates or
forgo further cuts, even as growth slows.`Ìf something should wake us up at night, it's the return of this
inflationary environment around the world,'' Caio Koch- Weser, Deutsche Bank AG vice chairman and
former German deputy finance minister, told the St. Petersburg International Economic Forum, Russia's
largest trade and investment fair, on June 7. European Central Bank President Jean-Claude Trichet said on
June 5 that the bank may raise rates as soon as next month. Two days earlier, Federal Reserve Chairman Ben
S. Bernanke indicated he's finished cutting for now.`Very Dangerous' ``We are facing a very dangerous
situation caused by these tremendously increasing prices for commodities, food and oil,'' German Finance
Minister Peer Steinbrueck told the gathering. Inflation in the 15 nations using the euro accelerated to 3.6
percent in May, matching a 16-year high reached in March. The International Monetary Fund already
estimates inflation to be running at its fastest since 1995 in advanced economies. UN Secretary-General Ban
Ki-moon said last week that the world needs to invest as much as $20 billion a year on agriculture to tackle a
60 percent gain in food prices over the past 18 months that has sparked riots in more than 30 countries. Even
with a coordinated effort, prices aren't going to fall any time soon, the IMF said. `Ìt's pretty clear that
we're not going to see a complete reversal of these prices,'' First Deputy Managing Director John Lipsky told
Bloomberg Television. ``The challenge is to make sure that doesn't turn into ongoing inflation, or a
deterioration in inflation expectations.'' BRICs to the Rescue As the world's biggest economies slow,
many companies are looking for sales growth in emerging markets, in particular Brazil, Russia, India and
China, known as the BRICs. Continued economic expansion here will see the nations closing the gap with
the U.S. and Europe, Lipsky said. By the second half, `àll the major industrial economies will be growing
at a below-trend pace,'' Lipsky predicted.
A2: Impact – Nationalism – A2: No Growth  Nationalism

Nationalism is bred by the transition of states not economic decline
Professor Otto Pick, NATO Review No.2 4/15/2002 “Reassuring Eastern Europe”
http://www.nato.int/docu/review/1992/9202-6.htm
People in Eastern and Central Europe feel insecure. The causes are not to be found predominantly in
perceptions of external threats, but are deeply embedded in the social, political and economic structures of all
the East European countries. They have little or noconnection with military factors, but as the transition
from centrally planned to market economies exacts its price in rising numbe rs of unemployed and
mounting inflation, the basic fabric of personal security begins to disintegrate. The collapse of the old
trading patterns has made matters worse, especially as economic relations with the West have not come up to
expectations. Disenchantment and fear of the future have become widespread. This personal insecurity,
which affects most people in the area in varying degree, has made them more vulnerable psychologically and
the need for reassurance has come to dominate their lives. Insecurity of this kind breeds frustration, and
this can be one of the major influences encouraging the growth of political radicalism, including
extreme nationalism and racism. The tragedy of Yugoslavia has shown that the end of the East-West
confrontation has, if anything, increased the danger of local wars with their dreadful potential for escalation.
As criminality throughout the area is seen to increase, the clamour for strong regimes, dedicated to the
maintenance of law and order, will become louder. Ultimately, internal instabilities related to perceived
economic failure, could put the concept of societal pluralism and democratic government at risk.
A2: Impact – Nationalism – Nationalism Up (1/2)

Russian nationalism high
Greenfield 08 (Daniel, Israel News [http://www.israelenews.com/view.asp?ID=2361] Understanding the New
Russian Threat/ June 16, 2008)
Across the third world, Russia is busy providing weapons, building ports and bases and creating an
anti-Western alliance based around its own oil and gas resources, that unites oil producing Latin American
nations with leftist governments such as Venezuela with Arab OPEC nations to form a common front against
America and Europe. On its own borders Russia is doing its best to push back NATO expansion while
preparing for its own great project to reclaim the lost territories of the USSR, not in the name of
Communism, but in the name of greed, power and Russian nationalism. The old rivalries with England
and the US have been resumed and the KGB is active everywhere that Russian trade goes. The KGB's
New Guard have learned from Communism's failures and they don't intend to repeat the same
mistakes. They respect the achievements of the USSR but their goal is to build a great Russian Empire
ruled by themselves. They are the crime syndicate which now rules Russia and is expanding across the
world. Fueled by the energy boom, they have a great deal of wealth and while the system they run is
corrupt and incompetent, it is not nearly as corrupt or incompetent as the old Communist system was.
Nationalism on the rise in Russia

The roots of Russia´s currently rising nationalism are threefold: pre-Soviet, Soviet and post-Soviet.
The idea of Moscow as the "Third Rome," i.e. of a special Russian mission in world history, goes back
several centuries. Russian nationalism had been – contrary to what many in the West believed – an
important element of Soviet ideology ever since the 1930s. Like in the early 19th century when Moscow´s
so-called Slavophiles applied German nativist thought to Russian conditions, ideas of various Russian
nationalist movements today are often imported from the West. A factor also accounting for Russia´s
recent nationalist resurgence is the mode of thinking learned in Soviet schools and universities – a
Manichean world-view which sharply distinguishes between "us" and "them." Although the basic
definitions of "us" and "them" have changed, a number of Soviet stereotypes, for instance, about the
US have survived glasnost until today.
Nationalism Up (2/2)
Radical nationalism in Russia on the rise
Moreover, the radical, often neo-fascist wing of Russian nationalism, naturally, has been rising together
with the movement as a whole. To be sure, both the Kremlin and mainstream public discourse
demonstratively condemn manifest expressions of racism. Yet, the extremists - whether active in the neo-
Nazi skinhead movement or publishing in high-brow conspirological journals - are part and parcel of
the xenophobic hysteria that much of Russian society has recently gotten into. For instance, the
Russian book market is experiencing a glut of vituperative political lampoons whose main features
include pathological anti-Americanism, absurd conspiracy theories, apocalyptic visions of the future,
and bizarre fantasies of national rebirth. Among the more or less widely read authors of such concoctions
are Sergei Kurginyan, Igor Shafarevich, Oleg Platonov, Maxim Kalashnikov (a.k.a. Vladimir Kucherenko),
and Sergei Kara-Murza. A main difference between Russian and Western forms of nationalism is that, in the
contemporary West, the intellectual and political mainstream of a given country usually more or less clearly
distances itself from that country´s – sometimes, also rather strong – nationalist movement. While the
Russian mainstream is quick to condemn racist violence, its relationship to the world view standing
behind such violence is, in contrast, more ambivalent. Thus, authors who, in the West, would be
regarded as being far beyond the pale of permissible discourse, such as the ultra-nationalist publicist
Aleksandr Prokhanov, are esteemed participants in political and intellectual debates at prime-time TV
shows. The bizarre, pseudo-scientific ideas of the late neo-racist theoretician Lev Gumilev are required
reading in Russia´s middle and higher schools. Gumilev teaches that world history is defined by the
rise and fall of ethnic groups that are natural units driven, moreover, by biological impulses and under
the influence of cosmic emissions.
A2: Impact – Nationalism – A2: Medvedev Checks

Medvedev prevents nationalism
Depeseze 08 (Europe Central News Service [http://biznes.onet.pl/7,1764647,wiadomosci.html] Medvedev calls
for end to "economic nationalism"/ June 7, 2008)
Russian President Dmitry Medvedev has called for an end to what he termed "economic nationalism,"
in which political considerations trump pragmatic actions. "I don't think that such a strategy is the best
solution to all problems in the current crisis," Medvedev told the economic forum in St. Petersburg on
Saturday. "Many experts believe the consequences of a clash of the old tendencies in the globalization
and the desire of certain countries to protect their economic sovereignty and reap the highest possible
profits for their citizens 'without sharing with the neighbors', so to speak, are becoming increasingly
apparent in the world," he said. "Essentially, we are talking about an increase in economic selfishness.
On the one hand, it is a natural characteristic of any economic activity. Like Leningrad film producer
Georgy Tovstonogov once joked, the higher the fence the better the neighbors," said Medvedev. "In general,
economic selfishness in this sense poses no serious risk to development. But on the other hand, there is
sometimes much tougher ideology behind it: namely, something that can be described as 'economic
nationalism', in which pragmatic interests are replaced with political reasons," said Medvedev.
Nationalism not possible with Medvedev

The Hindu International 08 ([http://www.hindu.com/2008/06/08/stories/2008060860371600.htm] U.S. to
blame for global crisis, says Medvedev/June 8, 2008)
Mr. Medvedev denounced “economic egoism” and “economic nationalism” which “substitutes
pragmatic interests for political considerations”. “The assumption that one country, no matter how
powerful, can play the role of a global government has proved to be an illusion,” said Mr. Medvedev at
the 12th St. Petersburg International Economic Forum, attended by business leaders of 400 Russian and
foreign companies, as well as Ministers and politicians from all over the world.
Impact Turn – Oil = Organized Crime

Organized crime takes profits from Russian oil
Stratfor 8, (World’s leading private intelligence service, online: http://www.stratfor.com/analysis/organized_crime_russia)
By the 1990s, Russia found itself again in a crisis of state authority that nurtured the expansion of organized
crime. After the Soviet system collapsed, organized crime exploded, filling every state and nonstate
void. Since laws concerning property and asset control were not enforced following the collapse, those who
took advantage of the situation acted with impunity. Organized criminals’ internal and external connections
from their days of operating under the Soviets ensured they gobbled up the oil, gas, mineral and
telecommunications industries; their smuggling routes (later to become supply chains) let them exploit
these assets for financial gain. The organized crime bosses and their colluding political contacts from
the Soviet era helped to create the enormously powerful oligarchs of Russia’s chaotic post-Soviet era.
Some oligarchs were former politicians, some were former criminals and some were well-connected
businessmen operating in the gray area. The oligarchs worked with organized crime, either because they
had to in order to conduct business or because crime was their business strategy
Russian oil industry is controlled by organized crime

Oil, gas, minerals, telecommunications, weapons systems (thanks to the KGB) and many other state-
owned assets were sold off to oligarchs who had special relationships with the government and who were
linked to organized crime. The oil industry, Russia’s most promising money maker, was corrupted by
oligarchs who cheated investors (including the Russian government, Western countries, the International
Monetary Fund and many more) by selling oil at below-market prices to holding companies that they owned,
which then turned around and sold the oil abroad at market prices. Such deals enriched private
businessmen at the expense of the Russian government, tipping the balance of power away from the
state. With the Russian state all but bankrupt, organized crime bosses and networks aligned
themselves with the new holders of Russian power: the oligarchs.
Organized crime dominates Russian oil industry

From Putin’s point of view, the problem with organized crime is that it has corrupted key assets such as
oil, gas, minerals and telecommunications that used to be completely controlled by the Soviet state. This
is not to say that the Soviet state was not corrupt, but it at least offered uniformity. The oligarchs, criminals
and corrupt politicians who oversaw this transfer of assets have varying styles of business that can differ
wildly. The state has, in turn, been discredited by foreign governments and companies that are unwilling
to invest in or cooperate with Russia due to the lack of transparency and uneven regulatory standards
that are the result of rampant organized crime.
Impact Turn – Organized Crime – Impact: Econ

Russian organized crime devastates growth.
Shelley 1 (Louise, American U law prof., http://www.worldbank.org/html/prddr/trans/janfeb97/art4.htm)

Organized crime has a devastating impact on Russia's economy. It discourages foreign investment,
deprives the country of its tax base, dominates the banking sector and financial markets, and
exacerbates the already widespread problem of corruption. But probably the most damaging aspect of
Russian organized crime activity is its contribution to large-scale capital flight. Why Is Russia's
Organized Crime Special? Colombian drug traffickers repatriate most of their profits. Italian authorities were
able to freeze $3 billion of mafia assets in the mid-1990s because much of the profits of Italian organized
crime were invested domestically. In contrast, Russian organized crime groups repatriate little of their
profits, instead depositing their proceeds in foreign countries, establishing banks in offshore havens. A
specialist on capital flight reported at a recent Ministry of Interior conference in Moscow that $150 billion
had been exported from Russia since 1991. This figure may be high but conservative estimates are still more
than $50 billion. A minimum of 40 percent of the estimated $2 billion in monthly capital flight is attributable
to organized crime groups. The problem of capital flight dwarfs the lamented absence of foreign investment
(a figure estimated at approximately $6 billion since 1991). Russian organized crime groups do more
damage to their country's tax base than do their compatriots in other countries. Apart from not paying
taxes, organized crime groups, by usurping the state's tax collection role, often deprive the state of
needed resources. Recent research on the Russian customs service revealed that duties are paid on only 35
of every 1,000 cars imported into the country. Regional crime bosses control customs warehouses in many
parts of the country. Many customs officials, who are on the payroll of crime groups, collude to divert
customs duties to the crime organizations. Russian organized crime has also infiltrated the domestic
banking sector and financial markets more deeply than have their counterparts in other countries.
Millions of citizens have lost their limited savings in pyramid schemes and in banking institutions that have
collapsed. Hundreds of banks are owned or controlled by organized crime groups that are laundering
money (abroad by Russian organized crime groups and within Russia by foreign organized crime groups).
Bankers who refuse to launder money cannot compete with banks that provide such services. This
criminalization of the banking sector and financial institutions has boosted capital flight. Russian organized
crime groups secured a massive transfer of state property because the privatization occurred rapidly, on a
huge scale, without legal safeguards, and without transparency. These groups used force, if necessary, but
relied mainly on their large financial assets and their close ties to the former Communist Party elite, the
military, and the banking sector. (Colombian, Italian, and Mexican organized crime groups have also
benefited from the privatization of state resources, but on a much more modest scale.) Amassing privatized
property even before the collapse of the Soviet state, the Russian mafia now controls more than 40
percent of the total economy. In some sectors, such as consumer markets, real estate, and banking, their role
is even greater. In other countries crime organizations also diversify from the illicit sector to the legitimate
economy. But in Russia, organized crime groups are dominating both legitimate and illegitimate economic
sectors simultaneously. The new owners, often uninterested in making their enterprises function, drain the
resources and transfer the proceeds abroad, exacerbating the problems of both capital flight and nonpayment
of wages.
ROC kills economic growth
Bagley ‘1 (Bruce Michael, International Studies @ U Miami, online:
http://www.mamacoca.org/feb2002/art_bagley_globalization_organized_crime_en.html)
The purpose of this paper is to examine the scope and impact of the post-Cold War wave of Russian
transnational organized crime in one region of the global system: Latin America and the Caribbean. Although
the evidence currently available in the public realm is primarily journalistic and often anecdotal, it is, despite
these limitations, sufficient to support the conclusion that the linkages or “strategic alliances” between
various Russian organized crime groups and major transnational criminal organizations in Latin
America and the Caribbean in 2001 were already substantial and expanding rapidly. Moreover, it raises
the specter that, at least in some key countries in the region (e.g., Colombia, Mexico and Brazil), the
alliances between home-grown and Russian criminal organizations may provide domestic criminal
and/or guerrilla groups with access to the illicit international markets, money-laundering facilities and
illegal arms sources that could convert them into major impediments to economic growth and serious
threats to democratic consolidation and long-run stability at home.
Impact Turn – Organized Crime = Prolif

Russian organized crime leads to nuclear proliferation
Steve Macko, 1997 (ERRI Risk Analyst, FBI DIRECTOR WARNS RUSSIAN
ORGANIZED CRIME THREATENS U.S. NATIONAL SECURITY
http://www.emergency.com/rusn-mob.htm)
Russian organized crime poses a
Appearing before the House Committee on International Relations on Wednesday, FBI Director Louis Freeh warned that
risk to U.S. national security and added that the risk of a nuclear attack by an terrorist/guerrilla group
is now greater than at anytime during the Cold War by the old Soviet Union. Freeh's testimony echoed a
recent report on the international threat posed by Russian organized crime that was issued by Washington's
Center for Strategic and International Studies. The report warned that, if left unchecked, crime networks
will turn Russia into a "criminal-syndicalist state" -- a nation controlled by gangsters, corrupt government officials and crooked businessmen
who accumulate vast amounts of wealth "by promoting and exploiting corruption and the vulnerabilities inherent in a society in transition." The two-year study found that Russia's
wealth has been "plundered since the Soviet Union imploded, and tens of billions of dollars have been moved to safe havens in offshore banking centers." The study echoed a
previous report by the Chicago-based Emergency Response and Research Institute that was issued some months ago. The Russian mafia in said to be bleeding Russia dry and is
"Russian organized crime constitutes a direct threat to the national
destroying the economy. According to the CSIS report:
security interests of the United States by fostering instability in a nuclear power. Russian organized
crime groups hold the uniquely dangerous opportunity to procure and traffic in nuclear materials." Freeh
said that about 30 Russian crime syndicates operate in the United States, trafficking in drugs, prostitution, fraud schemes and other illegal activities. While Freeh and others have
warned previously of the power of such crime networks in Russia, this was one of the first public acknowledgments that the groups have taken root in the U.S. The FBI Director said,
"The size of this problem is really immense. We have identified organized crime organizations not just from Russia and Eastern Europe, but from
Asia, from Africa, from many other parts of the world, which are beginning to operate very effectively and very dangerously in the United States." He also said that U.S. law
enforcement agencies take "very seriously" the possibility that nuclear weapons could fall into the hands of
Russian criminal gangs and added, "We have to take drastic steps to prevent and detect that."
Impact Turn – Leadership – Link: Oil = Russian Power

Oil key to Russia’s power
Pentland 8 (William, Forbes [http://www.forbes.com/2008/01/24/oil-glory-books-oped-cx_wp_0124levine.html]
An Oil Powered Russia, January 1, 2008)
The most important fact in Russia's re-emergence on the world stage is energy, and its most important
instrument in parlaying that into actual power--and projecting it abroad--is control of the flow of that
oil and natural gas from the former Soviet Union to places abroad. This pipeline--the Baku-Ceyhan
pipeline, with its million barrels of daily exports--is the first significant break in Russia's previous
monopoly control over all oil and natural gas from the Caspian Sea states. When the line starting
shipping that oil in 2006, it entirely changed the geopolitics of this important region--Central Asia and
the Caucasus. Now Russia no longer calls the shots with impunity. Azerbaijan and Georgia, for example,
rely on this pipeline--and a companion natural gas line--for the political independence they often act out. Of
course, that's somewhat dated news now. It's Russia who so far has learned the lessons of that enormous
U.S.-backed diplomatic triumph; it's got a handful of carefully selected oil-natural gas pipelines on the
drawing board that, if built unanswered by rival, western-built lines, will grab back much influence in
Kazakhstan and Turkmenistan, and project more of its petro-power into Europe down the road. I call
it the Pipeline War.
Russia's oil is key to its international power
Pentland 8 (William, interview with Steve Levine, An Oil-powered Russia.

http://www.forbes.com/2008/01/24/oil-glory-books-oped-cx_wp_0124levine.html)
The most important fact in Russia's re-emergence on the world stage is energy, and its most important
instrument in parlaying that into actual power--and projecting it abroad--is control of the flow of that oil
and natural gas from the former Soviet Union to places abroad. This pipeline--the Baku-Ceyhan pipeline,
with its million barrels of daily exports--is the first significant break in Russia's previous monopoly control
over all oil and natural gas from the Caspian Sea states. When the line starting shipping that oil in 2006, it
entirely changed the geopolitics of this important region--Central Asia and the Caucasus. Now Russia no
longer calls the shots with impunity. Azerbaijan and Georgia, for example, rely on this pipeline--and a
companion natural gas line--for the political independence they often act out. Of course, that's somewhat
dated news now. It's Russia who so far has learned the lessons of that enormous U.S.-backed diplomatic
triumph; it's got a handful of carefully selected oil-natural gas pipelines on the drawing board that, if
built unanswered by rival, western-built lines, will grab back much influence in Kazakhstan and
Turkmenistan, and project more of its petro-power into Europe down the road. I call it the Pipeline War.
Impact Turn – Leadership – Link: Oil = Russian Power

Russia nationalism will hamstring the US
Auslin 08 (Michael, The St Petersburg Times [http://www.times.spb.ru/index.php?action_id=2&story_id=26379]
Genghis Putin/ June 27, 2008)
While Washington continues to fixate on Iraq, a resurgent Russia is steadily expanding its influence in
Eurasia. If the next U.S. president ignores Moscow’s inroads, democratic development in Asia will come
under threat, and the United States may soon be faced with a strategic challenge in one of the world’s
most resource-rich regions. The Kremlin’s main target of late is Mongolia, one of Asia’s most vibrant
democracies. Since first holding elections in 1990, Mongolia has developed a stable electoral system with
more than 15 political parties and seen two peaceful handovers of power. Mongolians will vote on June 29 to
elect a new parliament. Polls suggest the ruling ex-Communist Mongolian People’s Revolutionary Party,
which regained power in 2000, could lose power to the opposition Democratic Party. Regardless of the
election outcome, Mongolia’s relationship with Moscow will take center stage. State-owned oil company
Rosneft supplies more than 90 percent of Mongolia’s oil. Over the past three months, it has increased prices
twice — by an average of 20 percent each time. This comes on top of surging prices that, since 2006, have
pushed inflation in Mongolia to over 15 percent annually. Rosneft recently told Mongolian officials that it
would lower oil prices if given the rights to run oil production in the country. Moscow also wants to build
100 gas stations throughout the country, which would solidify its overwhelming presence there and reduce
consumers’ energy choices even further. Similar tactics are afoot in other sectors of Mongolia’s economy.
Russian enterprises already own 49 percent of Mongolia’s national railway and its largest copper and
gold mining companies. An industrial group founded by Prime Minister Vladimir Putin wants to
consolidate the Russian-controlled shares of all three companies, effectively giving Putin’s cronies a
near-stranglehold on key players in the Mongolian economy. Officially, Mongolian officials express
confidence in the benefits of deeper economic relations with the Kremlin. Privately, they admit to feeling
pressured into opening up their markets to Moscow and wish more Western companies would invest.
Despite these misgivings, Mongolian President Nambaryn Enkhbayar visited Moscow last month and agreed
to discuss further joint uranium production and nuclear cooperation. President Dmitry Medvedev stated
that bilateral trade will soon exceed $1 billion, cementing Russia’s position as Mongolia’s largest
trading partner after China. If these trends continue, Mongolia may become an economic satellite of
Putin’s newly expansive Russia.
***Saudi Arabian Oil Disad Answers***

N/IL – Investments Don’t Help Economy

Foreign investment don’t boost the Saudi oil market or increase its GDP
Alhajji 00 (A.F., The Business Network
[http://findarticles.com/p/articles/mi_m3159/is_6_221/ai_63127271/pg_1?tag=artBody;col1] Investment in Saudi
Arabia needs patience and more patience - Brief Article/ June 2000)
Countries tend to open their upstream oil sectors to foreign investment because of lack of capital,
experience, technology and profitability. The Saudi oil sector, on the other hand, does not lack any of
these attributes. Foreign investment in the oil sector will not benefit the Saudis, because it will not add
much to GDP, improve technology or reduce unemployment. In addition, foreign investment in the oil
sector could force Saudi Arabia to violate its OPEC quota--a situation that happened in Venezuela.
Foreign investments don’t boost the Saudi oil market or increase its GDP
Alhajji 00 (A.F., The Business Network
[http://findarticles.com/p/articles/mi_m3159/is_6_221/ai_63127271/pg_1?tag=artBody;col1] Investment in Saudi
Arabia needs patience and more patience - Brief Article/ June 2000)
Countries tend to open their upstream oil sectors to foreign investment because of lack of capital,
experience, technology and profitability. The Saudi oil sector, on the other hand, does not lack any of
these attributes. Foreign investment in the oil sector will not benefit the Saudis, because it will not add
much to GDP, improve technology or reduce unemployment. In addition, foreign investment in the oil
sector could force Saudi Arabia to violate its OPEC quota--a situation that happened in Venezuela.
N-UQ – Investment Down

Volatile prices discourage investment
Ambah 08 (Faiza, The Washington Post [http://www.washingtonpost.com/wp-
dyn/content/story/2008/06/23/ST2008062300651.html] Saudis Say They Will Meet Global Demand for More Oil/
June 23, 2008)
Naimi, the Saudi oil minister, rejected that argument and said at the conference Sunday he was
convinced that oil markets were well supplied and that production levels were not the primary reason
for the dramatic price increases. Global demand over the past year rose by about 1 million barrels a
day, he said, while global supplies rose by around 1.5 million barrels. Analysts said Saudi Arabia was
trying to bring prices down because despite the cash windfall, the kingdom, which sits atop the world's
largest oil reserves, wants to maintain demand over the long run. "The price volatility hurts everyone
because it discourages long-term investment in oil exploration and encourages development of viable
alternatives and conservation measures," Aluwaisheg said.
Aff- Saudi Econ (1/2)
Saudi currency dollar peg causes overheating and massive inflation
http://www.gulfnews.com/business/Economy/10224260.html
What's true for China and other Asian economies is even more so for Saudi Arabia and its oil-exporting
neighbours in the Gulf region, where currency pegs to the dollar cause double-trouble, says Harvard economics
professor Martin Feldstein. First, because of dollar-pegging, Saudi Arabia was forced to more or less match US
interest rate cuts recently when what it needed was the reverse to combat overheating in the economy. Second,
given that oil is paid for in dollars, weakness in the dollar exchange rate means the likes of Saudi Arabia end
up "importing" inflation when they are forced to pay more for goods bought in foreign markets other than
the United States. "Emerging market countries around the world have been able to pursue successful anti-inflationary policies after
abandoning their dollar pegs," Feldstein said in an article published last week.
Saudi econ , stock market proves

AME June 26, 2008
Extensive selling in Gulf markets on Wednesday resulted in falls across the board, including the Kuwaiti Stock
Exchange which has been rising for eight consecutive sessions. The Saudi market ended its week with a sharp fall of 1.5%,
losing 2% in one week, while other financial markets witnessed smaller losses of 1%.
Saudi econ is in decline, stock market proves

Arabian Business June 25, 2008
http://www.arabianbusiness.com/523037-saudi-leads-declines-across-gulf?ln=en
Saudi Arabia's main index led declines across the Gulf on Wednesday as Saudi Basic Industries Corp.
(SABIC) and Al-Rajhi Bank fell.SABIC slipped 2.15 percent and Al-Rajhi ended 1.4 percent lower. The index slipped 1.55
percent to 9,581.34 points. Shares of Aldar Properties felll more than 3.45 percent and Abu Dhabi National Energy Co. (Taqa) closed 3.65
percent, pushing the index down 0.77 percent to 4,960.01 points. In Dubai, the index closed 0.09 percent lower at 5,454.32 points as Emirates
NBD inches down 0.42 percent.
High oil prices cause econ instability, inflation proves

http://www.nytimes.com/2008/06/21/world/middleeast/21saudi.html?_r=2&oref=slogin&oref=slogin
The resentment may seem surprising in light of the vast profits Saudi Arabia and other gulf nations have reaped from the oil boom. But many
Saudis have seen few tangible benefits. Inflation, caused partly by higher oil prices, has pushed up food prices
drastically, cutting into the income of poor and middle-class Saudis. And much of the oil profits have been spent on
ambitious long-term government efforts, including new industrial cities and a vast new university. Many Saudis felt that the wealth
created here by the oil shocks of the 1970s was largely wasted, and the Saudi government has chosen a different approach this time, building an
economy that can outlast its oil. “During the first oil boom, people squandered the money, but now we’re investing in smarter ways,” said Amr
Khashoggi, a prominent businessman here. “We’ve learned our lesson.” At the same time, Saudi officials recognize that the fast-
rising price of oil — for all the vast profits it has brought them in the past year — also represents a significant risk. If prices
continue to rise, they could prompt an economic downturn or a faster shift toward alternative energy sources that could
sharply reduce demand, causing oil profits to collapse.
Saudi unemployment and inflation are 

Khaleej Times June 20, 2008
http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/opinion/2008/June/opinion_June82.xml&section=opini
on&col=
Saudi King Abdullah bin Abdulaziz has initiated the most comprehensive programme of political and economic reform in the Kingdom since the
reign of his brother King Faisal, who was assassinated by a nephew in his own palace in 1975. Yet a Saudi Arabian reform agenda must
necessarily be gradualist and cautious, because the reigning monarch has to balance the factional interests of the royal Al Saud clan, maintain
consensus with the Ulema establishment (the Wahhabis to the world media) from whom the House of Saud derives its legitimacy, protect the
kingdom's poor and unemployed citizens (Saudi unemployment is a shocking 11 per cent and a potential source of
political risk during times of high inflation) from economic distress and maintain Riyadh's traditional strategic alliance with the
United States.

Saudi economy is overheating, rising inflation and decreasing incomes prove
Financial Times Online June 17, 2008
http://www.ft.com/cms/s/0/d05f4672-3c6f-11dd-b958-0000779fd2ac.html
The double-digit inflation problem in Saudi Arabia and its Gulf neighbours is different from that of other emerging
market economies. Although the rising price of imported food affects them all, the inflation problem in the Gulf region is
exacerbated by their fixed exchange rate policy. The peg to the dollar contributes to Saudi inflation in
two ways. First, the dollar link forces the Saudi central bank to match US interest rates. As the Fed lowered its
interest rate from 5.25 per cent last summer to 2 per cent now, the Saudis had to cut their interest rate. If they had not done so, investors
around the world would have flooded Saudi Arabia with funds seeking the higher yield on a currency that is pegged to the dollar.
While cutting rates was a good policy for the US as its economy weakened, it was a terrible policy for
Saudi Arabia, which is experiencing an overheated domestic economy with rapidly rising inflation. The
dollar peg also raises Saudi inflation by increasing the cost of imports as the dollar declines relative to the euro, the yen and other
currencies. The US is the source for only about 12 per cent of Saudi imports. The 15 per cent decline of the dollar relative to those
currencies during the past year meant that the prices paid by the Saudis for the goods that they bought from Europe, Japan and elsewhere
rose more than 15 per cent. The large US trade deficit is likely to continue to force the dollar to decline against other main currencies.
The result will be a continuing source of imported inflation in Saudi Arabia and other countries that tie their currencies to the dollar.
Inflation in Saudi Arabia and the other Gulf states is depressing real incomes of millions of low-income
workers. The combination of the dollar peg and the declining dollar is also reducing the value of the remittances that large numbers
of foreign workers send home to their families in low-income countries such as India and Pakistan. Since these foreign workers make up
more than half of the total workforce in Saudi Arabia and an even larger share in the less populous states of the region, their discontent is
a significant risk to local stability.

Saudi currency dollar peg causes overheating and massive inflation
http://www.gulfnews.com/business/Economy/10224260.html
What's true for China and other Asian economies is even more so for Saudi Arabia and its oil-
exporting neighbours in the Gulf region, where currency pegs to the dollar cause double-trouble, says
Harvard economics professor Martin Feldstein. First, because of dollar-pegging, Saudi Arabia was forced to
more or less match US interest rate cuts recently when what it needed was the reverse to combat
overheating in the economy. Second, given that oil is paid for in dollars, weakness in the dollar exchange
rate means the likes of Saudi Arabia end up "importing" inflation when they are forced to pay more
for goods bought in foreign markets other than the United States. "Emerging market countries around the world
have been able to pursue successful anti-inflationary policies after abandoning their dollar pegs," Feldstein said in an article published
last week.
Saudi econ , stock market proves

AME June 26, 2008
Extensive selling in Gulf markets on Wednesday resulted in falls across the board, including the Kuwaiti
Stock Exchange which has been rising for eight consecutive sessions. The Saudi market ended its week with a sharp fall
of 1.5%, losing 2% in one week, while other financial markets witnessed smaller losses of 1%.
Saudi econ is in decline, stock market proves

Arabian Business June 25, 2008
http://www.arabianbusiness.com/523037-saudi-leads-declines-across-gulf?ln=en
Saudi Arabia's main index led declines across the Gulf on Wednesday as Saudi Basic Industries Corp.
(SABIC) and Al-Rajhi Bank fell.SABIC slipped 2.15 percent and Al-Rajhi ended 1.4 percent lower. The index slipped
1.55 percent to 9,581.34 points. Shares of Aldar Properties felll more than 3.45 percent and Abu Dhabi National Energy Co. (Taqa)
closed 3.65 percent, pushing the index down 0.77 percent to 4,960.01 points. In Dubai, the index closed 0.09 percent lower at 5,454.32
points as Emirates NBD inches down 0.42 percent.
High oil prices cause econ instability, inflation proves

http://www.nytimes.com/2008/06/21/world/middleeast/21saudi.html?_r=2&oref=slogin&or
ef=slogin
many Saudis have seen
The resentment may seem surprising in light of the vast profits Saudi Arabia and other gulf nations have reaped from the oil boom. But
few tangible benefits. Inflation, caused partly by higher oil prices, has pushed up food prices
drastically, cutting into the income of poor and middle-class Saudis. And much of the oil profits have been
spent on ambitious long-term government efforts, including new industrial cities and a vast new university. Many Saudis felt that the wealth
created here by the oil shocks of the 1970s was largely wasted, and the Saudi government has chosen a different approach this time, building an economy that can outlast its oil.
“During the first oil boom, people squandered the money, but now we’re investing in smarter ways,” said Amr Khashoggi, a prominent businessman here. “We’ve learned our lesson.”
At the same time, Saudi officials recognize that the fast-rising price of oil — for all the vast profits it has brought them in the past year —
also represents a significant risk. If prices continue to rise, they could prompt an economic downturn or a faster
shift toward alternative energy sources that could sharply reduce demand, causing oil profits to collapse.

Saudi unemployment and inflation are 
Khaleej Times June 20, 2008
http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/opinion/2008/June/opinion_Ju
ne82.xml&section=opinion&col=
Saudi King Abdullah bin Abdulaziz has initiated the most comprehensive programme of political and economic reform in the Kingdom since the reign of his brother King Faisal, who
was assassinated by a nephew in his own palace in 1975. Yet a Saudi Arabian reform agenda must necessarily be gradualist and cautious, because the reigning monarch has to balance
the factional interests of the royal Al Saud clan, maintain consensus with the Ulema establishment (the Wahhabis to the world media) from whom the House of Saud derives its
(Saudi unemployment is a shocking 11 per cent and a potential
legitimacy, protect the kingdom's poor and unemployed citizens
source of political risk during times of high inflation) from economic distress and maintain Riyadh's traditional strategic alliance with the
United States.
Saudi economy is overheating, rising inflation and decreasing incomes prove

Financial Times Online June 17, 2008
http://www.ft.com/cms/s/0/d05f4672-3c6f-11dd-b958-0000779fd2ac.html
The double-digit inflation problem in Saudi Arabia and its Gulf neighbours is different from that of other emerging
market economies. Although the rising price of imported food affects them all, the inflation problem in the Gulf region is exacerbated by
their fixed exchange rate policy. The peg to the dollar contributes to Saudi inflation in two ways. First,
the dollar link forces the Saudi central bank to match US interest rates. As the Fed lowered its interest rate from 5.25 per cent
last summer to 2 per cent now, the Saudis had to cut their interest rate. If they had not done so, investors around the world would have flooded Saudi Arabia with funds seeking the
. While cutting rates was a good policy for the US as its economy
higher yield on a currency that is pegged to the dollar
weakened, it was a terrible policy for Saudi Arabia, which is experiencing an overheated domestic
economy with rapidly rising inflation. The dollar peg also raises Saudi inflation by increasing the cost of imports as the dollar declines relative to the
euro, the yen and other currencies. The US is the source for only about 12 per cent of Saudi imports. The 15 per cent decline of the dollar relative to those currencies during the past
year meant that the prices paid by the Saudis for the goods that they bought from Europe, Japan and elsewhere rose more than 15 per cent. The large US trade deficit is likely to
continue to force the dollar to decline against other main currencies. The result will be a continuing source of imported inflation in Saudi Arabia and other countries that tie their
. Inflation in Saudi Arabia and the other Gulf states is depressing real incomes of millions of
currencies to the dollar
low-income workers. The combination of the dollar peg and the declining dollar is also reducing the value of the remittances that large numbers of foreign workers
send home to their families in low-income countries such as India and Pakistan. Since these foreign workers make up more than half of the total workforce in Saudi Arabia and an
even larger share in the less populous states of the region, their discontent is a significant risk to local stability.
N-UQ – Production Down (1/2)

Saudi Arabia is running out of oil- no hard data proving spare capacity
Markman 8 (Jon, MSN Money [http://moneycentral.msn.com/content/P87339.asp] Is Saudi Arabia running out
of oil?/ June 19, 2008)
Its always been assumed, by the United Nations as well as European and U.S. policy makers, that Saudi
Arabia would be able to pump more of its oil to fulfill increasing world demand. The Saudis are
pumping, at most, 9 million barrels a day now and have boasted that they could pump as much as 15 million
barrels a day for the next 50 years. Indeed, Saudi leaders promised that they would start pumping more a
few weeks ago. But since world oil production hasnt increased any since those promises were made,
economists and energy users have wondered whether Saudi Arabia has elected, for political reasons, not
to fulfill its vow. Simmons says it's worse than that: Much like the biggest problem in the Enron fiasco
was that analysts always trusted Enron managers declarations about the strength of its financial assets,
he says that the world has always taken Saudi Arabia at its word for its oil assets. He now believes that
it cannot be trusted. He notes that the six major oil fields in Saudi Arabia, all discovered between 1940
and 1967, produce about 95% of Saudi oil. The Saudis produce 10% of the worlds oil from them at the
worlds lowest prices, and the Saudis are the only serious provider of spare capacity on the planet. A single
field, Ghawar, which is the worlds largest, was discovered in 1948 and produces up to 60% of the
kingdoms total. He believes that production at these mature fields has peaked. While that doesn't mean
they'll run out tomorrow, they're becoming much harder and more expensive to exploit efficiently. Its
much like a person getting older and suffering from arterial sclerosis: They slow down and become
increasingly less capable. The Saudis are now using intense water-injection techniques to improve
production, he says, a technique that can ultimately lead to catastrophic pressure failure. Aramco
disputes his claim, but Simmons notes correctly that its principal answer comes down to an Enron-like,
Trust me. There's no solid independent data source of Saudi oil production. A lack of verified data
leaves the world in the dark, he told the Hudson Institute.
Saudi Oil Production Down

Stier 8 (Kenneth, CNBC [http://www.cnbc.com/id/25281491] Saudi 's Oil Fields on Viagra?/ June 20, 2008)
Saudi Arabia has long been the world’s preeminent oil producer and the kingdom’s royal rulers want to
keep it that way. But there is another possible narrative to the kingdom’s likely future – and ours too - which
is far less comforting. Rather than a petroleum stud with enough hydrocarbon juice to carry the world
gradually into some kind of greener, post-petroleum energy era, Saudi Arabia may be far closer to
running dry than we realize, because of years of overexploitation. The Saudi’s current production is
“really equivalent to is putting an elderly man on steroids and entering him in a marathon,” says
Matthew Simmons, an energy investment banker, better known for his book on peak oil, Twilight in the
Desert: The Coming Saudi Oil Shock and the World Economy. Even when they only produce half or a
third of their peak levels Saudi Arabia’s giant fields (most discovered decades ago) still out-produce
just about all rivals. But that’s achieved through massive injection of seawater into fields to pressure
oil to the surface. The problem, says Simmons, is “what that really does is primary, secondary and tertiary
recovery all at the same time…[and now]…the sweep is almost done.” “When they go [out of service] they
are going to go out in a whimper.” That seems to be exactly what happened in Mexico with the giant
Cantarell oil field. Alarmed by declining production PEMEX, the state oil company, repressurized the field
(consider it Viagra for oil fields), and was able to quickly bring production back to 2 million bpd. But soon
afterwards the field was in steep collapse. “All the way up there was a general sense that basically they had
licked old age,” notes Simmons.
N-UQ – Production Down (2/2)

Saudi oil production has reached its peak
SCD 08 (Supply Chain Digest [http://www.scdigest.com/assets/NewsViews/06-06-08-
1.cfm?cid=827&ctype=content] Latest comments from oil minister on declining production lead “peak oil” theorists
to say “I told you!"June 8, 2006)
Pundits of every stripe have been heavily debating in the past few months whether there are signs that
oil output from Saudi Arabia, the world’s largest producer, has slowed and may indicate it has reached
peak output level that can only decline from here. As we’ve discussed a few times in Supply Chain Digest,
“peak oil” theorists predict even greater rises in fuel costs than we seen in the last 12 months are inevitable,
which would dramatically change the way we need to think about our supply chains (Supply Chain
Management and the End of Oil, Supply Chain Impact of $100 Oil). Houston energy analyst Matthew
Simmons, for example, is one of perhaps dozens of pundits who argues that Saudi Arabia has
overestimated the vastness of its oil reserves, and the difficulties of getting the hard-to-extract oil that
remains underground. In other words, it has or soon will reach its peak output. Simmons is perhaps the
most vocal of the oil pessimists, and has even said there may be a rapid drop in Saudi production within
3-5 years, sending oil markets into chaos. The impact of any decline from the Saudi’s is not only due to its
global market share, but because until now at least it frequently had some excess production capacity it
would unleash when global supply conditions tightened. The Saudi peak oil speculation got some added
juice this week when a Saudi official said the country’s oil had recently declined because global
demand was ebbing. That caused even well-known financial commentator and radio show host Jim Cramer
to say that this was just “an attempt to hide that the Saudis are running out of oil.” Energy Bulletin
blogger Mark Derewicz also recently had this to say: “Saudi Arabia, which is notoriously secretive about
the decline rates of its fields, says it can increase the overall flow of oil to meet increased demand. The
Saudis, though, haven’t released field-by-field justification of this statement for decades and, in fact,
they are mostly just reworking old oil fields to squeeze out more oil, not bringing large new fields on
line. This will bring on peak oil faster, and the decline rates will likely be even steeper than projected, which
are typically between 4 and 7 percent annually.”
A2: Impact – Coup – Instability Up (1/2)

Instability looms in Saudi Arabia, several reasons
AEI June 17, 2008
http://www.aei.org/publications/filter.all,pubID.28153/pub_detail.asp
Whoever succeeds Abdullah in Saudi Arabia will face myriad problems. Saudi oil wealth has inhibited the
advance of meaningful reform by cushioning the consequences of corrupt and inefficient governance.
Even with oil prices near an all-time high, a population growth rate of 2.06 percent has left authorities
in Riyadh scrambling to address an unemployment rate unofficially recorded at 30 percent.[24] As
Saudi princes conspicuously siphon the kingdom's oil revenue, Saudis see the royal family's religious
rhetoric as being at odds with its conduct. The sight of Saudi princes gambling, drinking alcohol, and
cavorting with prostitutes aggravates popular resentment and the widening socioeconomic divide.
After years of resistance, King Abdullah has acknowledged that Saudi Arabia has a terror
problem.[25] Al-Qaeda struck at the kingdom and at foreigners it hosted in the years after 9-11. On May 12,
2003, suicide bombers killed thirty-four at a foreign national housing compound in Riyadh, and over
subsequent months, there were nine attacks that took twenty-one lives.[26] In the face of such a terror
campaign, the Saudi leadership enacted reforms to dampen Islamist fervor and became more aggressive in
rooting out homegrown terrorists. The Saudi government began to arrest clerics who supported
terrorism. Younger clerics remain undeterred, however, and continue to preach anti-Americanism and
to incite violence. Saudi authorities tolerate many such clerics on the condition that they do not
condone terrorist attacks against Saudi targets.[27] Many wealthy Saudis--including some in the royal
family--donate money to charities or other organizations that support religious extremism abroad,
leading Saudi Arabia to become an epicenter of the financing of Al-Qaeda and other terrorist
organizations.[28] While Saudi authorities claim to have prosecuted individuals for terror financing and
have frozen the assets of a number of other such malefactors,[29] such sanctions remain limited. Still, the
Saudi government has created a number of laws to gain greater oversight of money transfers and charity
expenditures such as limiting charitable organizations to the use of a single bank account and prohibiting
such organizations from making or receiving cash payments.[30] Still, problems remain: Significant oil
revenues are controlled by independent interests within the royal family, which do not necessarily lend
themselves to monitoring by an incestuous Saudi government.[31] Saudi succession will come at a
delicate time, both internally and externally. Saudi reforms are inchoate, succession unclear, and
interest groups many. Any new Saudi leader will also face external challenges: The Iranian nuclear
program has bolstered Iranian confidence and prestige, and Iranian authorities have agitated Saudi
Arabia's large Shi‘i population, forcing Riyadh to worry about internal order. Primitive Wahhabi,
anti-Shi‘i attitudes only exacerbate the internal challenges, despite recent moves to build a Saudi identity
that transcends sect and regional origin. Saudi authorities often cite the 1996 attack on the Khobar Towers
U.S. military facility that killed nineteen U.S. servicemen and injured more than 350 as evidence of the
Iranian threat: While the perpetrators were Saudi, Iran's Revolutionary Guards organized the attack and
trained many of the terrorists who executed it.
A2: Impact – Coup – Instability Up (2/2)

Saudi Arabia has been hit with a campaign of violence from Al-Qaida, reducing stability
M&C News June 18, 2008
http://www.monstersandcritics.com/news/middleeast/news/article_1411885.php/Saudi_mini
ster_Al-Qaeda_changing_style_we_are_expecting_the_worst
Saudi Arabia is expecting the worst from the al- Qaeda terror network because the group is changing
its style and techniques but the kingdom is uncovering more details about its sources of funding, the Saudi
Minister of Interior said in remarks published Wednesday. Saudi Arabia's war on terrorism is going ahead
steadily but not without difficulty, which is caused by the fact that al-Qaeda is changing its techniques,
Prince Nayyif bin Abdel-Aziz told the pan- Arab daily Alsahrq al-Awsat. This is why the Saudi security
bodies are expecting the worst from al-Qaeda, the minister added. 'Investigation into sources that may be
funding the network in the kingdom is making progress. But the information we have gathered has to be
completed,' the minister said. The kingdom has been engulfed in recent years in a campaign of violence
carried out by al-Qaeda, targeting foreigners working in the country's oil industry and security forces.
The leader of al-Qaeda, Osama bin Laden, is a Saudi national, who was incensed by the US military presence
in the kingdom and his fight against the Saudi royal family initially focused on ousting Americans from the
country. Saudi Arabia came under increasing international pressure to crack down on religious intolerance in
the country after the 9/11 attacks on New York and Washington. Out of the 19 hijackers involved in the
attacks, 15 were from Saudi Arabia. 'Some people belonging to al-Qaeda may be in Iran,' the minister said.
But he ruled out the presence of Saudi detainees in Iran.
A2: Impact – Coup – Saudi-US Relations

US-Saudi relations are falling due to chinese pressure for oil
Energy Publisher June 19, 2008
http://www.energypublisher.com/article.asp?id=15526
To fuel its growing economy, China is following America’s footsteps, subjugating its foreign policy to its energy needs. It is attempting
to gain a foothold in the Middle East and build up long-term strategic links with the region’s producers. Though some optimists think
that China’s pursuit of energy could present an opportunity to enhance cooperation, integration, and interdependence with the U.S.,
there are ample signs that China and the U.S. could already be on a collision course over oil. For
China, the biggest prize in the Middle East is Saudi Arabia, home of a quarter of the world’s reserves.
Since September 11, tension in U.S.-Saudi relations has provided the Chinese with an opportunity to
win the heart of the House of Saud. To Washington’s dismay China has also set its sights on Iran, announcing that it will not
support sanctions against Iran in the UN Security Council. No doubt that as China’s oil demand grows, so will its
involvement in Middle East politics. China is likely to provide the region’s energy exporters not only with diplomatic support
but also with weapons, including assistance in the development of WMD.
A2: Impact – Coup – A2: Saudi Arms Race

US-Middle East arms deal will help stabilize the region and check Iran
ITN 07
http://itn.co.uk/news/4e0ebd246eafe8a7a97442895ba089ee.html
US Secretary of State Condoleezza Rice is meeting Middle East representatives having agreed a massive arms
deal for allies in the region. Accompanied by Defence Secretary Robert Gates, they are holding talks with members of the Gulf Co-
operation Council as well as ministers from Jordan and Egypt in the Egyptian Red Sea resort of Sharm el-Sheikh. Egypt will be offered a £6.4
billion package and Israel £14.8 billion over ten years as well as aid to Saudi Arabia and other Gulf states The pair, who say the huge military aid
will help counter al-Qaeda, Hezbollah, Syria and Iran, will later travel to Saudi Arabia to discuss Iraq and other issues with King Abdullah after
holding a joint press conference with Mr Gates. Before leaving Washington, Ms Rice said Egypt will be offered a £6.4 billion package and Israel
£14.8 billion over ten years as well as aid to Saudi Arabia and other Gulf states. The Democrat-controlled Congress still has to approve the
funding. During a refuelling stop at Shannon Airport in Ireland, she dismissed suggestions that the tens of billions of dollars is
a quid pro quo, saying: "We are working with these states to fight back extremism. "We all have the same
interest in a stable Iraq that can defend itself, defend its new political system and be unified. This effort will
help bolster forces of moderation and support a broader strategy to counter the negative influences of al-
Qaeda, Hezbollah, Syria and Iran." Iran, which has criticised the military aid, has accused the US of trying to create fear and mistrust
in the Middle East and of aiming to destabilise the region. Ms Rice continued: "If there is a destabilisation of the region it can be
laid at the feet of an Iranian regime. This is a positive agenda in the Middle East, not one that is a negative
agenda or against someone." The Bush administration is said to be increasingly frustrated at Sunni-dominated Saudi Arabia's attitude
towards the Shia-led Iraqi government although Ms Rice sought to play down that criticism ahead of talks in Jeddah. Before returning to
Washington on Thursday, Ms Rice will also meet Israeli and Palestinian leaders.
A2: Impact – Coup – Saudi-US Relations Resilient

Despite US-Saudi relations problems, the US must continue to support Saudi Arabia
Barker 01
(James Barker was Secretary of State for George H W Bush)
http://www.pbs.org/wgbh/pages/frontline/shows/saudi/interviews/baker.html
Our relationship with Saudi Arabia, with all of its faults that you've pointed out, is really a relationship we
can't disentangle ourselves from. In my view, if you accept as a premise that we must have access, easy access,
to the energy reserves of the Persian Gulf, I don't see how it makes sense for the United States to say we're no
longer going to support the government of Saudi Arabia, which enables us to do that.
US Saudi relations have always been rocky, but practical factors keep the countries
together
Washington Post 06
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/19/AR2006051901758.html
The 9/11 hijackers undermined otherwise strong U.S.- Saudi ties. Actually, things were never that smooth. Historians refer to the
"special relationship" established when Saudi Arabia's King Abdel Aziz and President Franklin D. Roosevelt
met in 1945. But since then the relationship has endured oil embargoes, U.S. restrictions on arms sales to
Saudi Arabia, and tensions around Israel and Palestine. Dissension permeates the entire history of U.S.-Saudi
relations. Since the end of the Cold War, relations have become particularly fraught, with the 9/11 attacks being the most recent issue. Oil,
defense and some regional interests keep the countries together, but both sides have made clear that the
relationship is less special today. In 2005, Rice stated that "for 60 years . . . the United States pursued stability at the expense of
democracy in this region here in the Middle East -- and we achieved neither."
A2: Impact – Coup – WOT Failing

War on terror is failing in Afghanistan.
OpEdNews 6/28 (http://www.opednews.com/articles/FORGOTTEN-WAR-IN-AFGHANIST-by-Allen-L-Roland-080628-91.html)

The forgotten war in Afghanistan is deteriorating rapidly whereas American and allied monthly deaths
have passed the monthly toll in Iraq for the first time ~ and the Taliban has taken back control of vast
rural areas and now has a foothold just outside. As if the the Cheney/Bush administration didn't have
enough failure on their hands with a crumbling economy, bear market and failed war and occupation of Iraq
~ the largely forgotten war in Afghanistan is also rapidly heading toward a disaster. Mosaic's highly credible
Link TV Middle East Intelligence reports in a five minute video The Year of the Taliban that the recent
brazen attacks of the Taliban have raised questions about the effectiveness of the War on Terror in
Afghanistan and whether any place in the country is safe from the Islamist movement that the war was
originally intended to eradicate. Then the Center For American Progress reports yesterday that
Afghanistan is in danger of becoming a failed state ~ " military officials and foreign policy analysts
have been sounding alarm bells over the deteriorating situation in Afghanistan for some time now. At
the beginning of 2008, two reports were released by prestigious committees that declared that Afghanistan is
"at great risk of becoming 'the forgotten war'" and "could become a failed state." "Make no mistake, NATO
is not winning in Afghanistan," said the report by the Atlantic Council, which was chaired by retired
Gen. Jim Jones. In January 2008, then-CentCom Commander Adm. William Fallon explained the increased
tempo of terrorist attacks in Afghanistan by saying "we moved focus to Iraq," and "there was a resurgence of
the Taliban." In April, Mullen told the Senate Armed Forces Committee that "with the bulk of our ground
forces deployed to Iraq...we cannot now meet extra force requirements in places like Afghanistan."
War on terror is failing – Muslims increasingly identify with terrorists, not the US.
Asian Tribune 6/29 (http://www.asiantribune.com/?q=node/11972)

While the rulers and USA put the blame of every terrorist act on al-Qaeda or Baitullah led militants,
the Taliban in Pakistan are not shunned by the public since they offer better system of governance and
quick justice. The Taliban in Afghanistan had demonstrated their ability to make the restive country
peaceful and drug free. In Fata and settled areas of NWFP the local Taliban have been able to control the
miscreants and brought relief to the tribals by taking to task the criminals. This is contrary to the policy of
our rulers and law enforcers who tend to protect the corrupt and criminals. The corrupt lower courts take
years to decide cases and in most cases give verdicts in favour of the criminals. The public does not fear the
religious extremists and are not fearful of them. It is USA and our spineless secular leaders that are
afraid of them. The people sympathies are with them since they consider them the real bearers of Islam
and the only ones who can keep the perverse American influence and western culture at bay. They feel
that the Islamists and not the nuclear capability is the best deterrence against foreign aggression. How
can they forget the commendable role of the tribals in 1948 war? But for their voluntary intrusion, Azad
Kashmir would also have become part of India. During the 1965 war and ten-year Afghan war, they
zealously guarded the western border without army support. They are natural fighters and a great asset for the
country but wrong policies of our leaders have turned the asset into liability. The people feel that USA and
India are behind terrorist acts to keep the army permanently engaged in the US war on terror. It is
questioned as to why the BLA in Baluchistan with its leadership residing in Kabul is being backed by RAW-
RAM-CIA-Mosad-MI-6 axis of evil based in Kabul. It is an open secret that the military bases provided
to US forces in Baluchistan in October 2001 are being misused for clandestine operations in Baluchistan.
Thousands of FBI and CIA agents are still operating unchecked in Pakistan under the plea of nabbing
terrorists. The MQM, which indulges in terrorism is patronised by USA, UK and India. The Islamists
feel that Musharraf is an American lapdog and as long as he remains at the helm of affairs, Islam will be in
danger; hence their moral and religious obligation to rid the Islamic State of an evil through violent means.
They add that Musharraf has been fighting this futile war not to end militancy but to prolong his stay in
power.
A2: Impact – Middle East Stability – Alt Cause

Alt cause – religion and ethnicity – multiple historical examples.
Library Index 6 [http://www.libraryindex.com/pages/2700/Poverty-Violent-Conflict-POVERTY-IN-MOST-

DANGEROUS-PLACES-ON-EARTH.html]
The Middle East is at the heart of some of the worst tension and violence in the world, much of it in the
form of terrorism. Some of this tension stems from ethnic and religious differences. Since the end of
World War II there have been several major interstate conflicts—including the Arab-Israeli conflict,
the Iran-Iraq War, and the Gulf War of 1991—civil wars in Jordan and Lebanon, and continuing
tensions between various factions throughout the region. The Arab-Israeli conflict alone has erupted
into war six times since 1948. Iraq has been involved in six skirmishes, including the ongoing war with
the U.S.-led coalition that began in 2003. Afghanistan is not always included as a Middle Eastern country, but
its history, language, and culture are closely linked to those of Iran, so the U.S. invasion there, which began
in late 2001, may also be considered a Middle Eastern conflict.
Alt cause – water is the main concern for Middle East conflict.
Darwish 3 [Adel, BBC News, http://news.bbc.co.uk/2/hi/middle_east/2949768.stm]

King Hussein of Jordan identified water as the only reason that might lead him to war with the Jewish
state.
Former United Nations Secretary General Boutros Boutros-Ghali warned bluntly that the next war in
the area will be over water.
From Turkey to Uganda, and from Morocco to Oman, nations with some of the highest birth-rates in the
world are all concerned about how to find enough water to sustain urban growth and to meet the needs
of agriculture, the main cause of depleting water resources in the region.
All of these countries depend on either the three great river systems which have an average renewal rate
of between 18 days to three months, or on vast underground aquifers some of which could take centuries
to refill.
Alt cause – Western intervention, arms dealers, military spending, and poverty.
War on Want 1 [most recent citation, http://www.waronwant.org/Just20War3F20Poverty2C20conflict20and

20instability20in20Iraq20and20the20Middle20East+4372.twl]
We fully understand from our work in Palestine, Western Sahara and other areas in conflict that stability and
justice are central to defeating poverty. The instability in the Middle East stems partly from years of
inappropriate Western intervention. Oil interests and arms dealers have played a major role in this.
Regional military expenditures, at an average of 7%-8% of GDP, are significantly more than any other
region of the developing world. Despite 30 years of large oil revenues, the Middle East has fallen
behind in human development terms - with one in five Arabs living on less than $2 a day.
Alt cause – exclusion from politics increases conflict.
May 6 [Deidre, http://www.commondreams.org/headlines06/0828-03.htm]

''The dilemma is clear, exclusion from political stakeholding radicalises, moderates, and legitimises
violence,'' said Talal, the outgoing moderator of the WCRP. "For the Middle East to be pulled back from
the brink of all-out chaos, we must take the first difficult steps on that road.''

Oil Disad Final - Scholars

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Oil Disad Final - Scholars

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Gonzaga Debate Institute 2008 1

Scholars Russia/ Saudi Arabia Oil DA

Oil Disads – Russia/Saudi Arabia

***General Oil UQ***

UQ – Oil Prices  (1/2)

Oil prices , commodity investment prooves

Oil prices , supply and demand proove

Oil prices , supply and demand proove

UQ – Oil Prices  (2/2)

UQ – A2: Speculation (1/2)

Supply and demand key to oil prices-not speculation

Speculation isn’t driving oil prices

Speculation not responsible for high oil prices

UQ – A2: Speculation (2/2)

Speculators are scapegoats- supply and demand drive oil prices

UQ – A2: Demand /Supply 

US oil supply is , and demand from developing nations is 

Increasing supply does not decrease oil prices

UQ – A2- Supply and Demand Doesn’t Affect Prices

Oil prices are driven by supply and demand

UQ – A2: Dollar Driving Oil Prices

Dollar value has no correlation with oil prices

UQ – A2: Price Gouging (1/2)

Oil industry isn’t price gouging

Yates 08 (Steven, The New American [http://www.thenewamerican.com/node/8481#SlideFrame_1] Why So High?

UQ – A2: Price Gouging (2/2)

UQ – A2: Demand Already Declining

UQ – A2: World Econ Hurts Russia

***General Oil Links***

Link- Investment T/O (1/4)

Link- Investment T/O (2/4)

Renewable energy and oil compete directly for financial resources

Link- Investment T/O (3/4)

Federal investments in alternative energy tradeoff with investments in oil

Link- Investment T/O (4/4)

Increased availability of alternative energy decreases investments in oil

Link- Alt Energy=Lower Prices

Decreasing the demand for fossil fuels lowers oil prices

Link- Alt Energy Reduces Demand (1/2)

Alternative energy decreases the demand for oil

Alternative energy decreases the demand for oil

Alternative energy reduces the demand for oil

Link- Alt Energy Reduces Demand (2/2)

Renewables decrease the demand for oil

Link- Ethanol=Lower Prices

Link- Biofuels= Lower Prices

Link- Hydrogen Reduces Demand

***General Prices/Investment Internals***

I/L- Investment K/T Market Stability

Investments in oil critical to market stability

I/L- Investment K/T Prices

Investments key to maintaining higher oil prices

I/L – Investment T/F Fast

I/L – Prices Sensitive to Supply and Demand (1/2)

A small decline in demand will decrease oil prices dramatically

Oil prices are sensitive to shifts in supply and demand

Oil prices sensitive to shifts in demand

I/L- Prices Sensitive to Supply and Demand (2/2)

Oil prices are driven by supply and demand

I/L – Investor Volatility

I/L – Price Volatility (1/2)

Oil prices volatile

The market is highly volatile

I/L – Price Volatility (2/2)

General Oil UQ

General Oil Links

General Prices/Investment Internals

A2: High Oil Prices Bad

Russian Oil Disad