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▌▌▌Russian Oil▌▌▌

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INDEX – RUSSIAN OIL


INDEX – RUSSIAN OIL.....................................................................................................................................2
RUSSIAN OIL 1NC SHELL (1/4)........................................................................................................................5
Shell (2/4)......................................................................................................................................................6
Shell (3/4)......................................................................................................................................................7
Shell (4/4)......................................................................................................................................................9
Russian Econ High - Cars.............................................................................................................................10
Econ High – African Expansion.....................................................................................................................11
Econ High – Oil (1/4)....................................................................................................................................12
Econ High – Oil (2/4)....................................................................................................................................13
Econ High – Oil (3/4)....................................................................................................................................14
Econ High – Oil (4/4)....................................................................................................................................15
Russian Econ High – Generic (1/3)...............................................................................................................16
Econ High – Generic (2/3)............................................................................................................................18
Econ High – Generic (3/3)............................................................................................................................20
Russian Econ Low – Corruption/Bureaucracy...............................................................................................21
Russian Econ Low - FDI................................................................................................................................23
Russian Econ Low - Inflation........................................................................................................................24
Russian Econ Low – Foreign Tech.................................................................................................................25
Russian Econ Low – Energy Dependency.....................................................................................................26
Russian Econ Low - Generic.........................................................................................................................27
Russian Econ Low – Oil Production Slowing..................................................................................................28
Russian Econ Low – Capital Outflow.............................................................................................................30
Oil Prices Turn Warming..............................................................................................................................31
Oil Prices Will Remain High (1/2)..................................................................................................................32
Oil Prices Remain High (2/2)........................................................................................................................33
US Prices Spillover.......................................................................................................................................34
I/L Extension (1/6)........................................................................................................................................35
I/L Extension (2/6)........................................................................................................................................36
I/L Extension (3/6)........................................................................................................................................38
I/L Extension (4/6)........................................................................................................................................40
I/L Extension (5/6)........................................................................................................................................41
I/L Extension (6/6)........................................................................................................................................42
I/L to Nationalism.........................................................................................................................................43
Nationalism  NW Impact Scenario.............................................................................................................44
High Oil Prices Aren’t Bad............................................................................................................................45
US Key to World Econ – China and India follow............................................................................................46
NW turns Global Warming - Generic............................................................................................................47

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Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
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Arms Sale Impact.........................................................................................................................................48
Inflation Key to Stop Nukes..........................................................................................................................49
Global Econ Collapse Impact Scenario.........................................................................................................50
Ext: Russian Econ Key to Global Econ..........................................................................................................52
Internal Measures ≠ Solve...........................................................................................................................53
A2 Russian Inflation.....................................................................................................................................54
Uniqueness – Oil Prices Won’t Fall in Squo...................................................................................................55
Uniqueness Ext – US is Reliant.....................................................................................................................56
Oil is Abiotic (1/2)........................................................................................................................................57
Oil is Abiotic (2/2)........................................................................................................................................58
Alternative Energy Inevitable.......................................................................................................................59
Oil Prices Key to Stability.............................................................................................................................60
EXT – Prices Based on Demand....................................................................................................................61
A2: Speculators (1/5)...................................................................................................................................62
A2 Speculators (2/5)....................................................................................................................................63
A2 Speculators (3/5)....................................................................................................................................64
A2 Speculators (4/5)....................................................................................................................................65
A2 Speculators (5/5)....................................................................................................................................67
A2 Stabilization Fund  No Impact..............................................................................................................68
A2 “But Our Oil’s From Canada!” (Oil = Fungible).......................................................................................69
A2 Non-Unique: ANWR (1/2).........................................................................................................................70
A2 ANWR (2/2).............................................................................................................................................71
A2 Non Unique: Peak Oil..............................................................................................................................73
A2 Peak Oil: Impact to Belief........................................................................................................................74
A2 Dutch Disease – Generic (1/2)................................................................................................................75
A2 Dutch Disease – Generic (2/2)................................................................................................................77
A2 Dutch Disease – WTO Scenario...............................................................................................................79
2NC/1NR — Link Magnifiers (Perception).....................................................................................................80
***AFFIRMATIVE ANSWERS***......................................................................................................................81
Aff – No Link – Institutional Investors (1/2)...................................................................................................82
Aff – Institutional Investors (2/2)..................................................................................................................84
Aff – Dutch Disease (1/3).............................................................................................................................86
Aff – Dutch Disease (2/3).............................................................................................................................87
Aff – Dutch Disease (3/3).............................................................................................................................88
Aff – Ruble Appreciation  Inevitable Collapse ...........................................................................................90
Aff – Econ Collapse Inevitable – Inflation......................................................................................................91
Aff- No Link..................................................................................................................................................93
Aff – Russian Oil Dependence Bad (1/2).......................................................................................................94
Aff – Russian Oil Dependency Bad (2/2).......................................................................................................95
Aff - Price Fall Won’t Affect Russia Immediately...........................................................................................96
Aff – Prices Won’t Drop Short Term..............................................................................................................97
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Aff – Oil Prices Will Fall (1/3)........................................................................................................................98
Aff – Oil Prices Will Fall (2/3)........................................................................................................................99
Aff- Oil Prices Will Fall (3/3)........................................................................................................................100
Aff- Oil Prices are a Lie...............................................................................................................................101
Aff – Stabilization Fund..............................................................................................................................102
Aff – Russian Econ Not Growing From Oil...................................................................................................103
Aff - No Reliance Now................................................................................................................................104
Aff – A2 Nuclear Winter Turns....................................................................................................................105
Aff – A2 Oil is Abiotic..................................................................................................................................106
Aff – A2 Global Economy Scenario.............................................................................................................107
***Impact Analysis***................................................................................................................................108
NW  Extinction........................................................................................................................................109
NW Outweighs GW AND Turns Environment..............................................................................................111
NW Turns Agriculture – Nuclear Winter......................................................................................................112
NW Turns Biodiversity – Nuclear Winter.....................................................................................................113
NW Turns Biodiversity – Generic................................................................................................................114
Turns GW – Ozone Layer............................................................................................................................115
Russian Econ Collapse Kills US Heg...........................................................................................................116
2NC/1NR Impact Calc. – Schell...................................................................................................................117
A2 Deterrence – It’s Outdated....................................................................................................................119
GW is Unstoppable.....................................................................................................................................120
Aff – GW = NW...........................................................................................................................................121
Aff – Deterrence Solves NW.......................................................................................................................122
Aff – A2 NW Causes GW (NW Delays GW)..................................................................................................124

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Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
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RUSSIAN OIL 1NC SHELL (1/4)


Uniqueness - Russia is currently experiencing a boom from high oil prices and
extensive exports, making up for OPEC.
The Star 08 (South Africa, Business Report, Pg. 2 http://www.busrep.co.za/index.php?
fSectionId=554&fArticleId=4404548 JFF)

The surplus has been boosted by revenue flows derived from the accelerating commodity boom.

Russia
Unlike South Africa, a net exporter of valuable commodities like platinum but a net importer of increasingly costly oil,
is described by Bloomberg as the "world's biggest crude oil and natural gas exporter". This
puts it in the pound seats in a commodity boom. Last year its economy grew 8.1 percent.

In view of the way its oil industry is creaming off profits, the Russian government has agreed
there is a need "to help the industry" by lowering its tax rate.

The reason: there had been "a slight stagnation of extraction", a minister said. Clearly Russia
does not believe in saving resources for another day, nor does it fear Dutch disease.

This attitude is fortunate for the world's oil consumers.

Opec takes a very different view, thumbing its nose at US president George W Bush and
others who are pressing the organisation to increase oil production.

Opec member countries believe in conserving reserves and, though they claim otherwise,
pushing up oil prices by keeping supplies tight.

Opec spokespersons claimed they were concerned about the strength of the global
economy, which is slowing in the face of sky-high prices and other problems.

If growth subsides and becomes an economic contraction, oil demand will fall.

So it makes sense for Opec to try to moderate prices.

However, Opec maintains that prices have nothing to do with the level of production. And it
has revised downwards its estimate of oil demand to underscore its determination not to
increase output.

However, the markets do not share its views on the direction of demand - and oil prices continue
to rise.

Link – plan causes reduction in oil consumption because of renewables.


<Insert if necessary.>

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Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
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Shell (2/4)
Internal Link - Russia is vulnerable to economic shock from a drop in oil prices,
but it can compensate if prices remain high. The plan doesn’t allow
enough time. Tompson and Ahrend 04
(William and Rudiger, employees of Organisation for Economic Co-operation and Development, Rudiger
teaches at Birkbeck College University of London School of Politics and Sociology, 25 May, OECD Economic
Studies [accessed through Google Books] JFF)

At present, Russia is highly dependent on the export of a limited range of natural


resources, chiefly hydrocarbons and metals. Indeed, this dependence has been growing
in recent years, and it will not rapidly be reversed. This resource dependence makes
the economy especially vulnerable to external shocks arising from fluctuations in the
international prices of its major export commodities, above all oil. The government is
well aware of the riskiness of such resource-dependent development and rightly
regards economic diversification as a key long-term goal. Yet policies promoting
diversification will take time to bear fruit. Even if diversification policies are
spectacularly successful and Russia increases sharply its exports of more
sophisticated manufactures, they will remain modest for quite some time, simply
because they start from such a low base.

The difficulties of managing a resource-based economy have prompted some


economists to view rich natural resource endowments as a "curse." Yet talk of a
"resource curse" is greatly overblown. The risks of resource-dependent development
are manageable, given the right policies and institutional framework. Prudent
macroeconomic management, in particular, is of vital importance. Regardless of the success or failure
of diversification-oriented structural policies over the long run, the sine qua non for sustaining growth
over the short to medium term will be sound macroeconomic policy.

“To all you Vada’ hatas – we’ll blow yo’ planet up!” 6
Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
Россия

Shell (3/4)
Impact - Economic trouble creates civil instability in Russia, loosening
government control and allowing for theft and use of Russia’s nuclear
arsenal.
David, (Steven, political scientist and professor, FOREIGN AFFAIRS [a peer-reviewed journal],
January/February 1999, http://www.foreignaffairs.org/19990101faessay955/steven-r-david/saving-
america-from-the-coming-civil-wars.html JFF)

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 Moscow responds with force, civil war is likely. Should Russia succumb to internal
war, the consequences for the United States 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 that
the 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

“To all you Vada’ hatas – we’ll blow yo’ planet up!” 7
Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
Россия
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.

“To all you Vada’ hatas – we’ll blow yo’ planet up!” 8
Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
Россия

Shell (4/4)
Russia has developed new nuclear weapons systems with long range and the
ability to bypass detection; Russia could initiate a nuclear war if its oil
revenue dropped.
Evening Herald 2007 (July 21, p. 11, Lexis, JFF)

Just under two weeks ago the Russian President Vladimir Putin tested a weapon more deadly than any previously
used by the former Soviet Union.

Besides ensuring his warheads work, Putin was sending a message. The missile was launched from a submarine in the White
Sea, and then travelled over 3,500 miles to the Russian Far East.

The target could have easily been Los Angeles or London, and the launch signifies that
Russia means business. After two decades of relative calm is the arms race back on?
While the UK press remains focused on Iraq and the Middle East, are the rumbles from the Kremlin something to worry about?

Putin never seemed keen to join the west, and now with his healthy gas and oil revenues earning dividends, it seems he'll never have too. Putin
aims to challenge and then counter American world dominance, which has been significantly weakened in recent times.

Looking back 10 years it seems crazy to think Russia would attempt such a manoeuvre. The main security issue in those days was how to stop
Russian nuclear fuel being sold for scrap.

Today Russia pumps out almost as much gas as Saudi Arabia, owns a huge surplus, has banked £25 billion in a reserve funds, and boasts the third
largest currency reserve in the world.

Here in little Britain we moan to Gordon about the state of our infrastructure, but Mr Putin has no time for health care because he's on an arms
spending spree. In 2003 the Russian defence budget stood at 140 billion roubles, today we're looking at a six fold increase to 870 billion roubles
(£16.8 billion pounds).

, there is no surprise that Mr Putin's new rocket takes off so fast


With such determined spending

that no missile defence system can detect it. More impressive is this new Topol-M missile has
multiple warheads which splinter so it can't be shot down. America's floundering Skynet missile
defence system wouldn't stand a chance of intercepting - even if it was finished!
Washington now hopes to place a missile defence system in Eastern Europe. Putin said seven years ago he was happy for a shared scheme to
proceed, but last month he made his current feelings clear.

If interceptors are erected, Putin said, "then we disclaim responsibility for our retaliatory steps, because it is not we who are initiators of the new
arms race which is undoubtedly brewing in Europe."

Europe depends on Russia for a quarter of our gas, and the Russian powers that be, are acutely aware of the strength they brandish. Eighteen
months ago, Russia temporarily suspended the gas supplies to the Ukraine in an argument about prices. Putin's long term plans for this power
were then revealed at the Munich security conference, "The United States has overstepped its borders in all spheres - economical, political, and
humanitarian, and has imposed itself on other states." This served a notice to Bush, Russia now stands as an adversary rather than ally.

Slowly the west is beginning to realise the situation which is arising. The President of the European Union Angela Merkel has been a vocal critic of
the Russian president, whilst we wait with anticipation for Gordon Brown's foreign policy.

With Russia simulating nuclear war with the US, and identifying Nato as a greater threat than terrorism, we can forget the clandestine practices of
the cold war. We might reason that the recent weapons tests were simply designed to focus our attention on Russia as they bid to lead a new
power axis.

a country dependant on oil money is particularly vulnerable to a


Yet we must remember that

drop in oil prices. Combine this with a demographic picture worse than any non
“To all you Vada’ hatas – we’ll blow yo’ planet up!” 9
Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
Россия
African country and Russia begins to look very fragile.

[END OF SHELL – 4/4]

Russian Econ High - Cars


Russia’s economy is currently growing – car sales prove. The Economist 08
(June 5th,”Crisis? What Oil Crisis?,” http://www.economist.com/research/articlesBySubject/displaystory.cfm?
subjectid=349002&story_id=11496858 JFF)

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.
Car ownership, at about 200 per 1,000 people, is still very low by developed-world standards. (In
most of western Europe it is over 500, and in America it is around 800.) And although average
incomes are lower than in the West, so is consumer debt. Heidi McCormack, GM's head of
business development in Russia, says that compared with other markets, burdened by debt and
oil prices, “Russia is still magically isolated.”
The growth and size of the Russian market has confounded every forecast. In 2007 sales of new
cars grew 36% by volume and, reflecting the steadily increasing buying power of customers,
57% by value. Sales of passenger vehicles exceeded 2.7m. Eduard Faritov, an analyst at
Renaissance Capital, an investment bank, thinks Russia could outstrip Germany as Europe's
biggest market this year, with sales reaching around 3.3m. By 2012 Russians will be buying more
than 5m new cars a year, of which nearly 90% will be foreign brands, predicts Ernst & Young, a
consultancy.

“To all you Vada’ hatas – we’ll blow yo’ planet up!” 10
Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
Россия

Econ High – African Expansion


The Russian economy is strong now – it is leveraging oil profits to expand into
Africa and is therefore diversifying its economy. AP 06
(September, “PUTIN IN MOROCCO FOR TALKS ON MIDDLE EAST, ENERGY COOPERATION,”
http://70.84.171.10/~etools/newsbrief/2006/news0908.txt JFF)

Russia's state-owned nuclear power company said Thursday it would bid to build Morocco's
first nuclear plant, while Russian President Vladimir Putin signed cooperation deals with the
Moroccan king as part of an economic mission to expand Russia's African reach.

Putin -- the first Russian leader to visit Morocco -- was welcomed by King Mohammed VI, Moroccan dignitaries and foreign ambassadors at a
ceremony under the baking sun before the royal palace in Casablanca, with a military band piping and minarets towering in the background
beyond a screen of pine trees.

They then headed into talks. Afterward the Russian and Moroccan delegations signed documents on extradition, tourism, fishing, medicine and
sports, palace spokesman Chakib Laroussi told The Associated Press.

The trip wraps up an Africa tour aimed at spreading Russia's influence beyond its traditional Soviet-era partners. Putin arrived early Thursday from
South Africa, where he pushed for a greater Russian business presence.

'The huge, positive moral and political potential, for which the USSR paid a lot in its time,
must be transformed today into pragmatic relations in the economic sphere,' he said in televised
comments.

'This is a very promising direction for our activity, our foreign policy, our economic expansion,' he said, adding: 'In the good sense of the word, so
as not to frighten anyone'

Putin and the king were expected to discuss boosting the U.N.'s role in global affairs, anti-terrorism efforts and tensions in the Middle East, Putin
aide Sergei Prikhodko said.

Regarding the Middle East, he said Putin and the king would 'consider prospects for resuming the political process in order to ensure a lasting
peace in the region in compliance with the norms of international law,' according to Russia's ITAR-Tass news agency.

The two were also expected to discuss the dispute over the Western Sahara, Laroussi said, adding that Morocco and Russia shared similar
positions on the issue. Morocco annexed the territory in 1975, but most countries do not recognize its sovereignty and years of U.N. efforts have
failed to organize a vote on self-determination.

Early Russian support for Algeria, which in turn backs the Western Saharan independence movement Polisario, has waned since the fall of the
Soviet Union.

Arms cooperation, including sales of Russian Kornet anti-tank missiles and Tunguska air defense systems, was also on the agenda, Prikhodko said,
adding that current arms trade between the countries was 'insignificant.'

Energy, too, was expected to be a key part of the talks. Russia is seeking to expand its energy influence and Morocco is seeking to diversify its
sources of gas and electricity.

Russia's nuclear power monopoly, Atomstroiexport, said Thursday it would bid for a contract to build Morocco's first nuclear plant, ITAR-TASS
reported.

Bidding has not yet opened for the plant, expected to go on line in 2016-2017.

Officials of Morocco's National Electricity office, which sent a delegation to Moscow for talks with Atomstroiexport last week, could not be reached
for comment.

Both countries stand to gain from cooperating on energy, said Claire Spencer, an analyst at London's Chatham House think tank.

Russia, whose natural gas exports are key to its now-booming economy, 'is looking for
markets outside Europe, and Morocco is looking to diversify away from Algerian gas,' Spencer said.

Morocco is heavily dependent on importing natural gas from neighbor Algeria, with whom relations are

“To all you Vada’ hatas – we’ll blow yo’ planet up!” 11
Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
Россия
sometimes tense, Spencer said.

Moscow was traditionally close to Algeria and other communist-friendly African states during the Soviet period,
but with the Russian economy thriving thanks largely to high oil prices, it is reaching out to
other African nations. In South Africa, Putin said Wednesday that advancing Russian business
penetration abroad was a priority. He said Russian businesses are prepared to invest
in South Africa, and corporate leaders signed agreements in mining, diamond and
banking.

Econ High – Oil (1/4)


Russia is economically far ahead of other similar countries because of oil
Globe and Mail 08 (“Oil wealth: Proving to be more purse than curse,” July 15, Lexis).

The authors say there is "little or no evidence" that an abundance of natural resources slows down long-term economic
growth. They also debunk the notion that oil wealth degrades public institutions. Institutions may not be markedly better, they
said, but they are not any worse. The economists point to the post-Soviet collapse experience of Russia, Ukraine and
Belarus as a "natural experiment" of the influence of oil and mineral resources. All three Slavic nations emerged from
the Soviet era with similar cultural, governmental and economic backgrounds, but with distinctly unequal resource
wealth. Russia was a powerhouse, Ukraine had less and Belarus had none. If the curse exists, Belarus would have emerged
the big winner. That isn't the case. It's Russia, and it isn't even close, based on key measures, including gross domestic product
per capita, rule of law, control of corruption and government effectiveness.

Russia’s economy largely depends on its wealth in oil and gas.


Gaddy and Ickes 08 (Clifford G and Barry W, (Gaddy) an economist specializing in Russia, is
writing books on the political economy of Russian oil and gas and on the country’s long-term
growth prospects. His earlier books include Russia’s Virtual Economy and The Siberian Curse,
(Ickes) an Associate Professor in the Department of Economics of the Pennsylvania State
University, and Director of Research at The New Economic School in Moscow, currently the
Chair of the Board of Directors of the National Council for Eurasian and East European
Research, and the American Editor of the journal Economic Systems, “Russia’s Addiction: The
Political Economy of Resource Dependence,” July 1, The Brookings Institute,
http://www.brookings.edu)

For nearly 40 years, the political economy of Russia has been shaped by its heavy reliance on oil and gas wealth.
Through alternating periods of boom and bust, Russia’s fortunes and the legacies of its leaders have been dependent on the
fluctuating value of its oil and natural gas. Resource dependence played a crucial role in both the development and the
demise of the Soviet economy. Resource abundance did not merely mask the flaws in the Soviet system; it led to a
transformation of the economy’s physical and institutional structure. The result was addiction to oil and gas wealth.
When oil prices collapsed in the early 1980s, Soviet leaders struggled to cope in much the same way as an addict faced
with a cutoff in the supply of a narcotic. Their panicky reactions weakened the system fatally.

“To all you Vada’ hatas – we’ll blow yo’ planet up!” 12
Z’s Juniors – AMP! LAB Jan F-F, Jan Wimmer, and Jyoti Narayanswami
Россия

Econ High – Oil (2/4)


Russia’s economy always has and still does depend on high oil prices.
Washington Post 08 (“Back In the USSR?” July 14th, lexis)
Vladimir Putin's appointment this spring as prime minister of the symbolic "union" of Russia and Belarus was yet another
example of the troubling similarities between today's Russia and the other most stable and prosperous Russian regime of the
past 80 years: Leonid Brezhnev's Soviet Union in the 1970s. That economy, too, was fueled by then-record oil prices. And
while there are clear differences between the two Russias, if these tendencies go unchecked, the increasingly authoritarian and
economically statist country may soon face crises of the kind that became apparent under Brezhnev and contributed to the
Soviet Union's demise. The most disturbing of these propensities include: · The national alcoholic binge. In the 1970s,
Soviets annually consumed eight liters of strong (40 to 80 percent proof) alcoholic beverages per person -- more than any other
country. Between 1964 and 1980, male life expectancy fell from 67 to 62. Today, per capita consumption of vodka, which is
four times cheaper in relation to the average salary than 30 years ago, has grown to 10 liters, according to official statistics
(outside experts say it is higher). By contrast, the most recent data available from the World Health Organization show the
corresponding U.S. figure is 2.57 liters. One in 10 Russian men is thought to be an alcoholic. Life expectancy for Russian men
is less than 60.6 years, more than 15 years shorter than in the United States and European Union and below current levels in
Pakistan or Bangladesh. · Oil-for-food. This spring, Putin admitted that 70 percent of the food consumed in Russia's largest
cities is imported, a situation he decried as "intolerable." This problem, too, first surfaced in the 1970s, when grain imports
were so high that by the end of the decade they supplied the flour for every third loaf of bread. When oil prices collapsed,
Russia was forced to spend gold reserves and seek loans -- and eventually found itself without grain or gold.

Russia’s economy is growing and is now more dependent on oil than ever before
The Economist 08 (“Smoke and mirrors,” Feb 28,
http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=349002&story_id=10765120)
Even Mr Putin's critics are impressed by Russia's transformation in the past few years. A country that
almost went bust ten years ago now boasts a $1.3 trillion economy, foreign-currency reserves of nearly $480 billion and
a $144 billion stabilisation fund for surplus oil and gas revenue. Annual growth of real incomes has been in double
digits. GDP per head has risen from less than $2,000 in 1998 to $9,000 today at current rates of exchange. Never before
have Russians shopped or travelled so much. Restaurants, mega-malls and airports are heaving; streets are choked with foreign
cars. Nor is the wealth confined to Moscow; every other city now seems to have a decent hotel, an Italian restaurant and a
Hugo Boss store. Mr Putin boasts that this is the result of his presidency, and implies that most Russians would back Dmitry
Medvedev, his chosen successor, even if the election were free and fair. Asked by a foreign journalist why there is no political
competition and why Mr Medvedev has not taken part in televised debates, Mr Putin says: “The salaries here are going up by
16%. There's the answer to your question.” Yet the truth is that Russia's economy began its rebound 18 months before he
became president. Behind it lie three factors: a revival of private initiative, oil prices that have risen fourfold during his
presidency and macroeconomic stability. Only the third can be credited to Mr Putin. The economy is now more dependent
on oil than ever.

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Econ High – Oil (3/4)


Russia’s economy is flourishing, mainly because of oil and other commodity exports.
Canberra Times 08 (“Russia is back and proud,” July 16, lexis)
Russia is back and proud. Prime Minister Vladimir Putin and President Dmitry Medvedev, are the Russian state, and
overwhelmingly supported by the Russian people. Today Russia is booming mainly from commodity exports, particularly
oil and natural gas. Also about 60 per cent of the world's uranium supply still comes from Russia's Cold War stockpiles.
The prosperity trickle down is apparent. Expensive brand names dominate Moscow's upmarket shops. GUM, the famous
monopoly Soviet department store, is now a tourist trap full of designer boutiques. Unfortunately there is no direct way for
Australian investors to buy Russian shares or managed funds although there are emerging market funds and Australian
Securities Exchange-listed exchange traded funds that include Russian companies. The mindsets of ordinary Russians are
hangovers from decades of communism. As a result Russians do not save. If you have got it you spend it. For the nouveau
riche anything imported is better than anything Russian. A Hermes tie bought in Paris for $200 is inferior to a Hermes tie
bought in Moscow for $400. Imported strawberries at $40 a punnet are superior to Russian strawberries at $5 a punnet.
Consumers have money to spend. Foreign capital and businesses are making substantial profits.

Russia is thriving on high oil prices


Emirates Business 247, 08 (Peter, “Russian economy flourishes like UAE’s,” July 11th,
http://www.business24-7.ae)
With oil prices remaining high, Russia is enjoying a similar economic boom to the Emirates, and has amassed $500 billion
(Dh1.83trn) in foreign currency reserves. GDP has been rising sharply at around seven per cent per annum for the past
seven years. And as emerging stock markets like China and India have sold down rapidly since last October, 48 and 35 per
cent respectively, the Russian bourse hovers near an all-time high.

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Econ High – Oil (4/4)


Russia’s energy sector has made the country wealthy, and the real estate
prices in Moscow are rising. Columbia Missourian 08 (“U.S. exports economic problems,” July
20, http://www.columbiamissourian.com/stories/2008/07/20/us-exports-economic-problems/)

Loory: How is the Russian economy doing? Matthew Chance, senior international
correspondent, CNN, Moscow: Russian state coffers have been overflowing, particularly
from Russia’s newly found energy wealth. Russia is one of the biggest oil producers in
the world, so as the world economies suffer the rising oil prices, Russia is one of the few
that benefits. It is putting that windfall of cash in its stabilization fund to spend on
projects later, and it is investing it in other foreign utilities. Loory: Housing prices are
going sky-high in Moscow and in other large Russian cities. How do people afford those
prices? Chance: Russia is in a boom-time economy, particularly in cities like Moscow and
St. Petersburg. Vast oil and gas wealth is trickling down to the general economy, and lots
of individuals have spare cash to spend. That hasn’t changed because of the credit
crunch. As a result, property prices in Moscow are getting more expensive. It may well
be the most expensive city in the world for real estate, and that doesn’t seem likely to
end soon.

Russia is seen by other EU countries as an attractive area to invest because of


its wealth in oil and natural gas.

Global Research 08 (“Russia’s "New Order" of security relations incorporating the US, Russia and the European
Union,” July 22, http://www.globalresearch.ca/index.php?context=va&aid=9641)

In a real sense the EU political elites today are schizophrenic. On the one hand Germany and the EU as a whole seek peaceful
The
economic cooperation with Russia, particularly in energy but increasingly in broader investment and economic terms.
Russian economy is seen more and more by European business as a prime area to invest
and a booming potential market. Russia enjoys the fourth largest foreign exchange
reserves in the world, near half a trillion dollars. It is the world’s premier repository of
raw materials and the second largest oil producer after Saudi Arabia and by far the
largest natural gas producer.

Russia is one of the few countries benefiting from high oil prices, and bankers
are cashing in on lucrative deals.
Guardian Weekly 08 (“Western workers cash in on Russia,” July 22, http://www.guardianweekly.co.uk/?
page=editorial&id=661&catID=15)
As the US enters recession and many European economies attempt to cope with financial
meltdown and a collapse in housing prices, Russia goes from strength to strength. A
boom in consumer spending, oil tilting towards $140 a barrel, a high growth rate,
coupled with success in football and the Eurovision song contest, have put the spotlight
on Russia in 2008. Western bankers in particular are charging to Moscow to cash in on a
record number of lucrative takeover deals, as London and New York have increasingly
become graveyards for the major financial institutions. Jonathan Astbury, a managing director at the headhunter
Sandton Group, which works with Goldman Sachs and Société Générale, said financiers are being incentivised to defect to Russia. He said: "This is a
slight premium compared to New York and London but the main benefit is that they are taxed at just 13% across the board, so they are significantly
better off in real terms. Certainly, in career terms, we feel the continued malaise in western markets – notably the UK and North America – is making

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many bankers contemplate eastern Europe, Asia and the Middle East as the main viable career options in the short term." Astbury has detected lots of
movement by expatriates between places such as Hong Kong, Dubai, Mumbai and Moscow: "Once a person has made the emotional decision to try an
overseas move, subsequent relocations then seem less daunting," he says. This was very much a characteristic of the 1980s and 90s when Hong Kong,
Russian
Tokyo and Singapore saw a major influx of expatriates to staff roles, many of whom stayed to build long-term careers within the region.

banks Renaissance Capital and Troika Dialog have doubled their headcounts over the
past 18 months, often looking overseas for expertise, in a period when the world's
biggest financial institutions have been forced to slash personnel in the wake of the
credit crunch. Andrew Keeley, head of financial institutions research at Troika, has spent
six years in Moscow, and now divides his time between the Russian capital and London.
"Bankers moving into Moscow from the west can expect to double their incomes because
a major skills shortage still exists here," says Keeley, who comes from Kent

Russian Econ High – Generic (1/3)


Russia’s economy is progressing and becoming competitive with other global
superpowers.
The Independent 08 (“Russia’s New Revolution,” July 1, lexis)
It has been a very good year to be Russian. The national football team sparkled at Euro 2008, it secured the unrivalled musical
accolade of winning the Eurovision Song Contest, and while the markets around the world disintegrate, its own economy has
continued to boom. Soaring consumer spending, oil past $140 a barrel, record numbers of mergers and acquisitions
(M&A) and a high growth rate means the financial focus is firmly on Russia in 2008. Investment bankers in the West are
charging to Moscow to cash in on the rise of lucrative takeover deals, as London and New York have increasingly become
graveyards for the bulge-bracket institutions. "Foreign bankers are pouring into Mos-cow, that's where the action is," one
capital markets professional said yesterday. The Russian investment banks Renaissance Capital and Troika Dialog have
doubled staff in the past 18 months, often looking abroad for expertise, at a time when Western bulge-bracket institutions have
been forced to slash headcount in the wake of the credit crunch. The latest big-name banker to make for Red Square is Nick
Harwood, the former head of equities for Central and Eastern Europe, the Middle East and Africa at Citigroup. Mr Harwood
will take up a post as deputy head of global markets at Troika Dialog, a Russian investment bank known for its close ties to the
Kremlin, in mid-September. Banks in Moscow are known to offer bankers packages that are well above market rates in the
West, yet Mr Harwood, who has worked for Citigroup around the world, said remuneration had not influenced his decision to
move. He said: "I am leaving a global market to work in a regional market, but the role will have a much wider remit than
equities. Moscow is a very dynamic city and Russia now has the energy of a major economic superpower." Chris Harvey,
the global head of banking at Deloitte, said: "Bankers from the UK are increasingly targeting the emerging markets, especially
Russia. The economy is modernising, and while it is not necessarily making headlines in the West, there is a lot of mergers and
acquisitions and project finance activity. The country is moving further into the 21st century, and barring micro-economic
shocks should continue to grow."

Russia is one of the world’s fastest growing economies.


New Straits Times 08 (“Russia next hotspot?” July 12, lexis)
RUSSIA'S high net-worth (HNW) population of 119,000 is said to be the largest among the emerging economies. The number
of Russian HNW individuals, increasing at 15 per cent per annum, also puts it among the world's fastest growing - at
fourth spot after Singapore's 21.2 per cent, India's 20.5 per cent and Indonesia's 16 per cent. Additionally, Russia's private
consumption growth forecast at 13 per cent even exceeds the 10 per cent projection for China. "With cheap valuations, strong
return on equity and a calm inflation outlook, Russia could be the emerging market play in the current year," said a
report by AsianInvestor.net, a subsidiary of United Kingdom-based Haymarket Media Group. Last month, it quoted HSBC
Global Asset Management fund manager for Russian equities, Douglas Helfer, as saying "Russia might once again become a
compelling case for emerging market investments this year as Bric (Brazil, Russia, India, China) markets have dipped
into financial trouble ... with a price-to-earnings ratio of 9.2 times, Russia's market is trading at the lowest valuations

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among all global emerging markets".

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Econ High – Generic (2/3)


Russia’s economy is growing – new president, widespread benefits, and the
financial sector prove. Enskog 08
(Feb. - Current Senior Editor at Credit Suisse Past Editor at Bloomberg News Reporter at AFX News Researcher at Asahi Education
Université catholique de Louvain Facultés universitaires 'Saint-Louis', Bruxelles ISB - http://emagazine.credit-
suisse.com/app/article/index.cfm?fuseaction=OpenArticle&aoid=228284&lang=EN “Russia’s Economy Continues Strong Growth” –
JFF)

Russia's new president takes over the reins of a country in full economic swing. Dmitry Medvedev seems to be
aware of the structural reforms the country urgently needs, says Alexis Rodzianko, head of Private
Banking for Credit Suisse in Russia. It remains to be seen whether he has the political will to carry them out.

Vladimir Putin's former chief of staff, Dmitry Medvedev, was sworn in as Russia's president on May 7, with Putin
appointed as his prime minister. What does this political change effectively mean for Russia?
Alexis Rodzianko: The new president Dmitry Medvedev is very close to Vladimir Putin, the outgoing president. His
election was strongly supported by Putin, and initially they will be working very closely on the continuation of existing
policies. But any organizational change is a change. I do expect we will begin to see a real impact over time, when
Medvedev's leadership style will become apparent.
How about the short term?
The Russian government will be very active in the coming months, with Vladimir Putin
maintaining his influence. But the election is an opportunity for change in certain key positions, and there could be a
change of emphasis. One important signal is the nomination of Alexander Konovalov as minister of justice, succeeding
Vladimir Ustinov.

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.

How is the Russian financial industry developing?


It's developing quite strongly. We see this in terms of the prices paid for banks being
acquired. The sums paid for financial institutions are way above the levels paid for
similar institutions just two or three years ago. There is a strong inflow of assets into the
sector.

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What are the banking needs of the growing and increasingly wealthy Russian middle
class?
Clients from the middle class have quickly become more sophisticated, not so different
from their European or American counterparts. They tend to invest in their home country
and put their reserves abroad, mainly in Europe or Switzerland.

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Econ High – Generic (3/3)


The Russian economy is growing – retail prices, millionaires, GDP, exports, and average
income prove. BBC News 07
( July 4, http://news.bbc.co.uk/2/hi/business/6265068.stm -JFF)

Retail sales in the country soared 13% last year, well ahead of the rest of Europe.

And almost half the Russian people believe it important to be fashionably dressed,
according to a recent Wall Street Journal survey.

But unlike many fashion victims in the West, Russia's elite can really afford to strut.

Last year, the number of so-called "high net worth individuals" - people whose spending
power exceeds $1m (£500,000) - in Russia rose 15.5% - compared with an 8% swelling
in their number globally, according to the Merrill Lynch and CapGemini World Wealth
Report.

Similarly, President Vladimir Putin's confident swagger on the international stage is that
of a man who has delivered what his people want: stability, prosperity and national
pride.

Regional growth

"There's been a fantastic transfer of wealth to Russia," observes Accenture energy


analyst, Mark Spelman.

In just four years, Russia's GDP has almost trebled, from $345bn in 2002 to $984bn in
2006, in dollar terms (partly due to economic growth, but also because the value of the
rouble has soared). The economy is now growing at almost 7% per year - up from less
than 5% four years ago.

Inflation, meanwhile, has slipped from almost 16% in 2002 to single-digit figures.

Exports have trebled - largely thanks to metals, oil and gas - to about $300bn, by far
outpacing import growth. This has enabled Russia to pump up its foreign cash reserves.

In 2002, the reserves stood at $44bn. By 2006, they had ballooned to more than $295bn.

Hence, as far as the Russian people is concerned, it seems President Putin can do
nothing wrong. "Putin has the highest [voter] approval rating of anyone in the world,"
says Mr Spelman.

"Everyone's focussing on the fact that there are more billionaires in Moscow than there
are in London, but what we're actually also seeing is that the disposable income of
skilled people in Russia is going up.

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"You see a lot of infrastructure, a lot of housing, shopping malls. The commodity boom is
now percolating beyond Moscow."

Agrees Global Insight Russia analyst Natalia Leshchenko: "Living standards are slowly
beginning to improve, also for the poorest, and that's why Putin is popular."

Russian Econ Low –


Corruption/Bureaucracy
The Russian economy is already weakening – the Yukos affair caused
inefficient government oil to take over – bureaucracy worsens the
problem. The Economist 08
(http://www.economist.com/research/articlesBySubject/displaystory.cfm?
subjectid=349002&story_id=10765120 “Russia’s Economy – Smoke and Mirrors, Feb. 28 JFF)

Where did it go wrong? Mr Illarionov, who quit his post in 2005, argues that the breaking
point was the attack on Yukos that began in mid-2003. The significance of the Yukos
affair went beyond the destruction of Russia's largest oil company and the imprisonment
of its boss, Mikhail Khodorkovsky. It dictated the country's entire economic and political
course.

The attack on Mr Khodorkovsky was presented as a crackdown on the oligarchs. Yet it


created a new, more powerful and less visible caste that began to play a dominant role
in the economy. The share of crude-oil production controlled by state and semi-state
companies doubled. Growth in oil output, which before the Yukos affair had been running
at about 9% a year, slowed to just 1% by the end of 2007.

Worse, the destruction of Yukos negated any efforts to strengthen the rule of law. “The
problem is not that the Russian legal system is weak,” says Vitaly Naishul, who watches
Russian institutions. “The problem is that it does not exist. The Russian justice system
has as much to do with justice as the Soviet system of trade with trade.” That problem is
as old as Russia, but under Mr Yeltsin the courts, however corrupt, were at least
independent of the Kremlin. Under Mr Putin, judges have again turned into bureaucrats
who rubber-stamp dubious administrative decisions.

The Russian economy is weakening – officials engage in multiple types of


corruption. The Economist 08
(http://www.economist.com/research/articlesBySubject/displaystory.cfm?
subjectid=349002&story_id=10765120 “Russia’s Economy – Smoke and Mirrors, Feb. 28 JFF)

Andrei Sharonov, a liberal reformer who left the economics ministry last year, says he
underestimated the impact of arbitrary bureaucratic decisions. “We have turned our
back on healthy competition. The system rewards those who are closer to the centre of
power, not those who work better. It is easier to get a competitor into a jail than to

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compete with him.” Businessmen complain that corruption, already rampant in the
1990s, is now more entrenched, and the sums involved are getting larger.
Corruption is of two kinds. One sort is driven by private firms and individuals who bribe
officials to turn a blind eye to the rules. This allows businesses to get around a net of
conflicting and outdated laws. “If everyone followed every rule and instruction in Russia,
the country would grind to a halt,” says Mr Naishul. The other kind of corruption
emanates directly from the Kremlin and benefits state officials and their friends who
double up as businessmen. Both damage the country, but the second is more insidious.

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Russian Econ Low - FDI


Russia’s economy is weak because it is overly reliant on large companies and
lacks foreign direct investment. The Economist 08
(http://www.economist.com/research/articlesBySubject/displaystory.cfm?
subjectid=349002&story_id=10765120 “Russia’s Economy – Smoke and Mirrors, Feb. 28 JFF)

The structure of the Russian economy remains skewed towards a few giant companies, mostly forged from
Soviet-era assets. Small and medium-sized businesses contribute less than 15% of GDP. The cost of opening a
business is higher than in most other countries. Only 5% of firms have been created in the past ten years,
according to the World Bank. And start-ups do not seem to push up the productivity of incumbents, a sure sign
of weak competition. In even more worrying contrast to the 1990s, polls show that half of young Russians want
to work in the government rather than go into business.

Russia's business climate and red tape also deter potential new investors. Although foreign direct investment
(FDI) doubled last year to $27.8 billion, that is still only 2.2% of GDP—half the level achieved in Ukraine. Half
of FDI went into mineral resources, and only some of it was genuinely foreign. (Tax havens are still the top
investors in Russia.)

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Russian Econ Low - Inflation


The Russian economy is suffering because of inflation
The Gazette 08 (“Russia to cut state role in economy, Medvedev says; Analysts say inflation is top
problem,” June 26, lexis)
Russia wants to reduce the state's role in the economy and will curb government spending to combat rising inflation,
President Dmitry Medvedev told Reuters in an interview. Medvedev rejected any idea of a state energy giant buying into one
of Russia's biggest foreign investments, oil firm TNK-BP, half owned by BP, and said Russia would not gamble its vast
sovereign oil wealth on risky equity investments. In a wide-ranging interview with Reuters at the Kremlin, Medvedev stressed
the importance of international cooperation to solve global economic woes and repeated his proposal to make the ruble one of
several regional reserve currencies, limiting the world's exposure to the dollar. Analysts say rising inflation, likely to hit 14
per cent this year, is Russia's top economic problem. They believe the economy is growing too quickly, or overheating.
Noting prices were rising more than twice as fast as an original government target of five per cent to six per cent a year,
Medvedev said Russia did not have "supernatural overheating" but should act "toughly and clearly to limit these
inflationary tendencies."

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Russian Econ Low – Foreign Tech


Russia’s energy sector isn’t as strong as it seems; they rely on foreign technology
Carey, founder of W.P. Carey & Co. LLC, 08 (W.P, “The Bear Is Back: Rising Oil Prices Raise Russia’s Global
Influence,” July 16, http://knowledge.wpcarey.asu.edu)
There are chinks in the Russians' energy armor, however, Goldman writes. From the earliest years in the fossil fuel
business, Russians have been dependent on foreign-supplied technology to extract and transport their oil and gas
efficiently. Long before the aforementioned reliance on Western compressor technology to pipe their gas, the Russians'
oil-drilling technology has been chronically inferior, which opened the door for foreign corporations to get a piece of the
Russian profits, though not of Russia's oil and gas. Secondly, being commodity-rich tends to make any nation less likely to
develop manufacturing technology in general. Citing "Dutch Disease," Goldman notes that such nations as Russia and
Saudi Arabia tend to accumulate commodity-fueled wealth and to use it to buy manufactured goods from other nations
such as Japan and Switzerland that, lacking commodity wealth, have great motivation to develop manufacturing technology.
"Once the Dutch found natural gas off their North Sea Coast, the relative prosperity it brought came at the expense of the
country's manufacturing section." Gas exports boosted Dutch currency and undercut prices of foreign imports, so Dutch
manufacturing declined along with domestic employment, Goldman reports.

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Russian Econ Low – Energy Dependency


Russia’s economy can’t progress; it’s too dependent on energy
Russia Today 07 (“Russia’s economy not competitive?” November 23, http://www.russiatoday.ru/business/news/17426)
Russia's economy has progressed in the last couple of years - but not enough, according to Christian H.M. Ketels at the
Institute for Strategy and Economy. He says Russia is not on the right track to fulfill its economic potential. "The country is
really not on the right track to fulfill its economic potential. Russia can do much better; Russia could develop into a
much stronger economy. But to do so we feel that something has to be changed," he said. Russian companies are moving
onto the global business stage by improving their operational strategies. But they are not regarded as having distinct
advantages or unique strategies. According to Ketels, "the culture of buying assets and market shares rather than
thinking about how you can be more innovative and efficient. That has to change over time for Russia to become a more
competitive economy." The report points to poor administrative practices in carrying out government policies as a main area
of weakness in Russia. However not everyone agrees with this. Andrey Klepach from the Ministry of Economic Development
and Trade says Russia's low competitiveness scores call the objectivity of these ratings into question. He says the situation in
the country is changing but the indexes remain at the same level. Deputy Economic and Trade Minister Kirill Androsov says
there was nothing new in the report for Russia. But he conceded that Russia was 'weak at execution', and needed to co-
ordinate and implement all of its strategies and documenting procedures. Russia has experienced solid growth per capita
and improved its macroeconomic management. However this growth has been significantly driven by oil prices.

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Russian Econ Low - Generic


Russia’s economic strength won’t last in the long term
Gaddy, an economist specializing in Russia, is writing books on the political economy of Russian oil and gas and on the country’s long-term growth
prospects. His earlier books include Russia’s Virtual Economy and The Siberian Curse, 07 (Clifford G, “As Russia Looks East: Can It Manage
Resources, Space, and People?” January 1, The Brookings Institute, http://www.brookings.edu/articles/2007/01russia_gaddy.aspx)
The suddenness with which Russia has re-emerged as a global political and economic power has stunned observers. This time, its power rests not on tanks and
nuclear arms but on oil and gas. Russia become a critical supplier of energy to a world whose demand is growing rapidly. At the same time, thanks to soaring
prices for these commodities, both the Russian state and its big corporations have turned into financial powerhouses. Is Russia's new-found power
only temporary, or will it last? In the short to medium term, high world oil prices are likely to continue to bolster Russia's wealth, strength, and
confidence. However, there are questions about the longer term. Russia has yet to address fundamental problems left behind
by decades of Soviet mismanagement of its economy. Some of these problems directly affect the future of Russia's
energy wealth. The oil and gas of the future lie in the vast, cold expanses of the eastern part of the country. In the
earlier phase of great energy wealth — the 1970s and early 1980s — Soviet economic planners committed great
mistakes by misdeveloping and overpopulating Siberia.

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Russian Econ Low – Oil Production


Slowing
Russia’s oil production is slowing
The Economist 08 (“Trouble in the pipeline,” May 8,
http://www.economist.com/research/articlesBySubject/displaystory.cfm?
subjectid=349002&story_id=11332313)
Over the past seven years, according to Citibank, Russia accounted for 80% of the growth in oil production outside the
Organisation of the Petroleum Exporting Countries. The increase in its output in the early part of the decade matched the
growth in demand from China and India almost barrel for barrel. Yet in April, production fell for the fourth month in a row.
It is now over 2% below the peak of 9.9m barrels a day (b/d) reached in October last year. Before that, the growth in
Russia's output had been slowing steadily, suggesting that the drop is not a blip. Leonid Fedun, a vice-president of
Lukoil, a local oil firm, says Russia's production will never top 10m b/d.

Russian Economy is low: oil production is slowing now; economic collapse is


inevitable
International Herald Tribune 2006. March 6th.
http://www.iht.com/articles/2006/03/02/business/ruble.php. “Russia Economy Chief Warns of a Stock
Crash”

Economy Minister German Gref said Thursday that Russia's quality of economic growth
was declining and that he was "very afraid" of a possible sudden drop in stock prices
after equity benchmarks soared to records last year.

"We're very afraid of the formation of a so-called bubble," Gref said at a cabinet meeting
in Moscow. "We should keep our hands on the pulse of key companies to understand if
the optimism of stock market players will lead to a fall that will take a long time to
recover from."

The RTS index surged 83 percent last year, making it the biggest gainer outside the
Middle East of the 77 major indexes tracked by Bloomberg. The RTS has added 30
percent this year, lagging only the main indexes in Venezuela and Peru.

Underinvestment is eroding the Russian economy's eight-year-old boom, Gref said.


Growth slowed for a third year in 2005, to 6.4 percent, as oil output advanced at the

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slowest pace in six years and output declined in key sectors of the machine-building
industry.

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Russian Econ Low – Capital Outflow


Russia’s economy is weakening from capital outflow. Russia Today
08
(July 22, http://www.russiatoday.com/business/news/27848 JFF)
Russia’s central bank says this time it is the foreign debts of Russian companies that
stand behind capital outflow. Oil company Rosneft, alone, has to pay back $22 billion by
the end of the year. Vladimir Tikhomirov, Chief Economist at Uralsib says there is a
mountain of debt to be repaid by Russian companies.

In the first half of 2007, the Russian private sector on the whole, including banks and
corporates, did manage to attract quite a significant amount of money – somewhere to
the tune of about $70 Billion. The large bulk of this had a duration of up to 12 months

Capital outflow is also a signal of decreasing interest by foreign investors in the Russian
market. They are pulling money out of emerging economies to cover losses stemming
from the financial crisis.

Kevin Dougherty of Pharos Financial group says the fear of a world-wide slow down is the
key influence on investors.

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Oil Prices Turn Warming


Oil prices turn global warming – a temporary fall in oil prices will stifle
investment in renewables that are needed to address global warming.
Brittan, economic analyst for Financial Times, 06 (Samuel, “Oil prices need to stay up,” March 10,
http://www.samuelbrittan.co.uk/text240_p.html)

If anything about the world economy could keep me awake at night, it would be neither the danger of another recession
nor the alternative danger of fresh inflation arising from excess “liquidity”. It would be the possibility of a temporary fall in
the price of oil. David Walton, of the Bank of England monetary policy committee, recently gave a lecture entitled: Has Oil
Lost the Capacity to Shock? His main object was to explain why the current explosion in the oil price has had neither the
inflationary nor the recessionary effect of previous shocks. One reason is that the price increase has taken longer to
unfold. Mr. Walton goes on to say that the UK has been better placed to absorb the current oil shock because of the
absence of the excess demand which coincided with previous shocks. In addition, the labor market is now “more flexible”
– real wages have been modestly squeezed to absorb higher energy prices without any attempt at catch-up. Last but not
least, successful inflation targeting has “helped anchor inflation expectations”. This means that employers and unions
have not projected into the future the initial impact of higher oil prices. I am happy to grant the MPC credit for the UK
monetary framework. But I would like to turn to another aspect of Mr. Walton’s paper. That is the chart at the beginning of
the real sterling oil price. This rose to a peak during the first shock of 1973, then subsided in the later 1970s only to rise
again during the second shock associated with the deposition of the Shah of Iran. There was a third sharp, but very short,
shock at the time of the first Iraq war. In the light of what came before and after, the period between the mid-1980s and
the beginning of the 21st century looks one of relative stability. The earlier shocks were, however, sufficient to reduce UK
energy use from a peak of 3.5 per cent of gross domestic product in the early 1980s to 1.5 per cent in 2003. But the
reduction nearly all took place between the 1970s and the mid-1980s. Something similar happened in the US when
several administrations launched energy-saving drives, only to let the efforts fizzle out once the crisis was no longer
staring them in the face. The latest oil price explosion has bitten deeply into business psychology. Yet we should be on
our guard. A faltering in US and world growth could easily produce a temporary fall in oil prices which would again set
back progress being made towards greater fuel efficiency. There are three reasons for wanting to economize on energy in
general and oil in particular. First, there is climate change. In a recent address, Sir Nicholas Stern, who is conducting a
British Treasury inquiry into the economics of global warming, listed a number of policies such as carbon-free electricity
generation, which could reduce unhealthy emissions. All of them would be stimulated by high oil prices and most would be
well worth achieving for their own sake. Second, there are old-fashioned environmental considerations. The ever-
increasing emission of toxic substances into the atmosphere cannot be healthy; and it is noticeable that protagonists on
all sides of the debate like to live in country areas as far removed from motorways and industrial works as possible.

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Oil Prices Will Remain High (1/2)

Oil prices won't fall—the OPEC president has rebuffed calls from oil consuming
countries to increase supply. ABC News 08 ("Oil prices won't fall: OPEC president,"
June 24, http://www.abc.net.au/news/stories/2008/06/24/2284726.htm)

OPEC president Chakib Khelil has rebuffed calls from oil-consuming countries to increase
supply saying that the cartel had already done what it could on high prices. "OPEC has
already done what OPEC can do and prices will not come down," Mr. Khelil told
journalists as he arrived for a meeting with EU energy officials in Brussels. Ahead of a
summit between producers and consumers in Jeddah last weekend, OPEC heavyweight
Saudi Arabia promised on Thursday (local time) to lift its oil production by 200,000
barrels per day. However, Saudi Arabia's increased output to counter the fears of
inflation-hit consumers, exposed divisions within OPEC at the summit with Mr. Khelil and
others opposed to a production hike. "Other member countries don't want to increase
their production because as they've said many times from our perspective we don't see
any shortage in the market," OPEC secretary-general Abdullah al-Badri said. In the face
of calls from consumer countries for an oil output hike, Mr. al-Badri insisted that "the
market is full of oil," blaming "other factors" for the high price of crude, including refinery
problems and hedge funds piling into the market.

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Oil Prices Remain High (2/2)

Oil prices can't fall right now; demand, especially from the US, is keeping them
high. Midweek 08 ("Why Gas Prices Won't Fall," March 25, article quotes Dr. Fereidun
Fesharaki, a senior fellow at the East-West Center,
http://www.midweek.com/content/columns/newsmaker_article/why_gas_prices_wont_fall/
)

The problem is that the oil is in countries where "the owners are not keen on depleting
it," since it is their main export and source of revenue. To maintain their most valuable
commodity, oil-rich nations will probably only increase production to about 95 million
barrels a day, a bit more than the current levels of 87 million to 88 million barrels a day.
Those extra 7 million or 8 million barrels will not be enough to accommodate growing
demands for fuel. Simple economics: When demand grows more than supply, costs go
up. The American driver stands to take the brunt of rising oil prices. According to
Fesharaki, the U.S. consumes one out of every four barrels of oil produced worldwide.
"The four big Asian economies of China, India, Japan and South Korea combined," he
explains, "use less oil than the U.S."

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US Prices Spillover

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I/L Extension (1/6)


A drop in oil prices would decimate the Russia economy – its growth is solely
dependent on high prices.
Skidelsky, former professor of Political Economy at the University of Warwick, 07 (Robert, “Putin’s patrimony,” Prospect,
March 2007, http://skidelskyr.com/index.php?id=2,113,0,0,1,0)
As we know, the Russian economy suffered a severe collapse between 1990 and 1996. Official GDP fell by 50 per cent.
The average standard of living probably fell by much less, but there was a big increase in inequality and in absolute
poverty. Growth started in 1997, but there was another collapse following the ruble crisis of 1998. Since 1999, the
economy has been growing at an annual average rate of 6.7 per cent. Russia is now the tenth largest economy in the
world, and its income per head has doubled since 1999 to around $12,000, about the same as Chile's. The stock market
has been doing even better: 2006 was the fourth year in which it notched up returns of over 50 per cent. Russia runs big
annual budget surpluses; it has almost no foreign debt, and has the largest foreign exchange reserves outside Asia. No
wonder investors love Putin. However, Russia is a single-track economy. Its boom is driven by rising energy and
commodity prices. The dominance of the energy sector is the result of two factors: the failure of "shock therapy" to
restructure the Soviet economy in the 1990s, and the belief that energy—oil, gas, pipelines—keeps Russia in the great
power game. Since 2001, energy prices have more than doubled. By 2006, oil and gas made up 40 per cent of GDP;
energy and minerals accounted for 60 per cent of Russian exports, and 40 per cent of government revenue. Commodity
stocks comprised 80 per cent of the stock market. The economy is more dependent on the production and export of
natural resources than it was in Soviet times, a unique case of de-industrialization. In the short run, Russia has benefited
hugely from the energy boom. But the long-run effects are quite possibly dire. This is because of what economists call the
"oil curse," or the "natural resource curse." Broadly speaking, a country with poor natural resources has no alternative, if it
is to grow, to developing its industry and services. Japan, China and now India have climbed up the economic ladder by
exploiting their abundant labor, and keeping it artificially cheap by means of undervalued exchange rates. By contrast, a
resource-rich country can become wealthy quickly by exploiting its abundant natural resources, even if it also has cheap
labor. But this may be at the cost of its long-term future. There are several reasons, obvious and not so obvious, for this.
First, commodity prices are more volatile than industrial prices, so a country which depends on commodity exports is
exceptionally vulnerable to price shocks. Second, large foreign cash inflows from commodity exports destroy the
competitiveness of non-oil industry by forcing up the exchange rate. Third, a natural resource economy is more likely to be
a politicized economy, as natural resources are viewed as part of the nation's "patrimony," to be kept out of foreign hands
and made available for political deployment. Fourth, natural-resource abundance diverts economic and political energy
from creating wealth to fighting over its distribution. The wealth is already there: the question is who will control the "rents"
from it? Fifth, it decreases the demand for democratic representation, as governments don't need to rely so much on
income tax to finance expenditure. This promotes authoritarianism. Finally, it makes control of territory a central concern
of politics. The uneven distribution of resources within a resource-rich country can either encourage resource-rich regions
to try to break away, or encourage resource-poor regions to establish control over the whole country by dictatorial means.
Both pulls have been evident in Iraq. These are tendencies rather than inevitable outcomes. They can be offset by good
policies. Norway and Holland escaped the oil curse; most of Latin America has succumbed to it. The Soviet Union offered
Russia an escape through forced industrialization. Post-communist Russia has succumbed to it by the speed of industrial
collapse and by the failure to introduce the competition which would have enabled a rapid restructuring of the economy.
Three consequences stand out. First, the Russian economy is highly vulnerable to any downturn in oil prices. This is most
obvious in its energy-dominated stock market. If the price of crude fell from $60 to $45 a barrel, the stock market could
drop by as much as one third. Such a drop would hit the Russian economy through a "wealth effect"—as personal wealth
falls; people spend less—while a reduction in the oil price would also hit government revenue through a fall in taxable
profits. Both would lead to a fall in aggregate demand, and quite possibly to the collapse of the current real estate boom,
buoyed up by oil dollars.

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I/L Extension (2/6)


If oil prices drop, Russia will suffer heavy economic consequences.
Hill, Senior Fellow, Foreign Policy, 04 (“Putin, Yukos, and Russia,” Dec 1, The
Brookings Institute, http://www.brookings.edu/articles/2004/1201russia_hill.aspx)
On the other hand, the Russian state has “restructured” in the opposite direction—it has
become even more dependent on the oil price than before. Looking carefully at Russia's
economic growth since 1997, there is a clear correlation between growth and the rise in
world oil prices. This is particularly tricky, as world oil prices are currently far above what
has been considered "normal"—and oil is known as a commodity that goes through well-
documented boom and bust cycles. The median world oil price for decades—in fact as far
back as 1869 in the United States—has tended to be around $18 a barrel (adjusted for
inflation). Since 1999, however, Russia has become addicted to a price regime well
above this. It could expect little growth at the median price—and perhaps no growth or
even a collapse in growth rates at prices well below the median. In 1998, when world oil
prices dipped to around $10 a barrel, this drop coincided with the worst of Russia's
economic crises and the collapse of the ruble. High oil prices and Russia's oil production
rebound after 1999 were good news for the Russian federal budget. Natural resources
constitute around 80% of Russian exports and oil and gas account for 55% of all exports
—making Russia's budget particularly dependent on the energy sector. In fact, 37% of
Russia's budget revenues are provided by taxes on oil and gas. Recent research by the
World Bank and the IMF has shown that each dollar increase in the price of a barrel of oil
(Ural crude) raises Russia's federal budget revenues by as much as 0.35% of GDP. And
indeed, the IMF's Resident Representative in Moscow, Goohoon Kwon, has argued that
the oil sector accounted for as much as 80% of total revenue gains at the general
government level in the period from 1999 to 2001. At the same time, changes in the
world oil price accounted for 60-75% of oil revenue gains between 1998 and 2001. Just
how important the oil price is for Russia could also be seen during a brief period from
October 2001 to March 2002, early in President Putin's first term as President. When oil
prices dipped to around $15 a barrel, reforms faltered in a number of regions.

Oil prices dictate Russia’s growth and economy directly.


Clifford G. Gaddy 2004. He is a prominent American specialist on the economy of the former USSR
comments on Russian oil in light of a preceding paper on the subject. September 20. Eurasian Geography and
Economics. “Perspectives on the Potential of Russian Oil.” Jdubz
It is becoming increasingly clear that Russia’s oil sector has been and will for the foreseeable future
continue to be the key to the country’s economic performance. Since 1997 Russian GDP growth has moved
nearly lock-step—first down, then up—with the level of world oil prices (see Fig. 1). This congruence is
almost surely not accidental. No one doubts that recent years’ high oil prices have been a windfall for
Russia, even though observers disagree about how much the high prices have contributed to growth.
Sometimes lost in the focus on the oil price impact, however, is the extent to which Russia has also gained
by steep growth of oil output—nearly nine percent per year over the past five years (see Fig. 2). As one of
the authors of the most recent OECD report on the Russian economy put it, Russia has been “pumping

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growth” (Ahrend, 2004).

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I/L Extension (3/6)


Oil price drop leads to economic collapse and a hard road to recovery when
coupled with declining demographics.
Hugh, Edward. 7/9/08 Macro economist who specializes in growth and productivity theory and
demographic processes. http://seekingalpha.com/article/84286-russian-inflation-is-
the-boom-about-to-bust Jdubs.

At the same time the price of Russia's Urals crude continues to touch all-time highs (it averaged $106 a
barrel in the year through July 2, compared with $60 a barrel in the same period a year earlier). Russia
produced 9.77 million barrels of oil a day in June, more than Saudi Arabia did, thus becoming the biggest
exporter of the fuel. Russia also produces the energy equivalent of about 11 million barrels a day of gas.
As a result of such factors Russia's trade surplus hit a record $130.92 billion in 2007. So what could
possibly go wrong?
Well, the central point would be that the strong rise in oil prices we have seen since the start of the
century has only served to increase Russia’s dependence on oil and gas revenue and has not been used to
facilitate the kind of diversification which could allow for a more stable development path. As such, the
Russian economy—despite the outward semblance of "you've never had it so good" boom times—has never been
more vulnerable to sudden falls in oil and gas prices.

The share of oil income in total fiscal revenue has increased substantially – from 10 to about 30 percent of GDP. Instead of
diversifying, Russia has, de facto, been specializing in oil. Oil now also accounts for about 60 percent of
total exports. Higher oil revenues allow for additional spending room, but they also complicate macroeconomic management
While this has not been a
and lead to an increased dependence on a highly volatile and uncertain source of income.
problem during the period of high oil prices, it would be a major source of vulnerability if
oil prices suffer any kind of rapid descent from the recent levels, and it does put in place
a "ceiling" on Russia inflation-free level of growth capacity given the fact that the
resources sector seem to have now reached its "peak output" level.
Soaring oil prices, large capital inflows, and high credit growth are all providing the
impetus for a virtuous circle of robust growth in investment, real incomes and
consumption but such growth has been producing manifest signs of overheating. The
situation is only being made worse by a procyclical fiscal policy which is stimulating
rather than easing demand pressures, while the fixed exchange rate policy in the face of
rising oil prices and large capital inflows is leading to very high levels of money and
credit growth.

And as we move forward the problems identified here are only likely to get worse.
Russia’s well documented
demographic trends—declining population, aging, and increasing demand for pension
and health services and the changing structure of demand for education are likely to
become key drivers of major social expenditures such as pensions, health and education
expenditures in the years to come. The net effect of these trends is that under any long-
term economic scenario, public expenditures on pensions, health and education are
likely to increase significantly. The World Bank estimate that the main social expenditure items are likely to increase
by 3 percentage points of GDP—from 14.1% in 2008-10 to about 17.3% by 2016-20. Given this situation stable sources of long-term
fiscal revenue and moderation in total public expenditure commitments are essential, as is the development of a growth model to
make all the numbers add up.

And sustainability of pensions and health spending isn't the only issue that Russia's demography presents us with. Declining
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levels of productivity growth mean that it is very likely that increases in headline GDP
will only be possible via sustained increases in labour inputs, yet Russia now has, as we
have seen, a declining working-age population. Long term, very low fertility [TFR 1.3-1.4
range, see chart above] means that this problem is set to continue at least over the next
twenty years (and probably a good deal longer), which means a Russian economy that is
increasingly immigrant dependent (the World Bank estimates Russia currently need a
million migrants a year) and that suffers from the almost permament inflationary
pressure of running a very tight labour market. Under these circumstances it is
impossible to contemplate the present very high levels of GDP growth being sustained in
the longer term. Indeed, if we have any kind of "adverse event" which precipitates an
unwind, precisely the opposite might well occur.

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I/L Extension (4/6)


Russia’s dependence on oil can destroy its economy and raise corruption
Adnam Vatanserver 2005 (Institute for the Analysis of Global Security) March 28th. An Associate fellow
at IAGS. “Russia’s Growing Dependence on Oil and its Venture into a Stabilization Fund”
http://www.iags.org/n0328052.htm Jdubz

Undoubtedly, Russia has emerged as one of the world’s primary energy suppliers today. Its increasing
reliance on natural resources, however, raises questions essential for Russia’s future evolution, as well as
its international role. On the one hand, it can capitalize on its resources and boost its economic
development, eventually joining the industrialized world as a competitive partner. On the other extreme,
natural resources may turn out to be a curse, rather than blessing, hindering Russia’s economic
diversification, expanding the level of corruption, and raising the risks for repeated economic (and
political) crises.

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I/L Extension (5/6)

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I/L Extension (6/6)

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I/L to Nationalism
Economic decline will empower nationalists and reverse reforms.
Mark Poncy, Ph.D./M.A joint degree candidate from the Georgetown University Law Center, 1998, and the Johns Hopkins School of
Advanced International Studies (SAIS), 1997. “The need for greater U.S. assistance in promoting Russian defense conversion,” Law
and Policy in International Business Vol 28, Questia.

The continued collapse of the Russian defense industry may trigger a series of events
that could prove disastrous for Russian and pro-Western democratic interests. Because
the defense industry has comprised such an immense portion of the former Soviet and
current Russian economies, its collapse, without conversion, would create an economic
nightmare of unemployment.(20) Politically, the Russian democratic government cannot
afford such a possibility. As the initial euphoria of securing newfound economic and
political freedom in the wake of the Russian Revolution has waned, political stability in
Russia has deteriorated. For example, political divisions between the Yeltsin government
and the Russian legislature became so acute in September of 1993 that Yeltsin invoked
emergency constitutional powers to suspend the legislature and call for new elections.
(21) Moreover, Yeltsin's assault on Chechnya in 1994 crippled his support among other
reformists. Grigory Yavlinsky, an economist and leader of the increasingly popular
Yabloko reform party, went so far as to demand Yeltsin's impeachment.(22) The split in
the reformist camp and the continued difficult living conditions caused by the painful
transition of the Russian economy have made reactionary policies sound more attractive.
(23) As The Economist predicted in December 1995,(24) Russian voters who tired of
waiting for economic improvements voted for "change" in the December 1995 elections
for the Russian Duma (the lower house of Russia's bicameral legislature). Communists
and hardline nationalists who have criticized Russia's move to a market economy over
the last five years were the primary beneficiaries of the Russian public's disgruntlement,
capturing more seats than any of the other parties in the election.(25) If Russia's
economy does not begin to register significant signs of growth, its people may choose to
relinquish democracy and opt for a return to Communist or nationalist rule in hopes of
regaining economic stability.(26) Yeltsin's initial failure to capture a majority of the vote
in the June 1996 presidential elections underscores this danger.(27) Although Yeltsin
eventually defeated Communist rival Gennady Zyuganov in the polls,(28) the very fact
that a Communist candidate succeeded in forcing a run-off for President of Russia is
alarming. Yeltsin's recently declining health(29) further indicates that a revival of
Communism or hardline nationalism may soon occur absent a Russian economic revival.
Yeltsin may have been the only candidate capable of defeating a reversion to
communism in the June 1996 elections. If health problems force him to retire, the lack of
other reformers with unified support, coupled with the economic despair in Russia,
could open the door for reactionary government interests and policies.(30) Such
a development could threaten not only Russia's transition to a market economy but also
Russia's progress in establishing a stable democracy. This already has occurred in
neighboring Belarus, where President Alexander Lukashenka has "done his worst to
undermine democracy" after capturing eighty percent of the vote in the 1994
presidential election.(31)

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Nationalism  NW Impact Scenario


Nationalist revival causes US-Russian nuclear war.
Victor Israelyan, was a Soviet ambassador, diplomat, arms control negotiator, and leading political scientist, 1998 Winter,
Washington Quarterly.

in the name of
The first and by far most dangerous possibility is what I call the power scenario. Supporters of this option would,
a "united and undivided Russia," radically change domestic and foreign policies. Many would seek to revive a
dictatorship and take urgent military steps to mobilize the people against the outside "enemy."
Such steps would include Russia's denunciation of the commitment to no-first-use of nuclear
weapons; suspension of the Strategic Arms Reduction Treaty (START) I and refusal to ratify both START II and the Chemical
Weapons Convention; denunciation of the Biological Weapons Convention; and reinstatement of a full-scale armed force, including
the acquisition of additional intercontinental ballistic missiles with multiple warheads, as well as medium- and short-
range missiles such as the SS-20. Some of these measures will demand substantial financing, whereas others, such as the
denunciation and refusal to ratify arms control treaties, would, according to proponents, save money by alleviating the obligations of
those agreements. In this scenario, Russia's military planners would shift Western countries from the category of strategic partners to
the category of countries representing a threat to national security. This will revive the strategy of nuclear deterrence -- and indeed,
realizing its unfavorable odds against the expanded NATO, Russia will place new emphasis on the first-use of nuclear weapons, a
trend that is underway already. The power scenario envisages a hard-line policy toward the CIS countries, and in such circumstances
the problem of the Russian diaspora in those countries would be greatly magnified. Moscow would use all the means at its disposal,
including economic sanctions and political ultimatums, to ensure the rights of ethnic Russians in CIS countries as well as to have an
Some
influence on other issues. Of those means, even the use of direct military force in places like the Baltics cannot be ruled out.
will object that this scenario is implausible because no potential dictator exists in Russia who
could carry out this strategy. I am not so sure. Some Duma members -- such as Victor Antipov, Sergei
Baburin, Vladimir Zhirinovsky, and Albert Makashov, who are leading politicians in ultranationalistic
parties and fractions in the parliament -- are ready to follow this path to save a "united Russia." Baburin's
"Anti-NATO" deputy group boasts a membership of more than 240 Duma members. One cannot help but remember that when
Weimar Germany was isolated, exhausted, and humiliated as a result of World War I and the Versailles Treaty, Adolf Hitler took it
upon himself to "save" his country. It took the former corporal only a few years to plunge the world into a second world
war that cost humanity more than 50 million lives. I do not believe that Russia has the economic strength to implement such a
scenario successfully, but then again, Germany's economic situation in the 1920s was hardly that strong either. Thus, I am afraid that
economics will not deter the power scenario's would-be authors from attempting it. Baburin, for example, warned that any political
leader who would "dare to encroach upon Russia" would be decisively repulsed by the Russian
Federation "by all measures on heaven and earth up to the use of nuclear weapons." n10 In autumn 1996 Oleg Grynevsky,
Russian ambassador to Sweden and former Soviet arms control negotiator, while saying that NATO expansion increases the risk of
nuclear war, reminded his Western listeners that Russia has enough missiles to destroy both the United States
and Europe. n11 Former Russian minister of defense Igor Rodionov warned several times that Russia's vast nuclear arsenal could
become uncontrollable. In this context, one should keep in mind that, despite dramatically reduced nuclear arsenals -- and tensions --
Russia and the United States remain poised to launch their missiles in minutes. I cannot but agree with
Anatol Lieven, who wrote, "It may be, therefore, that with all the new Russian order's many problems and weaknesses, it will for a
long time be able to stumble on, until we all fall down together."

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High Oil Prices Aren’t Bad


Oil prices will stay high—the economy can handle higher prices and multiple
factors point to high global demand.
Oleg Mityaev, 1/16/2008. RIA Novosti economic commentator. “Whence the crisis?”
http://en.rian.ru/analysis/20080116/97057980.html.

A number of Russian experts subscribe to an even gloomier analysis. The so-called


"concept of 2009" predicts that a recession in the U.S. would drive oil prices so low that
Russia's impressive export surplus would quickly turn into an import surplus.
Accustomed to an abundance of cheap imports, Russia would be unable to give them up
at a moment's notice and start delving into its hard-currency reserves. These
doomsayers, however, are in the minority. Too many factors point to oil prices (which
exceeded $100 per barrel early in January for the first time in history) running at high
levels for at least the next 10 years. Demand for oil grows consistently year after year.
Despite huge investment by consumer countries in alternative energy technology, their
dependence on traditional hydrocarbons is only growing. Even if the U.S. economy slows
down, China's 6% annual growth would continue to push demand for oil. Nor is the much
talked about recession in the U.S. anywhere in sight. On the other hand, oil producing
countries and companies take a very conservative view of investments in new fields and
have no urge to flood the world with cheap oil. Goldman Sachs, an international bank
famed for its prediction two years ago that oil would cost more than $100 per barrel, has
now forecasted that average 2008 prices will be $95 per barrel. Curiously enough, the
report's authors even stress that the world economy has learned how to handle high oil
prices, and do not highlight them as a threat to global economic stability. If they are
right, Russia may be able to enjoy prolonged high hydrocarbon prices without fear they
might cause a global downturn and, as a result, a drop in raw materials prices.

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US Key to World Econ – China and India


follow
US action to decrease oil consumption would cause China and India modeling.
Steve A. Yetiv and Lowell Feld, Fall 2007. Professor of political science at Old Dominion University and senior international
oil markets analyst at the U.S. Energy Information Administration until March 2006. “America's Oil Market Power: The Unused Weapon
Against Iran,” World Policy Journal, Proquest.

As world oil demand is projected to increase at least through 2025, some might argue
that this would diminish the impact of a U.S. 3 MMBD reduction plan. This is not the case.
All other things being equal, the 3 MMBD reduction in oil demand would lead to higher
spare capacity and lower oil prices. Recall that we are discussing reductions from current
baseline projections of future global demand, which include rising demand from China
and India. These projections do not include the type reductions envisioned in our plan.
Thus, one can reasonably expect the program to impact price, even under the
expectation of rising global demand. In addition, the 3 MMBD plan is merely a
conservative starting point for an overall, long-term strategy. Over time, the United
States could continue to take action towards cutting its oil consumption, and that could
spur other countries to follow suit. But even if other nations choose not to pursue similar
policies, U.S. action alone would likely decrease oil prices.

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NW turns Global Warming - Generic


Even a small scale nuclear war would cause devastating climate change throughout the world. LiveScience 06
(Jeanna Bryner, “Small Nuclear War Would Cause Global Environment Catastrophe,” December 11,
http://www.livescience.com/environment/061211_nuclear_climate.html)

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.

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Arms Sale Impact


Russian economic growth solves arms sales.
Blank 96 (Stephen J., professor at the Strategic Studies Institute of the US Army War College, Russian Security Policy in the
Asia-Pacific Region: Two Views, pg. 11) (KNDI)

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Inflation Key to Stop Nukes


Russia needs time: If rushed, their efforts would fuel inflation
Associated Press 7/21/08. “Some fear Russia’s boom could turn to bust as economy is growing too fast.”
http://www.iht.com/articles/ap/2008/07/22/business/EU-Russia-Overheating-Economy.php

"Russia's economy is overheated at the moment," said Eric Berglof, chief economist at the European Bank for
Reconstruction and Development. "The growth rate is too high — two to three percentage points above potential."

An economy overheats when its capacity to produce cannot keep up with rising demand. A World Bank report issued in
June lists seven signs — ranging from infrastructure constraints to accelerating property prices.

"The government has failed to address bottlenecks in the economy, to implement necessary infrastructure projects that
would improve the power system, railroads, agriculture, or alleviate the traffic jams in Moscow," Berglof said.

But if the government throws too much money at resolving these problems, the risk is that the cash injection will only
further fuel inflation, economists say.

Any drop in inflation means Russia won’t maintain its nukes by not being able
to direct 33% of their budget towards security
Associated Press 7/21/08. “Some fear Russia’s boom could turn to bust as economy is growing too fast.”
http://www.iht.com/articles/ap/2008/07/22/business/EU-Russia-Overheating-Economy.php

Fears are growing that Russia's oil and gas fueled economy is running too hot — and about to boil over in
the kind of mess that has scalded smaller East European neighbors.

Some of the most vehement warnings have been coming from the normally bland Finance Minister Alexei
Kudrin, who says gross domestic product is growing too fast and any ill-conceived stimulus
measures such proposed tax cuts will lead to intolerable inflation and a sudden stall in growth.

Kudrin startled audience at a recent tax conference when he compared the issue to nuclear war. Cut taxes, Kudrin
warned, and Russia won't maintain its thousands of atomic warheads. "The 33 percent share of the budget spent
on defense and security is our guarantee that there won't be a nuclear war," the minister said.

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Global Econ Collapse Impact Scenario


Russian collapse kills global economy.

Australian Financial Review, 1/8/00. afr.com (7wk)

As a big debtor nation, Russia's ability to meet its financial obligations also matters to
world markets – as the Russian rouble's collapse and accompanying loan default in
August 1998 starkly revealed. The crisis raised fears of a domino effect across emerging
markets that could ultimately push the global economy into recession. That, in the end, didn't
occur. But an economist specializing in Russia at the European Bank for Reconstruction and Development, Ivan
Szegvari, says the confidence of international investors in emerging markets, and
transitional economies as a whole, is affected by what happens in Russia. In addition, Russia
remains one of the most important clients of international financial institutions such as
the International Monetary Fund.

Russia's economy has decoupled from the US and high oil prices overcome any
recession—this Russian growth is the key to global growth.

Martin Gilman, 1/16/20 08 . Former senior representative of the IMF in Russia and professor at the Higher School of
Economics in Moscow. "Well-Placed to Weather an Economic Storm," Moscow Times,
http://www.moscowtimes.ru/stories/2008/01/16/008.html. (7wk)

Faced with this gloomy global outlook, Russia is well placed to weather the storm. In fact,
not only is the Russian economy likely to decouple largely from a sagging United
States and even Europe, but its continuing boom -- mostly but not solely fueled by high energy
revenues -- is sucking in both consumer and investment goods, and so acting as a
motor of world growth. And the planned $1 trillion public investment program over the
next decade should ensure that the country remains decoupled for years to come.

Economic collapse results in extinction.


Bearden, 2000 [T. E. Bearden, LTC, U.S. Army (Retired) CEO, CTEC Inc., the Director of the Association of Distinguished
American Scientists (ADAS) and a Fellow Emeritus of the Alpha Foundation's Institute for Advanced Study (AIAS), "The Unnecessary
Energy Crisis: How to Solve It Quickly," 6-12-2000]
History bears out that desperate nations take desperate actions. Prior to the final
economic collapse, the stress on nations will have increased the intensity and number of
their conflicts, to the point where the arsenals of weapons of mass destruction (WMD)
now possessed by some 25 nations, are almost certain to be released. As an example,
suppose a starving North Korea {2} launches nuclear weapons upon Japan and South Korea, including U.S.
forces there, in a spasmodic suicidal response. Or suppose a desperate China whose long range nuclear
missiles can reach the United States attacks Taiwan. In addition to immediate responses, the mutual

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treaties involved in such scenarios will quickly draw other nations into the conflict,
escalating it significantly. Strategic nuclear studies have shown for decades that, under
such extreme stress conditions, once a few nukes are launched, adversaries and
potential adversaries are then compelled to launch on perception of preparations by
one's adversary. The real legacy of the MAD concept is this side of the MAD coin that is
almost never discussed. Without effective defense, the only chance a nation has to
survive at all, is to launch immediate full-bore pre-emptive strikes and try to take out its
perceived foes as rapidly and massively as possible. As the studies showed, rapid
escalation to full WMD exchange occurs, with a great percent of the WMD arsenals being
unleashed . The resulting great Armageddon will destroy civilization as we know it, and
perhaps most of the biosphere, at least for many decades.

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Ext: Russian Econ Key to Global Econ


Russia influences the World Economy
William Cooper 5/30/08. Specialist in International Trade and Finance “Russia’s Economic Performance
and Policies and Their Implications for the United States,” the CRS Report for the Congress.
http://fpc.state.gov/documents/organization/106151.pdf

Although its influence has been greatly diminished since the Soviet period, Russia remains a
formidable force on the global stage, and its influence seems to be growing. Russia’s economy is
large enough to influence global economic conditions. Many European countries and former
Soviet states are highly dependent on Russian natural gas. Russia is a significant player on a
number of issues critical to the United States, for example, nuclear proliferation by Iran and
North Korea. Russia’s perceived national interests do not always match those of the United
States, creating an environment for disagreement if not conflict.

All markets are interrelated; Russia is key.


William Cooper 5/30/08. Specialist in International Trade and Finance “Russia’s Economic Performance
and Policies and Their Implications for the United States,” the CRS Report for the U.S. Congress.
http://fpc.state.gov/documents/organization/106151.pdf
The greater importance of Russia’s economic policies and prospects to the United States lie in their indirect
effect on the overall economic and political environment in which the United States and Russia operate. From
this perspective, Russia’s continuing economic stability and growth can be considered positive for the United
States. Because financial markets are interrelated, chaos in even some of the smaller economies can cause
uncertainty throughout the rest of the world. Such was the case during Russia’s financial meltdown in 1998.
Promotion of economic stability in Russia has been a basis for U.S. support for Russia’s membership in
international economic organizations, including the International Monetary Fund (IMF), the World Bank, and
the World Trade Organization (WTO). As a major oil producer and exporter, Russia influences world oil prices
that affect U.S. consumers.

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Internal Measures ≠ Solve


Internal measures can’t check: They will just make the problem worse.
Associated Press 7/21/08. “Some fear Russia’s boom could turn to bust as economy is growing too fast.”
http://www.iht.com/articles/ap/2008/07/22/business/EU-Russia-Overheating-Economy.php

As prices rise, workers demand higher pay, creating an inflationary spiral. And as food
prices rise, poorer people spend more on necessities. FBK International, a consultancy,
has forecast that the number of Russians living in poverty could increase this year for
the first time since 2000 — by 1.1 million people to a total 20 million.

"Inflation needs to be cooled down sooner rather than later. If it is not dealt with early,
the consequence will be ... a greater fall in the growth rate, as we see in Estonia and
Latvia right now," said Anders Aslund, senior fellow at the Peterson Institute for
International Economics in Washington, referring to the two Baltic states whose
economies overheated and are now seeing a sharp decline in growth.

Tax-cut supporters insist that reducing the value-added tax from 18 to 12 percent will
provide manufacturers the necessary respite to rejuvenate output. Also, by jump-starting
manufacturing and small and medium businesses, tax-cut advocates also hope to
diversify the economy, which is highly dependent on oil and gas.

Not so, countered Kudrin. The VAT accounts for one-third of federal budget revenues.
Cutting it will not help economic restructuring, as badly as Russia needs it.

Concerns over Russia's economy coincide with the approaching 10th anniversary of the
1998 financial crisis, when the country defaulted on domestic debt and devalued the
currency, causing a shock wave on international markets. Millions of Russians lost
their savings.

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A2 Russian Inflation
Inflation doesn’t matter- Russian economy still strong, though inflation exists -
Russia is taking measures to reduce inflation
China View 08 (July 5th, “Russia’s economic growth remains robust,” http://news.xinhuanet.com)
Russia has become one of the largest economies in the world, and will be the
world's sixth largest economy by the end of 2008, Russian First Deputy Prime
Minister Igor Shuvalov said at the 12th St. Petersburg International Economic Forum in
June. Russian Economic Development Minister Elvira Nabiullina said Russia's foreign
exchange and gold reserves have exceeded 500 billion dollars, and the foreign
direct investment is expected to grow 33.3 percent year-on-year in 2008.
Despite the fact that the Russian economy expanded energetically, inflation in Russia
surged to 8.1 percent in early June. Both Russian President Dmitry Medvedev and
Prime Minister Vladimir Putin have made fighting inflation a top priority. The
Russian Central Bank raised key interest rate moderately in February and April
in an effort to keep down the inflation. The government has raised its 2008 inflation
forecast to 9-10. 5 percent from the initial projection of 7-8.5 percent. First Deputy
President of the Central Bank Gennady Melikyan said the country's inflation rate is likely
to reach 12 percent this year. The International Monetary Fund (IMF) predicted that
Russia's inflation rate will hit 14 percent in 2008. Russian Deputy Prime Minister and
Finance Minister Alexei Kudrin said that the government would take a series of
measures, including establishment of inflation target mechanism, to bring the
inflation rate down to 6 percent before 2011.

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Uniqueness – Oil Prices Won’t Fall in


Squo
Prices on oil won’t likely drop – no one culprit exists and demand will steadily
increase from India and China. Saler 08
(Tom, author and freelance journalist, June 15, http://www.jsonline.com/story/index.aspx?id=762343 JFF)

Yes, it would be helpful if governments in emerging Asia stopped subsidizing energy costs and allowed market
forces to work, a process that is just starting. Yet it is delusional to think that $1 gasoline would return if only
some villain (greedy oil companies, tree-hugging environmentalists, anti-American regimes overseas) could be
identified and taken to task.

Rapid industrialization in Asia and South America means that cheap oil is not coming back. Over the next 20
years, India and China alone will double their energy consumption, accounting for almost half of the increase in
worldwide demand. Unlike the tech and housing bubbles, psychology has been only a bit player in the energy
group’s powerful bull run. Fundamentals have been the driving force, so prices are probably still within
shouting distance of reality.

Demand means that oil will never drop below $100 a barrel. Reuters
08
(June 4, http://www.reuters.com/article/etfNews/idUSL0413209620080604 JFF)

Rising emerging market demand will hold oil prices above $100 per barrel for the
forseeable future, the co-president of Morgan Stanley, one of Wall Street's largest oil
traders, said in a Russian newspaper on Wednesday.

"Will it be $200, or $150, and when? I don't know. But clearly in the current situation it
will not be $100," Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) co-
president Walid Chammah told Russia's Vedomosti newspaper in an interview published
on Wednesday.

"We are seeing a long term growth cycle based mostly on an increase in demand, not
tight supply. The demand is from China, India and other developing countries which are
playing a more significant role in the world economy."

Chammah's remarks were printed as a Russian translation from English. The original
English was not immediately available.

Financial investors, spurred by turmoil in other asset classes, have piled funds into oil to
capture the returns from demand growth outside the developed world. They have been a
factor driving oil prices to their latest record high of $135.

Morgan Stanley trades not only oil derivatives but physical oil and oil products, and even
refines crude at former BP plants in Europe by agreement with their current owner.

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Chammah said expanding emerging market economies would also support metals and
food prices, which have soared in recent years on poor harvests, rising demand and
growing production of crop-based biofuels.

"Their rise explains not only the rise of oil and metals prices, but on agricultural
products, so inflationary pressures on food will continue," Chammah said.

Uniqueness Ext – US is Reliant


The US currently imports billions in oil every year – there’s no way for it to
stop short of the plan. Ahmad 08
(Business Wire. March 7, 2008. http://findarticles.com/p/articles/mi_m0EIN/is_2008_March_7/ai_n24380607
leech LMDIT)

With the run-up in oil prices over the past four years, the United States is paying
dearly for its dependence on imported oil, Petroleum Intelligence Weekly (PIW)
reports in its latest issue. The US oil import bill last year came to some US$327 billion,
and should easily top US$400 billion this year. That's an increase of some 300%
since 2002, according to PIW. Last year, PIW reckons that the US paid out a record
US$245 billion for about 10 million barrels per day of crude oil imports, and another
US$82 billion for about 3.5 million bpd of imported oil products. This year it looks like
paying out even more, with domestic crude production continuing to fall, demand for
imports of high-priced transport fuels remaining strong, and oil prices around 30% higher
year-on-year so far in 2008.
The increase to an estimated US$440 billion for 2008 is based on an average US$90 per
barrel crude oil price for the year. In 2002, before the current bull market for oil began,
US oil imports cost less than US$103 billion. With oil prices this year as strong or
stronger than in 2007, any moderation in the US import bill must come from
reduced volumes. While oil demand growth has slowed in recent years due to both
high prices and greater fuel efficiency, the higher quality of crude oil imports that US
refiners require and the emphasis on high-quality transport fuels in the product import
mix are likely to keep upward pressure on import costs even if volumes are stable,
according to PIW. Although "energy security" and "dependency on the Middle East" get
the attention in the American national debate over oil imports, huge and rapidly rising
costs are of greater immediate economic significance, PIW says. Relatively secure
supplies from Canada and Mexico account for about one third of crude imports.

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Oil is Abiotic (1/2)


Oil is abiotic; Russia can continue to drill oil in the status quo until it can
balance its economy; peak oil is a scam
Jerry Mazza 2005. Associate Editor of Online Journal. The Writer of State of Shocks (SOS), the only poetry
collection solely on 9/11 and the war on terror. He has a BA and MA. He has written over 350 articles for
Online Journal and his articles are featured on sites around the world, including an anthology soon to be
published in multiple languages. The former Creative Director at Grey Advertising, the group that
represents the United Nations. Being highly involved with the UN, he became well-educated in the field of
politics. September 29th. “Oil is not a Fossil Fuel: It is Abiotic.” http://www.rense.com/general67/oils.htm.
Jdubz

To begin with, oil is not a fossil fuel. This is a theory put forth by 18th century scientists. Within 50 years,
Germany and France's scientists had attacked the theory of petroleum's biological roots. In fact, oil is
abiotic, not the product of long decayed biological matter. And oil, for better or for worse, is not a non-
renewable resource. It, like coal, and natural gas, replenishes from sources within the mantle of earth. This
is the real and true science of oil. Read all about it.

In fact, working in the 1950s, Russian and Ukrainian scientists, cut off from the Western World's oil supply,
applied their keen minds to the problem and, by the 1960s, had thoroughly demolished the idea of oil as a
'fossil fuel,' Is it any wonder then that Russia is one of if not the leading producers and exporters of oil. The
isolation of the Cold War forced Russia to dig deeper, literally, to find oil deeper in the earth in some
places, and to look in other places where no one had thought to look to reveal more. This while America
feels incumbent upon itself, since it claims oil production and discovery has peaked and will fade to
nothing in several decades, that America's feels it must make war to take other people's oil: Afghanistan,
Iraq, Iran, the Caspian Basin, Sudan, etcetera.

And to others who have oil, it must either rattle its saber, as with Venezuela, threaten to kill its president
who will not buckle and sell all his oil to America. And with the Saudis we will protect them from their own
terrorists and any Saddam that comes along. And we will get in bed with them so long as we can have the
lion's share of their oil, and the say-so as to who gets the rest. And therein lays the evil genius, secret and
sham of the 'Peak Oil' put on.

If oil, as coal, and natural gas, restores itself by nature, if we will more likely run into it then out of it, how
do we continue to make money on it? Certainly not by giving oil away at some reasonable price. After
World War II, oil was about 25 cents a gallon at the pump. Even given the spiraling inflation since then-last
week I paid $3.50 a gallon for it in New York City, 14 times that price. A week after the summer holiday
season ended (the peak usage season), oil is down to $3 a gallon. I doubt if I'm the only one who notices
oil's price shoot up every summer, then slither down a bit after, and then climb up in the middle of the
winter when the heating bills waft in, and old and poor people who can't afford the hikes begin to freeze
and die in their own homes.

Someone is shilling for the American petro-brokers, because 'Peak Oil' is a wonderful concept to use to go
out and war for "the control" of oil resources. So that a barrel of crude can suddenly jump from $20 to $70
to $100 a barrel, or to two, three or four hundred dollars a barrel, therefore providing exponentially
expanding profits for oil companies and oil suppliers who relish the idea of having an "inelastic demand"
for their gasoline. 'Peak Oil,' as writer Dave McGowan points out in his priceless Newsletters, which you
can find at Educate-Yourself.org, 'Peak Oil' will even drive oil companies like Shell, to attempt to shut down
an incredibly profitable facility, like the one it owns in Bakersfield, California.

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Oil is Abiotic (2/2)


Oil is abiotic; Top scientists prove it, whereas fossil fuel literature gives no
warrants as to why
Dave McGowan 2004. Well respected writer for the Center for an Informed America (CIA), a seasoned
commentator on society and a published author. Writer for Sign of the Times and Quantum Future Group

The modern Russian-Ukrainian theory of deep, abiotic petroleum origins is not controversial nor
presently a matter of academic debate. The period of debate about this extensive body of
knowledge has been over for approximately two decades (Simakov 1986). The modern theory is
presently applied extensively throughout the former U.S.S.R. as the guiding perspective for
petroleum exploration and development projects. There are presently more than 80 oil and gas fields in the
Caspian district alone which were explored and developed by applying the perspective of the modern theory and which produce from
the crystalline basement rock. (Krayushkin, Chebanenko et al. 1994) Similarly, such exploration in the western Siberia cratonic-rift
sedimentary basin has developed 90 petroleum fields of which 80 produce either partly or entirely from the crystalline basement. The
exploration and discoveries of the 11 major and 1 giant fields on the northern flank of the Dneiper-Donets basin have already been
noted. There are presently deep drilling exploration projects under way in Azerbaijan, Tatarstan, and Asian Siberia directed to testing
potential oil and gas reservoirs in the crystalline basement. (http://www.gasresources.net/index.htm)

It appears that, unbeknownst to Westerners, there have actually been, for quite some time now,
two competing theories concerning the origins of petroleum. One theory claims that oil is an
organic 'fossil fuel' deposited in finite quantities near the planet's surface. The other theory
claims that oil is continuously generated by natural processes in the Earth's magma. One theory
is backed by a massive body of research representing fifty years of intense scientific inquiry. The
other theory is an unproven relic of the eighteenth century. One theory anticipates deep oil
reserves, refillable oil fields, migratory oil systems, deep sources of generation, and the
spontaneous venting of gas and oil. The other theory has a difficult time explaining any such
documented phenomena.

So which theory have we in the West, in our infinite wisdom, chosen to embrace? Why, the
fundamentally absurd 'Fossil Fuel' theory, of course -- the same theory that the 'Peak Oil'
doomsday warnings are based on.

I am sorry to report here, by the way, that in doing my homework, I never did come across any of
that "hard science" documenting 'Peak Oil' that Mr. Strahl referred to. All the 'Peak Oil' literature
that I found, on Ruppert's site and elsewhere, took for granted that petroleum is a non-renewable
'fossil fuel.' That theory is never questioned, nor is any effort made to validate it. It is simply
taken to be an established scientific fact, which it quite obviously is not.

So what do Ruppert and his resident experts have to say about all of this? Dale Allen Pfeiffer, identified as the "FTW Contributing Editor for Energy," has
written: "There is some speculation that oil is abiotic in origin -- generally asserting that oil is formed from magma instead of an organic origin. These
ideas are really groundless." (http://www.fromthewilderness.com/free/ww3/04_04_02_oil_recession.html)

Here is a question that I have for both Mr. Ruppert and Mr. Pfeiffer: Do you consider it honest,
responsible journalism to dismiss a fifty year body of multi-disciplinary scientific research,
conducted by hundreds of the world's most gifted scientists, as "some speculation"?

petroleum can be produced abiotically (in your response to


You[Dr. Ruppert, a leading believer in Peak Oil and oil being a fossil fuel] have admitted that
my "kindred spirit"). In
fact, no one with any credibility can deny that fact. It has been demonstrated in the laboratory and
verified with unchallenged mathematical models. It is a fact. The 'fossil fuel' theory, on the other hand, cannot be verified
and is disputed by, at the very least, a large community of Soviet and Ukrainian scientists. Since abiotic petroleum is not
disputed and is verifiable, the logical presumption, until proven otherwise, is that all the natural gas and petroleum in
commercial use, and in the ground, and in storage tanks, and anywhere else, is abiotic oil and gas.
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Alternative Energy Inevitable


Neg turns case: higher oil prices will spur alternative energy growth in the
future
Cleofe Maceda 7/18/2008, an esteemed staff reporter for gulfnews.com. “High oil could be a blessing
in disguise.” http://www.gulfnews.com/business/Comment_and_Analysis/10229988.html. Jdubz

With oil prices shooting through the roof and supply falling, people are forced to
scramble for other options. If oil were priced at $1 per barrel today and it flowed like
water, no one would have bothered thinking about how to use energy from the sun, wind
and water to power homes, offices and industries.

Conserving energy would probably not even cross their mind. That's the fundamental
anomaly of human nature. People take for granted things that cost them no effort and
value those they can't easily get.

So, keeping the price of oil expensive may be a good thing after all. It will ultimately
motivate more economies to break themselves free from oil dependency and head in the
greener, more sustainable direction.

If more people are interested in renewable energy, entrepreneurs will be encouraged to


pour money into research and development.

Scientists and inventors, in turn, will be inspired to sharpen their minds further to
develop cheaper technologies.

And as alternative energy technologies become more affordable, investments in the


sector will pick up speed. In the end, it will be the consumers who will reap the benefits.

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Oil Prices Key to Stability


Oil revenue provides self-insurance against volatility
Ghiath Shabsigh and Nadeem Ilahi 2007. April. Both are contributors to the International Monetary Fund.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=983282. “Looking Beyond the Fiscal: Do Oil Funds Bring
Macroeconomic Stability?” Jdubs
The results in this paper provide support for a hitherto overlooked benefit of oil funds: that they provide
self-insurance against macroeconomic volatility. The results indicate a robust negative relationship
between the presence of an oil fund and inflation and the volatility of broad money and prices in oil
exporting countries. The results for the volatility of the real exchange rate are weaker, and it is probable
that this weakness is because of the role of other variables that comprise the real effective exchange rate
—mainly, the foreign nominal exchange rates and inflation.

The results also appear to contradict the commonly held view that oil funds may simply be “veils”—i.e.,
their apparent success may be ascribed to the inherent prudence of the countries that adopt them, and
that in and of themselves, they do not affect economic performance. Compared to other work on oil funds,
we are able to control for time-invariant unobserved factors that may be correlated with the decision to
have an oil fund. Through the use of panel data and fixed effects estimation we show that, regardless of
the time invariant policy environment, country capacity or other unobserved factors, the presence of an oil
fund is negatively associated with the volatility of macroeconomic variables.

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EXT – Prices Based on Demand


Demand is the fundamental factor affecting prices – China and India prove.
Anderson and Buol 05
(January, http://www.stls.frb.org/publications/re/2005/a/pages/oil_prices.html Anderson is VP of Fed.
Reserve Bank of St. Louis and has a Ph.D. in economics from MIT – JFF)

Many factors affect the price of oil in the world market. Recently, the rapid increase in
world oil demand has been a major factor. In August 2004, the International Energy
Agency reported that world oil demand was increasing faster than at any other point in
the past 16 years.3 The agency attributes the increase in demand to rapid economic
expansion in several countries, particularly China.

In 2003, China became the second-largest consumer of petroleum products behind the
United States.4 According to the U.S. Energy Information Administration (EIA), China
accounts for approximately 40 percent of world oil demand growth over the past four
years and consumes approximately 5.6 million barrels of oil per day (bbl/d).5 The EIA
forecasts continued growth in oil demand by China, reaching 12.8 million bbl/d by 2025,
with net imports of 9.4 million bbl/d. This would mean China’s oil demand would more
than double in the next 20 years.

India also has fueled increased oil demand. In 1995, India’s oil consumption was
approximately 1.6 million bbl/d. The EIA predicts that India’s future consumption will
grow rapidly from 2.2 million bbl/d in 2003 to 2.8 million bbl/d by 2010. This would
represent a 75 percent increase in 15 years. India’s net oil imports are also increasing.
Since 2000, India’s net oil imports increased by 27 percent, from 1.1 million bbl/d to 1.4
million bbl/d in 2003. As other developing countries continue to expand, they are likely
to follow the same pattern of sharply rising demand for energy.

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A2: Speculators (1/5)


Prices are driven by market fundamentals, not speculators. Jackson
08
(Roland, June 28, employee of Agence France-Presse, quotes are from US Energy Secretary Samuel
Bodman, http://news.yahoo.com/s/afp/20080621/pl_afp/saudioilcommoditiesus JFF)

"There is no evidence that we can find that speculators are driving futures prices," Bodman told a press briefing ahead
of Sunday's summit in Jeddah that will bring together consuming and producing nations to address the global energy crisis.

"It is clear that financial markets have seen unprecedented movement of capital into commodities in recent
years. Our view is that this capital is following the market upward, it is not leading that movement."

"That is our position. We believe that it is backed up by the facts, and that is the case that we will be making here in Jeddah
tomorrow."

The Organisation of Petroleum Exporting Countries, whose 13 nations pump 40 percent of the world's oil, has repeatedly argued that
speculation and the weak dollar, not low supplies, were driving prices to record highs.

But Bodman said: "Fundamentally tight market conditions in our view are the major driver of the dramatic price
increases that we have seen over the last five years, and particularly in recent months."

Much focus ahead of the Jeddah Energy Meeting has been on whether the final statement should criticise index funds and other
investors, which have pumped billions of dollars into oil futures.

Saudi Arabia and other nations say this has played a key role in pushing up prices to almost 140 dollars a barrel, while Western
nations, led by the United States, have called for greater output.

"The world faces an extraordinary set of circumstances that in my view demand responsible action from both consuming and
producing nations," Bodman said.

"Market fundamentals show us that production has not kept pace with growing demand for oil, resulting in
increasing prices and increasingly volatile prices."

He added: "Even despite higher global production for oil so far this year, inventories have been drawn down and production capacity
is below historic levels."

Saudi Arabia is expected to announce a further 200,000 barrel a day production increase at the summit and Bodman said any
production increase announced in Jeddah would be "welcome".

According to Bodman, global spare capacity was estimated at less than 2.0 million barrels per day

"In the absence of any additional crude supply, for every one percent increase in demand we would expect a 20
percent increase in price in order to balance the market," he said.

"Prices respond when surplus capacity is low, particularly when geopolitical turmoil or events such as
hurricanes, threaten supply."

Last Monday, New York's light sweet crude oil hit a record 139.89 dollars per barrel.

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A2 Speculators (2/5)
Though speculation has increased, it has not affected the actual supply or
price of oil and the market will correct for any bubble created. The
Economist 08

(May 29, “Double, double, oil and trouble,” http://www.economist.com/research/articlesBySubject/displaystory.cfm?


subjectid=381586&story_id=11453090 JFF)

Those who see speculators as the culprits point to the emergence of oil and other
commodities as a popular asset class, alongside stocks, bonds and property. Ever more
investors are piling into the oil markets, the argument runs, pushing up the price as they
do so. The number of transactions involving oil futures on the New York Mercantile
Exchange (NYMEX), the biggest market for oil, has almost tripled since 2004. That neatly
mirrors a tripling of the price of oil over the same period.

But Jeffrey Harris, the chief economist of the Commodity Futures Trading Commission
(CFTC), which regulates NYMEX and other American commodities exchanges, does not
see any evidence that the growth of speculation in oil has caused the price to rise. Rising
prices, after all, might have been stimulating the growing investment, rather than the
other way around. There is no clear correlation between increased speculation and
higher prices in commodities markets in general. Despite a continuing flow of investment
in nickel, for example, its price has fallen by half over the past year.

By the same token, the prices of several commodities that are not traded on any
exchange, and are therefore much harder for speculators to invest in, have risen even
faster than that of oil. Deutsche Bank calculates that cadmium, a rare metal, has
appreciated twice as much as oil since 2001, for example, and the price of rice has risen
fractionally more.

Investment can flood into the oil market without driving up prices because speculators
are not buying any actual crude. Instead, they buy contracts for future delivery. When
those contracts mature, they either settle them with a cash payment or sell them on to
genuine consumers. Either way, no oil is hoarded or somehow kept off the market. The
contracts are really a bet about which way the price will go and the number of bets does
not affect the amount of oil available. As Mr Harris puts it, there is no limit to the number
of “paper barrels” that can be bought and sold.

That makes it harder for a bubble to develop in oil than in the shares of internet firms,
say, or in housing, where the supply of the asset is finite. Ultimately, says David Kirsch of
PFC Energy, a consultancy, there is only one type of customer for crude: refineries. If
speculators on the futures markets get carried away, pushing prices so high that
refineries run at a loss, they will simply shut down, causing the price to fall again.
Moreover, speculators do not always assume that prices will rise. As recently as last
year, the speculative bears on NYMEX outweighed the bulls.

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A2 Speculators (3/5)
Oil price is based on supply and demand – multiple warrants and slow
expensive development prove. The Economist 08
(May 29, “Double, double, oil, and Trouble”
http://www.economist.com/research/articlesBySubject/displaystory.cfm?
subjectid=381586&story_id=11453090 JFF)

Mr Harris of the CFTC, for one, believes that the oil price is still a function of supply and
demand. For the past few years, the world's production capacity has grown only
sluggishly. Meanwhile, demand, especially from the developing world, has been growing
faster. So there is hardly any slack in the system. Only Saudi Arabia and the United Arab
Emirates are thought to be able to increase their output from today's levels, and even
then, there are doubts, since Saudi Arabia, in particular, is secretive about the state of
its oil industry.

That leaves the oil market at the mercy of even small disruptions to supply. Prices tend
to jump each time militants sabotage an oil pipeline in Nigeria, bad weather threatens
production in the Gulf of Mexico, or political clouds gather over the Persian Gulf.

The problem is exacerbated by a growing mismatch between the type of oil being
produced and the refineries that must process it. The most common benchmark prices,
including the one used in this article, refer to “light” crude, the least viscous sort, which
produces the most petrol and diesel when refined. “Heavy” oil, by contrast, yields more
fuel oil, which is used mainly for heating.

At the moment, diesel is in short supply and there is a glut of fuel oil. That makes
processing heavy oil unprofitable for some refineries, since the gains from diesel are
outweighed by losses on fuel oil. As refineries turn instead to lighter grades, it pushes
their prices yet higher. The discount on heavier crudes has risen to record levels. But even then,
points out Ed Morse, of Lehman Brothers, another investment bank, Iran is having trouble selling the stuff. It is storing huge
quantities of unsold oil on tankers moored off its coast.

Presumably, Iran and other heavy-oil producers will eventually be obliged to drop prices far enough to make processing the stuff
worth refiners' while. In the longer run, more refineries will invest in the equipment needed to crack more diesel out of heavy oil. Both
steps will, in effect, increase the world's oil supply, and so help to ease prices.

But improving an existing refinery or building a new one is a slow and capital-intensive
business. Firms tend to be very conservative in their investments, since refineries have
decades-long life-spans, during which prices and profits can fluctuate wildly. It can also be
difficult to find a site and obtain the right permits—one of the reasons why no new refineries have been built in America for over 30
years. Worse, new kit is becoming ever more expensive. Cambridge Energy Research Associates (CERA), a consultancy, calculates
that capital costs for refineries and petrochemical plants have risen by 76% since 2000.

Much the same applies to the development of new oilfields. CERA reckons that the cost of developing
them has risen even faster—by 110%. At the same time, oilmen remain scarred by the rapid expansion of output in the late 1970s, in
response to previous spikes in prices, that led to a glut and so to a prolonged slump. Exxon Mobil claims that it still assesses the
profitability of potential investments using the same assumptions about the long-term oil price as it did at the beginning of the
decade, for fear that prices might tumble again. Environmental concerns are also an obstacle: America, for one, has banned oil
production off most of its coastline.

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Increasing nationalism on the part of oil-rich countries is adding to the difficulties.
Geologists are convinced that there is still a lot of oil to be discovered in the Middle East
and the former Soviet Union, but governments in both regions are reluctant to give
outsiders access. Elsewhere, the most promising areas for exploration are also the most technically challenging:
in deep water, or in the Arctic, or both. Although there have been big recent discoveries in such places, they will take
longer to develop, and costs will be higher. The most expensive projects of all involve the extraction of oil from
bitumen, shale and even coal, through elaborate processing. The potential for these is more or less unlimited,
although analysts put the costs as high as $70 a barrel—more than the oil price this time last year.

A2 Speculators (4/5)
Supply and demand drives the market – refineries have sufficient capacity and
production has suffered. The Peninsula 08
(7/9, http://www.thepeninsulaqatar.com/Display_news.asp?
section=business_news&month=july2008&file=business_news2008070912647.xml JFF)

The key driver of higher oil prices is tighter supply and demand fundamentals rather
than speculation and tighter refining capacity, according to Mark Finley, General
Manager, BP Global Energy markets and US Economics.
He said if there were refining capacity constraints there would have been large
quantities of crude oil on the market forcing the price down which is not the case.
"Refining constraint does not explain why overall crude prices have been rising sharply," said Finley who
was here to make a presentation on the 2008 issue of BP Statistical Review of World Energy.
Despite high and volatile energy prices, the BP Statistical Review data shows the world's energy markets
continue to deliver reliable energy supplies.
The world's fuel resource base remains sufficient to support growing levels of production. But the
continued weakness in oil supply and increasing demand outside the Organization for Economic
Cooperation (OECD) also points to the challenges in maintaining secure energy supplies.
Interestingly consumption in the oil-exporting regions of the Middle East, South and Central America and
Africa accounted for two-thirds of the world's growth, according to BP Statistical Review.
The market's supply and demand fundamentals have tightened. The data in the BP
Statistical Review shows that last year global oil consumption grew by one million barrels
per day, slightly below the 10-year average but oil production fell, said Finley.
Global energy consumption growth remained robust in 2007, driven by above-average
economic growth and despite continued high prices.
Finley said the decline in oil production was partly due to net production cuts by OPEC in
addition to field maturity in OECD, where output declined by nearly 300,000 b/d.
OPEC production dropped by 350,000 b/d resulting from production cuts implemented in
late 2006 and early last year. Among the 10 members participating in production cuts,
crude oil output fell by 900,000 b/d.
"This has been a contributor to the tightening of the market fundamentals.
In the second half of last year oil inventories fell sharply and remain at or below
historical levels," said Finley.
He said people are worried about future supply and demand fundamentals, about
whether supply will continue to grow and about lack of spare capacity.
"Some of those concerns we think are exaggerated but is still fair to say that this is what people are
worried about," said Finley.
Asked what is expected of OPEC to stabilize oil prices, Finley said: "there is a combination of factors that

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can help to address these imbalances. But national oil companies or private companies need to invest to
take advantage of those ample reserves and to turn those reserves into production capacity."

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A2 Speculators (5/5)
Speculators are investing based on their perceptions – there’s no conspiracy.
US News and World Report 08
(June 27, http://www.usnews.com/blogs/flowchart/2008/6/27/6-myths-about-oil-speculators.html JFF)
Global markets are so abstruse to ordinary folks that it's easy to imagine a cabal of evil
geniuses pulling the levers from some fortified complex in London or Geneva. But that's
the Hollywood version. "The market is so competitive that that's nonsense," says Bob
Hodrick, a finance professor at Columbia Business School. "There's no way for everyone
to communicate and get together and say, 'We're going to buy and drive the price up.' "
There are thousands of investors around the world placing bets every day on whether oil
prices will go up or down—and they have no way of knowing who their fellow speculators
are. All they know is the current price, shown on a computer monitor, plus whatever their
own research tells them.

The aff’s speculator arguments are baseless – no one tracks speculators.


US News and World Report 08
(June 27, http://www.usnews.com/blogs/flowchart/2008/6/27/6-myths-about-oil-speculators.html JFF)

Part of the reason nobody's really sure what effect speculators have on the oil markets is a lack of information.
Exchanges like the New York Mercantile Exchange track the activities of their members, but even then, a trader
could be a speculator one day, buying oil or futures contracts, and a seller the next day: Nobody checks a
"speculator" box when making a trade.

A recent study by the federal Commodity Futures Trading Commission, which regulates commodities markets,
found a big increase in the percentage of speculators buying oil contracts for investment purposes—"paper
barrels"—instead of buying because they need the oil. But oil markets are less regulated than markets for stocks
or bonds, and there's still a lot that's unknown. Congress has ordered more studies, with new regulation likely as
well.

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A2 Stabilization Fund  No Impact


The Stabilization fund does not have enough to cushion a huge drop in oil
prices
Adnam Vatanserver 2005 (Institute for the Analysis of Global Security) March 28th. An Associate
fellow at IAGS. http://www.iags.org/n0328052.htm

Russia’s decision to establish a stabilization fund is a major success by itself. It could potentially alleviate
the country’s excessive dependence on oil prices, as well as address concerns about the “Dutch Disease”.
Nevertheless, Russia faces two major challenges, which are partly an outcome of the current design of the
stabilization fund.

First, the 500 billion rubles threshold appears considerably low. The law adopted in 2003 set the fund’s
threshold level to be equivalent to nearly 3.8 percent of Russia’s GDP. By contrast, the Finance Ministry
had proposed the threshold level to be at least 9 percent of the GDP. While establishing no limits about
the size of the fund is also deemed to be inefficient for the economy overall, its size needs to be large
enough to insure the budget against several years of low oil prices. This does not appear to be the case in
Russia, where fiscal difficulties could reappear if oil prices remain below 20 dollars again.

Second, setting the fund threshold low immediately invited sharp political battles for using the oil
windfalls. In fact, the designers of the fund believed that the threshold would provide them a breathing
space for at least 3-4 years until fund money could be used. However, within just one year, the 500 billion
ruble threshold was surpassed, with revenues accumulated in the fund reaching 740 billion rubles (26.7 bn
USD) by February 2005. Calls for the “easy money” from the stabilization fund have intensified and will
further grow in strength as the revenues in the fund reach new records.

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A2 “But Our Oil’s From Canada!” (Oil =


Fungible)
Oil is fungible – it doesn’t matter where the US gets its oil. Rocky
Mountain News 06
(Feb. 24, http://www.freerepublic.com/focus/f-news/1584659/posts JFF)

Fungibility is the degree to which units of a given commodity are interchangeable. While there are different grades of
petroleum, in the overall world market, it's a basically fungible commodity. The same can be said of gold and silver. Money is
fungible, too. So regardless of the source of government revenues - taxes, fees, debt, etc. - once the money is collected, it all goes into
the same barrel to be spent.

To help explain that, a good example is the futile act of designating your United Way contribution to your favorite charity so some
other one doesn't get the funds instead. Since United Way's collections are fungible, when you earmark dollars specifically to Charity
A, it just means that other non-earmarked dollars, some fraction of which would have gone to Charity A, are now free to go to
Charities B through Z.

Getting back to Dilbert and oil, the point is that all


oil production becomes part of the world supply, and the price of oil
is a function of aggregate demand for that finite supply. Changes in the amount supplied or the amount
demanded cause the price to go up or down. It doesn't matter where the oil comes from or what it costs to
extract it from the ground. So, lower cost producers, like Saudi Arabia, make more profit per unit of oil than
higher cost producers like the United States. OPEC doesn't set the price of oil; the world market does that,
although OPEC can influence the price by controlling its production.

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A2 Non-Unique: ANWR (1/2)


Drilling in ANWR won’t work – takes too long, produces very little, doesn’t
increase supply, threatens the ecosphere, and would only last four years.
Burgos 08
(Russell A., teaches Global Studies at UCLA,
http://www.venturacountystar.com/news/2008/jun/16/unraveling-myths-about-anwr-drilling-it-just/ JFF)

The first myth about ANWR is that we can solve today's oil problem by drilling there.

But the government says that, even under best-case scenarios, it would take 10 years to
start production and the average net drop in price would be about 86 cents per barrel —
0.6 percent.

The second myth about ANWR is that drilling there would provide us with "energy independence."

But the government's most optimistic estimate is that peak ANWR production would be
less than 1 percent of total world oil output — about 750,000 barrels per day in a country
that consumes 19 million barrels per day.

In fact, the government admits that foreign-oil dependence would decrease only slightly, between the years 2022 and 2026, and
would then return to pre-ANWR levels.

The third myth about ANWR is that drilling would produce a "supply effect" on gasoline
prices. In that Economics 101 formulation, as oil supply increases, gasoline prices will
drop.

But the government throws cold water on that myth, too, because "OPEC and other
producers may cut output to offset the supply effect." In other words, OPEC won't sit still
as we force price reductions — they'll match our production increases with production
decreases to keep supply steady and prices high.

The fourth myth about ANWR is that we "know" there's an awful lot of oil just waiting to
be pumped there.

But the government admits that "there is much uncertainty" about ANWR and "little
direct knowledge" about the location of oil, how easily it can be recovered, the size of
the fields and the quality of oil in them. What we "know" is little more than a guess,
based upon some hypothetical, exploratory models.

The fifth myth about ANWR is that so-called "limited-footprint" technologies would minimize environmental
harm.

But the government admits limited-footprint technology probably won't work and "full
development of the 1002 area" would require infrastructure throughout the area.

And the government openly acknowledges the threat to what it calls "the most
biologically productive part of the Arctic Refuge for wildlife," "the center of wildlife
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activity," and the only federal land that "protects, in an undisturbed condition, a
complete spectrum of the arctic ecosystem in North America."

At the end of the day, ANWR simply doesn't live up to the mythology. It certainly doesn't seem worth the cost. So it seems the only
real relief will come from the dreaded "nanny state" remedies — higher corporate average fuel efficiency standards, smaller cars, fuel
conservation and slower driving speeds.

Under its own best-case scenario, the government admits that drilling in ANWR would
produce a pitifully tiny effect on foreign-oil dependency — four short years of relief at
most — and a trivial effect on gas prices.

And even then, it'd be 10 years before that Suburban and I felt a penny's worth of relief
at the gas pump.

A2 ANWR (2/2)
Because oil is fungible, drilling in ANWR would have only negligible impacts on
oil prices. The Economist 05
(April 28, http://www.economist.com/printedition/displaystory.cfm?
Story_ID=3910260&CFID=54430080&CFTOKEN=533d4dd-e4df7e00-f190-428b-8ce9-e6c78aaa21c8 JFF)

Thanks to the spectacular rise of futures trading, oil has become a fungible global
commodity. The conventional notion that stakes in oil fields add up to energy security no
longer holds up: if there is an oil shock, then the market price of every barrel of oil in the
world will shoot up past $100 a barrel. [I]n America... Congress is trying to boost "energy
independence". It is now considering an energy bill that would allow oil drilling in pristine
parts of Alaska and would dole out billions in subsidies for the oil and gas business. This
is mad. America has so little oil, and guzzles so much, that it will never again be energy-
independent while relying on oil. America's best hopes for energy security lie in the
resilience of global oil markets, in conservation and in alternative energy sources.

Drilling in ANWR would have virtually no effect and couldn’t make up for
growing demand. AP 04
(March 16, http://www.msnbc.msn.com/id/4542853/ JFF)

Opening an Alaska wildlife refuge to oil development would only slightly reduce America’s dependence on
imports and would lower oil prices by less than 50 cents a barrel, according to an analysis released Tuesday by
the Energy Department.

The report, issued by the Energy Information Administration, or EIA, said that if Congress gave the go-ahead to
pump oil from Alaska’s Arctic National Wildlife Refuge, the crude could begin flowing by 2013 and reach a
peak of 876,000 barrels a day by 2025.

But even at peak production, the EIA analysis said, the United States would still have to import two-thirds of its
oil, as opposed to an expected 70 percent if the refuge’s oil remained off the market.

At the same time, the report said new Alaska production would stem the expected dramatic decline in domestic
production and extend the economic life of the Alaska oil pipeline as production from other North Slope areas
declined significantly.

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But even the additional domestic production would not be enough to overcome increased demand, meaning
continued heavy reliance on imports, the EIA said. Currently, the United States imports about 56 percent of the
oil it consumes.

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A2 Non Unique: Peak Oil


Oil won’t run out before Russia can stabilize – supply and demand dictates that
oil will be replaced gradually. Moffatt 05
(Mike, “We Will Never Run Out of Oil,” economist and lecturer at The Richard Ivey School of Business located at the University of
Western Ontario. He teaches courses on the "Global Environment of Business" that deal with economic performance, exchange rates,
political risk and international trade. Mike's academic research is in the areas of optimal pricing, taxation, exchange rates and free-
market environmental policy. Mike has been interviewed on a variety of economics and business topics by many national and
international media outlets, including the National Post, La Presse (Montreal), CBC Radio International, Financial Post, and the Toronto
Sun. Mike has studied economics at four different universities in three countries, has taught economics at both the university and
community college level. Mike is also a private-sector economic and regulatory consultant for Nexreg Compliance which assists
corporations in developing and implementing cost-effective strategies to comply with health, safety and environmental legislation.
http://economics.about.com/cs/macroeconomics/a/run_out_of_oil_2.htm )

At least not in a physical sense.


There will still be oil in the ground 10 years from now, and 50
years from now and 500 years from now. This will hold true no matter if you take a
pessimistic or optimistic view about the amount of oil still available to be extracted. Let's
suppose that the supply really is quite limited. What will happen as the supply starts to
diminish? First we would expect to see some wells run dry and either be replaced with
new wells that have higher associated costs or not be replaced at all. Either of these
would cause the price at the pump to rise. When the price of gasoline rises, people
naturally buy less of it; the amount of this reduction being determined by the amount of
the price increase and the consumer's elasticity of demand for gasoline. This does not
necessarily mean that people will drive less (though it is likely), it may mean that
consumers trade in their SUVs for smaller cars, hybrid vehicles, or cars that run on
alternative fuels. Each consumer will react to the price change differently, so we would
expect to see everything from more people bicycling to work to used car lots full of
Lincoln Navigators.

If we go back to Economics 101, this effect is clearly visible. The continual reduction of
the supply of oil is represented by a series of small shifts of the supply curve to the left
and an associated move along the demand curve. Since gasoline is a normal good,
Economics 101 tells us that we will have a series of price increases and a series of
reductions in the total amount of gasoline consumed. Eventually the price will reach a
point where gasoline will become a niche good purchased by very few consumers, while
other consumers will have found alternatives to gas. When this happens there will still be
plenty of oil in the ground, but consumers will have found alternatives that make more
economic sense to them, so there will be little, if any, demand for gasoline.

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A2 Peak Oil: Impact to Belief


Belief in Peak Oil is bad: It perpetuates fascism, abuses the common people,
and makes more wars for oil inevitable.
Jerry Mazza 2005. Associate Editor of Online Journal. The Writer of State of Shocks (SOS), the only poetry collection solely
on 9/11 and the war on terror. He has a BA and MA. He has written over 350 articles for Online Journal and his articles are
featured on sites around the world, including an anthology soon to be published in multiple languages. The former Creative
Director at Grey Advertising, the group that represents the United Nations. Being highly involved with the UN, he became
well-educated in the field of politics. September 29th. “Oil is not a Fossil Fuel - It is Abiotic.”
http://www.rense.com/general67/oils.htm Jdubz

In this concept of 'Peak Oil' you have the system's secret to hold the world hostage. Not that we shouldn't
take care to not overuse oil, not that we should avoid conservation, or even to stop poking the planet, and
actually seek purely organic ways in which to live. But now, now that we are here, and have billions of
people to sustain, we must not let vast numbers of them be harmed, murdered, abused, because of
feigned shortages, economies overturned by outrageous prices, everyday working people be bankrupted
by same, to get to work, to warm their homes, to cook their families' food, to participate in an organized
society. We must not make the beasts, the Bilderbergers, the elites, the oligarchs use the 'Peak Oil' lever
to bend the backs of the world on its wrack.

Believing in 'Peak Oil' is not a price to pay to avoid the price of drilling for oil in new ways, for setting fair
and unwavering commodity prices. The cost of blood and lives and the future of nations are too much to
pay for the folly of 'Peak Oil.' In fact, realizing that oil is a self-renewing resource puts the neocon agenda
into a new perspective. Instead of seeing 'Peak Oil' as the end days of technological civilization literally
losing its power, see this idea as the further manipulation towards fascist power and subjugation that it is:
still another way to scare the world into believing its resources are terminally finite, and that we must be
led into another and another war that must be waged to survive.

If we do not accept the lie, the manipulation of 'Peak Oil," it is not to say we can't devise new systems to
bring life and the world forward. It is only to put the petroleum barons on notice. It then gives us a chance
to bring people together, to tear away the false scarcity, to share resources, to experience peace, to
alleviate poverty with the abundance of renewable hydrocarbon resources, as with the abundance of the
human imagination. Or else we end up with another Ruppert rubric, “Sizing Up the Competition - Is China
the Endgame?,” another piece of priceless paranoia to peddle for perdition, another dark ops for a bright
new generation of believers. More war, endless war it is, to enrich the already rich, to impoverish the
already poor.

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A2 Dutch Disease – Generic (1/2)


Dutch Disease is stopped by good governance. Russia, while having a corrupt
government, resembles the US government of the early 20th Century;
empirically proven to be fixable.

Time 2007. “Curing the Dutch Disease.”


http://www.time.com/time/specials/2007/article/0,28804,1720049_1722077_1722426,00.html

For years, the country's economic situation had seemed hopeless. Abundantly endowed with minerals and
oil and gas deposits, it has nonetheless swung from booms to busts and back again. Its politics are
hopelessly corrupt. The central government, far from being an effective regulator, serves mostly as a
handmaiden to a powerful group of oligarchs, making it that much easier for the rich to get richer. And as
the oil and mineral barons party on, the rest of the country suffers ...

It's called the "resource curse" — and what it means is that many economists have come to accept that for
developing countries, less is more. Think of Ghana and Zambia, which upon independence expected that
their cocoa plantations and copper deposits would ease their way to prosperity — and were quickly
disabused of the idea. Think of Saudi Arabia, where they import Filipinos and Palestinians to do the work as
the sheiks jet off to party and shop in London and Paris. When the Netherlands in the 1950s and '60s
discovered a huge amount of natural gas off its shores, only to see the rest of its economy subsequently
go into the tank, the phenomenon became known as the "Dutch disease."

It's coming to the end of its shelf life. The historic commodities boom that we are living through now shows
that the Dutch disease is just as often absent from resource-rich countries as it is present. The key is
governance. Yes, commodities can indeed produce rent-seeking, and can bump up the external value of a
currency, making it hard to produce other goods for export. But well-governed nations find ways to
insulate their economies from the downside of commodities. Some of it, as Norway has shown, is just
straightforward economic fundamentals: sound monetary policy, open trading and investment regimes.
Enforced laws against corruption are basic. So, too, is using natural endowments to make key industries
more efficient and productive, in part by utilizing (and indeed, prodding) innovations elsewhere in the
economy. Australia, points out Stanford economist Gavin Wright, receives more income from intellectual
property associated with the mining industry than it does from wine exports.

Skeptics of the Dutch disease's demise point to Russia as the most prominent example of a hugely
endowed country making bad choices. A chaotic democracy has become an authoritarian, one-party state
guided by former Gazprom chairman Dmitri Medvedev, who is often regarded as little more than a front
man for former President Vladimir Putin. The crippling corruption of the 1990s, in conventional wisdom, is
now simply benefiting a different cast of characters.

Maybe so. But nothing guarantees that doleful outlook — surely not the geological gift of
massive resources. History, if it shows anything, shows that resource-dependent, boom-
and-bust, poorly regulated countries can — and do — change. Consider the country
described in the first paragraph of this story. It is, true enough, Russia today. But it's also

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a fair description of another country, at the start of the 20th century. The United States
has come a long way since then.

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A2 Dutch Disease – Generic (2/2)


Russia’s economic development has been solid and should continue into the
future should oil stay strong

Rudiger Ahrend, Donato de Rosa and William Tompson 2007. January 25th Economists for
OECD, the Organization for Economic Co-operation and Development, a leading organization with
representatives from 30 different countries, 2500 experts in their respective fields, and brings
together the governments of countries committed to from around the world to support
sustainable economic growth, boost employment, raise living standards, maintain financial
stability, assist other countries' economic development, and contribute to growth in world trade.
They also share expertise and share views with over 100 other countries.

The analysis is divided into two parts. The first considers the question of whether and how the greater
relative abundance of natural resources in Russia has affected structural change in that country relative to
Ukraine. The second looks for evidence that the resource sector has actually hindered the development of
non-resource sectors and tries to assess whether Russia has actually suffered from the size of its resource
sector. The paper’s main findings may be summarized as follows. First,
it is difficult to avoid the
conclusion that the development of Russia’s manufacturing sector has been affected by
the country’s resource wealth. However, the evidence also suggests that, so far, at least,
Russian economic performance has not suffered as a result: economic development has
been vigorous and living standards in Russia have been much higher than in Ukraine. Of
course, this may simply reflect the steadily rising terms of trade of recent years, but
there are no signs that the manufacturing sector in general is withering away. On the
contrary, although some sectors have clearly been finding it difficult to cope with the
pressure of real appreciation in recent years, the evidence suggests that Russia overall
would have been much worse off without its resource wealth.
This, of course, leaves open the question of whether Russian economic development will
be significantly handicapped by Dutch disease in the future. The period covered by this paper, after all,
precedes the dramatic oil-price rises of 2005-06, which has led to an acceleration of real appreciation in Russia and, in the view of
OECD (2006), has led to mounting pressure on non-resource tradable sectors. Russian policy choices will largely determine how
successfully the economy adapts to its new terms of trade.
The so-called resource curse is no fatalité, and
there is no reason why Russia’s development must necessarily be handicapped by its
resource wealth. Resource rich countries can develop successfully, as the experiences of
countries like Canada, Australia, or Finland, not to mention the US in the late 19th and
early 20th centuries, show.

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Russia uses high oil revenues to invest in economic diversification—this will


drive growth now.
The Guardian (UK), 1/25/2008. “Russia investment fund seeks $4 bln/year from 2011,”
http://www.guardian.co.uk/feedarticle?id=7256415 . (7wk)
Russia, flush with windfall oil revenues, runs a strong budget surplus but has
substantially loosened its fiscal policy to accommodate pension and wage hikes as well
as infrastructure and industrial investment needs. The fund, which aims to introduce a
concept of private-public partnership in Russia, has so far approved 20 projects worth 1
trillion roubles with the share of state budget financing at about 30 percent. The budget
investment fund is one of several vehicles created in Russia in recent years aimed at
channelling oil wealth into improving infrastructure, diversifying the economy and
boosting economic growth. Cash assigned to the Development Bank and other state-run
institutions has so far only been used to support banking sector liquidity. Analysts see
government spending as key for maintaining high growth rates in 2008.

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A2 Dutch Disease – WTO Scenario


Reforms will cause WTO membership.
Kaveh L Afrasiabi and Natalia Gold , 3/21/20 08. Teaches international relations at Bentley College, teaches
business at Bentley College. “Medvedev holds key to WTO,” Asia Times, http://www.atimes.com/atimes/Central_Asia/JC21Ag01.html.
(7wk)

In the wake of this week's Moscow visit by US secretaries of state and defense, Condoleezza Rice
and Robert Gates, and their showering of praise on Russia's president-elect Dmitry Medvedev as
someone that the US "can do business with", eyes are now on Medvedev to see if the former
protege of President Vladimir Putin will stamp his own mark, for example by accelerating the
tempo of change in Russia, or whether it will be business as usual. The younger and more
technocratic Medvedev may be more ready than his predecessor to steer the Russian economy
towards market liberalization and globalization, witness his decision to make a top priority of
Russia's entry to the World Trade Organization (WTO). Russia's bid to join the WTO has moved
forward slowly since 1993, yet expectations are rather high that all the required bilateral and
multilateral agreements, as well as technical, legal and organizational issues, can be wrapped up
within the next few months. In that event, Medvedev can then take credit for accomplishing
something that eluded Putin, even though the latter paved the way for Russia's WTO accession
by adopting many of the necessary economic and legal reforms. The country has agreed to
substantial tariff cuts, such as an average of 8% on manufactured goods, and to permit complete
foreign ownership of banks and investment companies on accession to the world body. However,
just as Moscow has previously had to alter its forecast for WTO membership several times, the
Kremlin's new boss may discover that unless the country adopts more economic changes and
policy changes, accession to the WTO may need to be postponed yet again.

That will diversify the economy—solves your long term dependence


arguments.
William J. Burns, 11/28/2006. U.S. Ambassador to Russia. “WTO and U.S.-Russian Relations — Remarks to the American Chamber
of Commerce,” Department of State, http://usembassy.ru/bilateral/statement.php?record_id=73. (7wk)

WTO membership will provide a strong impulse toward diversification of the Russian
economy beyond oil and gas. It will help the modernization of Russia's aviation industry,
making state of the art aircraft and plane parts more affordable and airlines better able to service Russia's eleven time zones.
WTO membership will help Russian exporters and employers to expand in the ferrous
and non-ferrous metals, chemicals, and telecommunications sectors. Chemical
processing industries like those I visited in Volgograd ten days ago are likely to get a big boost. Russian
consumers will see a broader range of goods at cheaper prices in stores and groceries.
Russian food processors will have better access to import ingredients due to lower tariffs and
fewer import restrictions. WTO membership will also allow Russian agricultural producers to better defend and promote their export
interests.

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2NC/1NR — Link Magnifiers


(Perception)
Oil prices are perception based—the plan triggers a massive sell-off.
Robert Shiller, 11/8/2004. Prof. Econ @ Yale. “The perception of declining prices triggers a massive sell-off and price collapse,”
The Edge (Malaysia), Lexis. (Leech 7wk oil DA)

Butwhat matters for oil prices now and in the foreseeable future is the perception of the story, not the
If there is a perception that prices will be higher in the future, then prices will
ambiguities behind it.
tend to be higher today. That is how markets work. If it is generally thought that oil prices will be higher in the future,
owners of oil reserves will tend to postpone costly investments in exploration and expansion of production capacity, and they may
pump oil at below capacity. They would rather sell their oil and invest later, when prices are higher, so they restrain increases in
supply. Expectations become self-fulfilling, oil prices rise and a speculative bubble is born. But
if owners of oil reserves think that prices will fall in the long run, they gain an incentive to explore for
oil and expand production now in order to sell as much oil as possible before the fall. The
resulting supply surge drives down prices, reinforces expectations of further declines, and
produces the inverse of a speculative bubble: a collapse in prices.

Perception that oil is losing value causes rapid decline.


Andrew Leonard, 8/21/2006. Senior editor at Salon.com. “The oil bubble,”
http://www.salon.com/tech/htww/2006/08/21/oil_bubble/index.html. (leech from Michigan 7wk Oil DA)

some portion of the spike in oil prices over the last


The theory goes like this: First, there's the supposition that
couple of years is speculator driven. Traders are stockpiling oil for sale to buyers at some later
date, hoping that in the intervening period prices will continue to rise. Such speculation naturally pushes the price of
oil even higher. This is a classic pattern in markets, going back at least as far as the great tulip mania of the 17th
century, and there's no reason why oil should be any different from any other traded commodity. And as with all bubbles,
once traders start thinking that the price might fall, whoooosh -- the air rushes out.

Herd mentality magnifies the link.


The Globe and Mail (Canada), 10/12/2007. “Speculating on the future of those pesky oil and gas speculators,” Lexis.
(Leech 7wk oil da)

Probably not.Oil analysts vary widely on this subject, but a sample of respected ones says the
speculative premium in crude adds between $20 and $35 a barrel. What if these investment funds -
and they're not all hedge funds - decide they want to short the market? Since they tend to move in a herd fashion, that
would mean a big drop in oil prices.

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***AFFIRMATIVE ANSWERS***

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Aff – No Link – Institutional Investors


(1/2)
Institutional investors have caused oil futures to spike without regard to
supply – alternative energy would not lower prices. Masters 08
(Michael, May 20, Managing member/portfolio manager for Masters Capital Management LLC, testimony
before US Senate Governmental Affairs and Homeland Security Committee,
http://hsgac.senate.gov/public/_files/052008Masters.pdf JFF)
You have asked the question “Are Institutional Investors contributing to food and energy
price inflation?” And my unequivocal answer is “YES.” In this testimony I will explain that
Institutional Investors are one of, if not the primary, factors affecting commodities prices
today. Clearly, there are many factors that contribute to price determination in the
commodities markets; I am here to expose a fast-growing yet virtually unnoticed factor,
and one that presents a problem that can be expediently corrected through legislative
policy action.
Commodities prices have increased more in the aggregate over the last five years than
at any other time in U.S. history. We have seen commodity price spikes occur in the
past as a result of supply crises, such as during the 1973 Arab Oil Embargo. But today,
unlike previous episodes, supply is ample: there are no lines at the gas pump and there
is plenty of food on the shelves.
If supply is adequate - as has been shown by others who have testified before this
committee2 - and prices are still rising, then demand must be increasing. But how do
you explain a continuing increase in demand when commodity prices have doubled or
tripled in the last 5 years?
What we are experiencing is a demand shock coming from a new category of
participant in the commodities futures markets: Institutional Investors. Specifically,
these are Corporate and Government Pension Funds, Sovereign Wealth Funds,
University Endowments and other Institutional Investors. Collectively, these investors
now account on average for a larger share of outstanding commodities futures contracts
than any other market participant.3
These parties, who I call Index Speculators, allocate a portion of their portfolios to
“investments” in the commodities futures market, and behave very differently from the
traditional speculators that have always existed in this marketplace. I refer to them as
“Index” Speculators because of their investing strategy: they distribute their allocation of
dollars across the 25 key commodities futures according to the popular indices – the
Standard & Poors - Goldman Sachs Commodity Index and the Dow Jones – AIG
Commodity Index.4

Investors have created massive artificial demand equivalent to China and the
US petroleum reserve. Masters 08
(Michael, May 20, Managing member/portfolio manager for Masters Capital Management LLC, testimony
before US Senate Governmental Affairs and Homeland Security Committee,
http://hsgac.senate.gov/public/_files/052008Masters.pdf JFF)

In the popular press the explanation given most often for rising oil prices is the
increased demand for oil from China. According to the DOE, annual Chinese demand
for petroleum has increased over the last five years from 1.88 billion barrels to 2.8 billion
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barrels, an increase of 920 million barrels. Over the same five-year period, Index
Speculatorsʼ demand for petroleum futures has increased by 848 million barrels.9 The
increase in demand from Index Speculators is almost equal to the increase in demand
from China!
In fact, Index Speculators have now stockpiled, via the futures market, the equivalent of
1.1 billion barrels of petroleum, effectively adding eight times as much oil to their own
stockpile as the United States has added to the Strategic Petroleum Reserve over the
last five years.

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Aff – Institutional Investors (2/2)


Index speculators are especially dangerous to the market because they invest
fixed amounts to diversify portfolios and because commodities markets
are small. Masters 08
(Michael, May 20, Managing member/portfolio manager for Masters Capital Management LLC, testimony
before US Senate Governmental Affairs and Homeland Security Committee,
http://hsgac.senate.gov/public/_files/052008Masters.pdf JFF)

Index Speculator demand is distinctly different from Traditional Speculator demand; it


arises purely from portfolio allocation decisions. When an Institutional Investor decides
to allocate 2% to commodities futures, for example, they come to the market with a set
amount of money. They are not concerned with the price per unit; they will buy as many
futures contracts as they need, at whatever price is necessary, until all of their money
has been “put to work.” Their insensitivity to price multiplies their impact on commodity
markets.
Furthermore, commodities futures markets are much smaller than the capital markets,
so multi-billion-dollar allocations to commodities markets will have a far greater impact
on prices. In 2004, the total value of futures contracts outstanding for all 25 index
commodities amounted to only about $180 billion.16 Compare that with worldwide
equity markets which totaled $44 trillion17, or over 240 times bigger. That year, Index
Speculators poured $25 billion into these markets, an amount equivalent to 14% of the
total market.

Index speculation fuels itself and steals market liquidity – answers back any
arguments they make that speculators follow market fundamentals.
Masters 08
(Michael, May 20, Managing member/portfolio manager for Masters Capital Management LLC, testimony
before US Senate Governmental Affairs and Homeland Security Committee,
http://hsgac.senate.gov/public/_files/052008Masters.pdf JFF)

One particularly troubling aspect of Index Speculator demand is that it actually


increases the more prices increase. This explains the accelerating rate at which commodity futures prices (and
actual commodity prices) are increasing. Rising prices attract more Index Speculators, whose
tendency is to increase their allocation as prices rise. So their profit-motivated demand
for futures is the inverse of what you would expect from price-sensitive consumer
behavior.
You can see from Chart Two that prices have increased the most dramatically in the first quarter of 2008. We calculate that Index
Speculators flooded the markets with $55 billion in just the first 52 trading days of this
year.19 That’s an increase in the dollar
value of outstanding futures contracts of more than $1 billion per trading day. Doesn’t it seem likely that an increase in demand of
this magnitude in the commodities futures
markets could go a long way in explaining the extraordinary commodities price increases in the beginning of 2008? There
is a
crucial distinction between Traditional Speculators and Index Speculators: Traditional
Speculators provide liquidity by both buying and selling futures. Index Speculators buy
futures and then roll their positions by buying calendar spreads. They never sell. [his emphasis/italics –
not added] Therefore, they consume liquidity and provide zero benefit to the
futures markets.
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It is easy to see now that traditional policy measures will not work to correct the problem
created by Index Speculators, whose allocation decisions are made with little regard for
the supply and demand fundamentals in the physical commodity markets. If OPEC
supplies the markets with more oil, it will have little affect [sic] on Index Speculator
demand
for oil futures. If Americans reduce their demand through conservation measures like
carpooling and using public transportation, it will have little affect [sic] on Institutional
Investor demand for commodities futures.

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Aff – Dutch Disease (1/3)


Russia currently has Dutch disease – its economy and imports are reliant on oil
and production is suffering. The Economist 08
(http://www.economist.com/research/articlesBySubject/displaystory.cfm?
subjectid=349002&story_id=10765120 “Russia’s Economy – Smoke and Mirrors, Feb. 28, JFF)

The share of oil and gas in Russia's GDP has increased, according to the Institute of Economic
Analysis, from 12.7% in 1999 to 31.6% in 2007. Natural resources account for 80% of exports.
Like a powerful drug, oil money has masked the pain caused to the Russian economy by the
Kremlin. But the disease remains.
To appreciate the impact oil prices have on the economy, compare real GDP growth of about 7%
with growth measured in international prices. In dollar terms, says Rory MacFarquhar of Goldman
Sachs, Russia's economy has grown on average by 27% a year, the fastest of any big economy
since 2000. The flow of petrodollars is fanning a massive consumption boom, making Russia the
sixth-biggest market in Europe. Disposable incomes (and retail trade) have been growing twice
as fast as GDP.
The problem, says Peter Aven, the head of Alfa Bank, is that Russia has failed to convert the oil
stimulus into domestic production. Imports are growing much faster than manufacturing. The
rapid real appreciation of the rouble is hurting Russia's producers, and many goods are of poor
quality. This is why Algeria says it wants to return 15 military jets it purchased from Russia.
Productivity remains far below that of most developed countries. In the first years after the 1998
crisis, labour and capital efficiency went up by 5.8% a year. But that growth was driven by using
spare capacity left from Soviet times. Sustaining it will require more investment.
Meanwhile the economy, unable to digest the money generated by the oil-and-gas boom, is
clearly overheating. Inflation moved into double digits in late 2007, pushed up by, among other
things, a huge inflow of capital attracted by swelling reserves and the strong rouble. Unlike oil
revenues, which can be partially channelled into the stabilisation fund, this money cannot easily
be absorbed.

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Aff – Dutch Disease (2/3)


The Russian Economy is overly reliant on oil – its manufacturing sector is
suffering from the Ruble’s inflation and lack of investment.
New York Times 06 (“Russia Called Too Reliant on Petroleum,” April 17,
http://www.nytimes.com/2006/04/18/business/worldbusiness/18ruble.html JFF)

Russia's economic growth is masking signs of trouble that are characteristic of a


petroleum-based economy, according to a World Bank report released Monday.

The report, though generally upbeat, reinforced warnings that Russia is relying too
heavily on oil exports while allowing its manufacturing sector to wither. The country is
the world's second-largest oil producer, after Saudi Arabia.

The report found that the energy sector and consumer sales were strong but industrial
output was leveling off, having reached a plateau after a few years of growth fueled by
favorable exchange rates that resulted from the Russian economic crisis of 1998.

The bank estimated Russia's gross domestic product grew 6.4 percent in 2005 compared
with 7.2 percent a year earlier. Industrial production, however, increased only 4 percent
compared with 8.3 percent the previous year.

"The vast majority of manufacturing sectors showed marked slowdowns in economic


growth in 2005 relative to 2004," according to the report, the latest in a series released
by the bank's Moscow office.

Underlying the troubles is the ruble's new strength. It is suddenly a rock solid currency
because of Russia's oil exports. Factory directors now must pay workers and buy
supplies in expensive rubles, undermining their competitiveness. Also, the oil economy is
igniting inflation, which was 10.9 percent last year.

This paradox of good times is known as the Dutch disease for what happened in the
Netherlands in the 1960's after the discovery of natural gas in the North Sea; Monday's
report suggested symptoms are already appearing here.

The industrial slowdown also indicates a lack of investment, a separate problem gnawing
at the economy for many years because of political uncertainty and high corporate
taxes, according to the report and to independent economists.

Russia needs lower oil prices to avoid economic decay


Otto Latsis 2005, writer for The Moscow News. June 14 http://eng.globalaffairs.ru/engsmi/922.html

The Dutch disease is already here. To begin with, we have to admit this fact, as there is
no getting away from it. Next, we have to realize what the Dutch disease means for
Russia. It may not entail a speedy disaster. Unless crude oil becomes cheaper, we might
continue to decay for an indefinite time. The present State Duma deputies and
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government ministers have a chance of retaining their jobs for a long time. If Russia
wants to develop, however, it cannot do so by swallowing up the Stabilization Fund. It
must seriously decide what it should do and what it should not do. It must be clear on its
priorities: Should it, for example, continue to spend heavily on armaments? Or should it
start thinking seriously about spending more on education? Or on increasing the average
lifespan? In other words, we need a new, fundamentally different social contract, one
that would recognize that each of us is an esteemed - rather than humiliated - citizen in
our relationship with the state.

Aff – Dutch Disease (3/3)


Russia suffers from Dutch Disease: It drives away businesses and will cause a
crash by the end of 2009
Ambrose Evans-Pritchard 5/2/08. International Business Editor for Telegraph. “Russian economy
succumbs to the oil curse” http://www.telegraph.co.uk/money/main.jhtml?
xml=/money/2008/02/04/ccview104.xml
Moscow is the most expensive city in the world, like Tokyo before the Nikkei bubble burst. A taxi
from Domodedovo airport to the Kremlin costs $170 (£86). Property in Ostozhenka trumps
Chelsea. Space fetches $30,000 a square meter.

Nice Tsarist flats fetch $3m to $4m. Even Bolshevik boxes are booming. Moscow boasts 150,000
home millionaires in dollars, says Sergei Polonsky, the Mirax Group tycoon. 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.

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"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 80% of exports.

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Aff – Ruble Appreciation  Inevitable


Collapse
Ruble Appreciation Causes Economic turmoil
William Cooper 5/30/08. Specialist in International Trade and Finance “Russia’s Economic Performance
and Policies and Their Implications for the United States,” the CRS Report for the Congress.
http://fpc.state.gov/documents/organization/106151.pdf

Other factors could present problems for the Russian economy. One factor is ruble
appreciation. Between 1998, the year of the financial crisis, and 1999 the ruble
depreciated 25% in real effective terms. The ruble appreciated in real terms from 1999
onward but only gradually, reaching its pre-financial crisis level not until 2002. During
that period Russia’s domestic producers benefitted from diminished competition from
imports because they had become much more expensive. Since 2002, the ruble has
appreciated much more rapidly, 43% by the end of 2007. The rapid appreciation is
causing concerns, particularly among Russia’s manufacturing industries which are facing
stronger import competition while they are still trying to develop.

The ruble appreciation has been caused in part by the strong demand for Russian energy
exports, particularly oil. The trend has led some observers to surmise that Russia may
have caught the “Dutch disease.” This is a term that is applied when a country that is
heavily dependent on one product, such as oil, in its exports, experiences a surge in
export revenues. That country’s currency will appreciate accordingly, forcing other
industries to face stronger foreign competition and dampening exports of those other
products. While ruble appreciation makes imports cheaper and help to dampen inflation,
it also makes diversification of Russia’s export base much more difficult. Whether or not
Russia has the “Dutch Disease,” the strong ruble has put downward pressure on Russian
non-energy exports. The OECD reported that the non-fuel trade balance has deteriorated
beginning in 2005 even though the overall trade balance had remained strong because
of rising oil prices.

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Aff – Econ Collapse Inevitable –


Inflation
Economic crash inevitable: Inflation and government control hurt Russia’s
economy; Squo doesn’t help these sectors
William Cooper 5/30/08. Specialist in International Trade and Finance “Russia’s Economic Performance and Policies and
Their Implications for the United States,” the CRS Report for the Congress. http://fpc.state.gov/documents/organization/106151.pdf

Inflation has been another factor of concern for Russia. Russia had been making
considerable progress in controlling inflation, which had been a constant problem since
the collapse of the Soviet Union. At the end of 2006, inflation was 9%, still high by U.S.
standards but the first single-digit inflation since 1991. However, consumer prices in
Russia began to rise more rapidly in 2007, 11.9% by the end of 2007. The rate of
inflation has continued to increase, reaching 14.3% in April 2008 compared to April 2007.
A sharp rise in food prices has been the primary cause of the inflation spike, as well as
increases in prices for raw materials and other industrial inputs. Another contributing
factor may be the increase in government spending. In 2007, Russian government
expenditures rose to 18.1% of GDP from 16.0% GDP the year before, and are projected
to increase to 21.2% GDP in 2008. High inflation causes economic instability and political
instability as it reduces consumer buying power and saps savings.

The Russian government’s seizure of “strategic sectors” of the economy (discussed


earlier) could be a factor that will impede Russian economic growth and development.
The OECD cites the tendency of state-owned companies in Russia to be associated with
corruption, lack of transparency, and rent-seeking. State representatives tend to
interfere in day-to-day operations, which undermines the commercial effectiveness of
the company.

The increase in state control over the economy has also coincided with a sharp decline in
the pace of economic restructuring and reforms that occurred during Putin’s first term.
One indicator of the decline in economic reforms is the measure of the business
environment in Russia. Each year the World Bank evaluates the ease of doing business in
178 countries by examining a range of criteria, such as ease of starting a business,
closing a business, employing workers and, protecting workers. In April 2006, Russia
ranked 96th. In April 2008, it ranked 106th, although it had improved from 112th during the
previous year. Nevertheless, Russia ranked behind such former Soviet republics as
Azerbaijan (96th), Armenia (39th), Georgia (18th), and Kazakhstan (71st). Singapore was
ranked (1st) and the United States was ranked (3rd) The Congo Democratic Republic was
ranked 178th. Another indicator is Russia’s economic growth compared to those of other
former Soviet states. In 2007, even though Russia’s real GDP increased 8.1%, it was only
9th among the other former Soviet states.

However, it is Russia’s continue dependence on oil and the world price of oil that will be
a dominant factor in Russia’s economic prospects for the time being. As indicated earlier,
this is a double-edged sword for Russia. On the one hand, Russia is clearly benefitting
from record-high prices. On the other, its oil production capacity is limited and showing
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signs of strain.

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Aff- No Link
Demand from developing countries more than offsets the plan.
Newsweek June 23, 2008 Learning From the Oil Shock; SECTION: ROBERT J. SAMUELSON; JUDGMENT CALLS; Pg. 39 Vol. 151
No. 25 ISSN (CNDI)

But higher demand from developing countries and oil producers is offsetting the lower
demand of wealthy countries. Consumption in these countries will rise 3 percent in 2008,
or 1.2 million barrels a day, projects the International Energy Agency. Many of these
countries subsidize fuel so that final customers are insulated from price increases.
Gasoline is about 25 cents a gallon in Venezuela and about 60 cents in Saudi Arabia,
Kuwait and Iran, notes Rubin. China also subsidizes fuel.

Alternatives don’t lower the cost of oil – they only make high prices more
bearable.
Business World 2008 [No end in sight to high fuel prices, lexis] (CNDI)

While the government has stressed that indigenous and alternative fuels would ease
market pressure from imported fuel, Energy department director Mario C. Marasigan
yesterday admitted "They will not necessarily lower oil prices."
"It's primarily to find alternatives to our [shrinking] supply. But cheaper alternatives can
balance high prices of imported oil," he said.

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Aff – Russian Oil Dependence Bad (1/2)


If Russian oil dependence stays high, it allows for decreased life span, lack of
food security, one party rule, and a new oligarchy: empirically proven
Aron, Leon. July 14, 2008. (Director of Russian studies at American Enterprise Institute.
http://www.washingtonpost.com/wp-
dyn/content/article/2008/07/13/AR2008071301721.html Jdubs

Vladimir Putin's appointment this spring as prime minister of the symbolic "union" of
Russia and Belarus was yet another example of the troubling similarities between
today's Russia and the other most stable and prosperous Russian regime of the past 80
years: Leonid Brezhnev's Soviet Union in the 1970s. That economy, too, was fueled by
then-record oil prices. And while there are clear differences between the two Russias, if
these tendencies go unchecked, the increasingly authoritarian and economically statist
country may soon face crises of the kind that became apparent under Brezhnev and
contributed to the Soviet Union's demise.The most disturbing of these propensities
include:

· The national alcoholic binge. In the 1970s, Soviets annually consumed eight liters of
strong (40 to 80 percent proof) alcoholic beverages per person -- more than any other
country. Between 1964 and 1980, male life expectancy fell from 67 to 62. Today, per
capita consumption of vodka, which is four times cheaper in relation to the average
salary than 30 years ago, has grown to 10 liters, according to official statistics (outside
experts say it is higher). By contrast, the most recent data available from the World
Health Organization show the corresponding U.S. figure is 2.57 liters. One in 10 Russian
men is thought to be an alcoholic. Life expectancy for Russian men is less than 60.6
years, more than 15 years shorter than in the United States and European Union and
below current levels in Pakistan or Bangladesh.

· Oil-for-food. This spring, Putin admitted that 70 percent of the food consumed in
Russia's largest cities is imported, a situation he decried as "intolerable." This problem,
too, first surfaced in the 1970s, when grain imports were so high that by the end of the
decade they supplied the flour for every third loaf of bread. When oil prices collapsed,
Russia was forced to spend gold reserves and seek loans -- and eventually found itself
without grain or gold. After agricultural land was denationalized in the early 1990s, food
became available almost immediately -- for the first time in almost 70 years it could be
had without hours-long lines and rationing coupons. Russia started to export grain. Yet
agricultural land was never legally privatized, and rules for long-term leasing have been
left to local authorities.

Not surprisingly, such legal gray areas have given rise to corruption, increased
production costs and hampered innovation. Provincial governors, who are no longer
elected and answer only to the president, pressure successful entrepreneurs and farmers
to "share" with local authorities. A leading industrialist told me that at least six local
agencies conduct almost weekly "inspections" of his potato farm. State agriculture
subsidies often go to the largest and best politically connected enterprises, not
necessarily the most productive ones.

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The ruble's steady appreciation because of huge petro-dollar inflows further depresses
the domestic food industry. Should Russia allow the ruble to float, at least partially, to
help curb inflation, it would become even more expensive, encouraging demand for
better-quality and, often cheaper, imported food.

Putin's remedies have the same flavor as Brezhnev's: Throw billions in subsidized credits
and grants at the problem instead of strengthening property rights and making it easier
for independent producers to compete.

· One-party rule. With its opposition marginalized and demoralized, and election results
rigged, United Russia has emerged as the "ruling party," the term that used be reserved
for the Soviet Communist Party. "Today we are the party responsible for the
government," a top United Russia functionary told a Russian newspaper this year, "since

Aff – Russian Oil Dependency Bad (2/2)


[CONTINUES… NO TEXT OMITTED]

our leader [Putin, the party's chairman] is the chairman of the government." Those who
argue, rightly, that United Russia membership is only a ticket for ambitious apparatchiks
to punch should remember that there was precious little ideological fervor and much
cynicism in the 1970s as well. Lack of sincerity then did nothing to ameliorate the
absence of corrective societal feedback and, with it, the inability to reverse dead-end
policies that led to the crisis.

· A new oligarchy. Brezhnev drew some of his loudest cheers in his six-hour "reports" to
party congresses when he declared "respect for the cadres." Delivering his presidential
valediction this spring, Putin's longest applause came when he cited "stability" as his
crowning achievement.

With virtually every top Putin official and adviser retained, sent to the Security Council or
made "presidential envoy" to some part of the country, a new nomenklatura has
emerged -- insulated from media criticism, spared political competition and effectively
immune from criminal prosecution. As in Soviet times, the members of this political
master race are almost never fired, only retired with honors or reassigned. Since the
Putin "Politburo" and "Central Committee" are a good 20 years younger than Brezhnev's,
retirement is not an option.

The 1970s made clear what the belief in official infallibility and omnipotence, utter
disregard for public opinion, ossification, and pandemic corruption could lead to. Most of
all, the experience of Brezhnev's Russia confirms that authoritarian "stabilization" is a
curious political commodity. Its benefits are instantly apparent but its price is revealed
only gradually -- and may be devastatingly high. As he moves forward, President Dmitry
Medvedev would do well to remember the lessons from Russia's other most stable
regime.

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Aff - Price Fall Won’t Affect Russia


Immediately
Even if oil prices drop, Russia won’t be affected immediately. Russia
Today 08
(July 17, http://www.russiatoday.com/business/news/27632 JFF)
[all emphasis from original article]Oil
prices have fallen sharply for the second straight session, in a
sign that markets are becoming more volatile. Experts point to fears of an economic
slowdown, especially in the U.S. But while the world’s biggest economy is reeling -
Ratings Agency, Moody`s, has lifted its rating for Russia, reflecting the country's strong
fiscal position and economic growth.
Fears of an economic slowdown in the US keep kept oil markets volatile on Wednesday -
with a sharp downward movement of 6 dollars a barrel for the second day running. At
around 135 dollars, it’s a sign the markets are not sure strong levels of demand can
persist.
However, Ron Smith of Alfa Bank says long-term, fundamental demand for oil remains
strong.
If this trend continues in the next ten days or two weeks we should see another run at
higher prices. At the same time there is reason to believe this might be a bubble, and if
this trade ever turns, if the hedge funds and everyone else who’s piled into suddenly
start to think that prices are going to go down then that will become a self fulfilling
prophecy and they will go down.
Russia, the world’s second-biggest oil exporter, remains little affected for now. With
petro-dollars flowing into the country, any hope that lower prices will slow inflation are
also vague. Inflation has topped 9 per cent so far this year. But the falls in the oil price of
this week won’t have an immediate impact on inflationary pressure according to Roland
Nash of Renaissance Capital.

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Aff – Prices Won’t Drop Short Term


Prices won’t drop rapidly – change takes time. The Economist 08
(Double, double, Oil, and Trouble, May 29,
http://www.economist.com/research/articlesBySubject/displaystory.cfm?
subjectid=381586&story_id=11453090 JFF)

In the short run, neither demand for nor supply of oil is very elastic. It takes time for
people to replace their old guzzlers with more fuel-efficient cars, or to switch to jobs with
shorter commutes, or to move closer to public transport. By the same token, it can take
ten years or more to develop an oilfield after its discovery—and that does not include the
time firms need to bolster their exploration units.

Gary Becker, an economist at the University of Chicago, has calculated that in the past,
over periods of less than five years, oil consumption in the OECD dropped by only 2-9%
when the price doubled. Likewise, oil production in countries outside OPEC grew by only
4% every time the price doubled. But over longer periods, consumption dropped by 60%
and supply rose by 35%. The precise numbers may be slightly different this time round,
but the pattern will be the same.

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Aff – Oil Prices Will Fall (1/3)


Oil prices are analogous to the tech and housing bubbles – even though
demand is high, prices are inflated and will fall. Saler 08
(Tom, author and freelance journalist, June 15, http://www.jsonline.com/story/index.aspx?id=762343 JFF)

At the peak of the high-tech mania in early 2000, stocks from that sector routinely sold
for 100 times earnings. If they even had earnings, that is. Some dot-com upstarts were
accorded market values greater than ExxonMobil. Today, the vast majority of those tech
companies don’t even exist.
Now that’s a bubble.
Though the rise in house prices wasn’t as extreme by some measures, that asset class
also entered a bubble phase a few years ago. Again, the determining factor was the
sector’s complete detachment from traditional valuation metrics.
House prices worldwide came unglued from incomes, rents and equity ratios. Those are
fundamental, quantifiable forces that ultimately prevail over mass psychology. Like
technology stocks earlier this decade, house prices will continue to decline until
reasonable value is restored.
Meanwhile, the only evidence for an energy bubble is the startling rate of increase in oil
and gas prices. Yet the rapid appreciation of an asset doesn’t necessarily mean that its
value is detached from reality.
The world consumes almost 99% of available productive capacity. That’s cutting it
uncomfortably close, especially given the soaring cost of developing new energy
sources, geopolitical unrest in many producing countries and the coming hurricane
season.
But even if energy isn’t in a bubble, that doesn’t mean that the sector isn’t in nosebleed
territory.
Asset prices frequently overshoot, and that seems to be happening now in oil.
Commodity traders are notorious momentum players. They’ll only stop buying when the
next person does.
Experts disagree on other factors that also might be at work.
The increased securitization of commodities similar to what happened to mortgages a
few years ago has made it easier to speculate in energy. But it is not clear that
newfangled investment vehicles like exchange-traded mutual funds actually boost
demand for the commodity itself.

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Aff – Oil Prices Will Fall (2/3)


Oil prices will drop in 09 – OPEC will raise production and demand will continue
to drop. Thelwell 08
(July, Emma, writes for the Daily Telegraph and The Sunday Telegraph,
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/15/cnoil115.xml JFF)

Crude oil will unwind much of its meteoric rise next year, investment bank Lehman Bros has predicted, as the
Opec oil producers raise their supply and the slowing global economy squeezes demand.

The bank expects the price of crude to fall back to about $93 a barrel. Oil, which hit a record high of $147 on
Friday before falling back at the close. Yesterday, crude prices in London were trading up 34 cents at $144.83.

Soaring oil prices are increasing pressure on consumers and businesses in the US and the UK - with US oil
import volumes now falling rapidly - down 19pc in the three months to end-May.

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Aff- Oil Prices Will Fall (3/3)


Oil prices will fall – people move to increase efficiency and innovation causes
electric cars – causes massive, rapid price drops. Bailey 08
(Ronald, May 15, writer, science editor for Reason Magazine, B.A. in economy and philosophy,
http://www.readthehook.com/stories/2008/05/15/ESSAY-Peakoil-NotbyBailey-A.aspx JFF)

So supply is up; relative demand is down. And yet the price of oil is soaring. What's going on? Exxon Mobil
CEO Rex Tillerson just blamed a third of the recent run-up in oil prices on the weak dollar, another third on
geopolitical uncertainty, and the rest on market speculation.

Let's start with geopolitical uncertainties. Last year, oil consumers watched warily as unrest in Nigeria's oil fields, the possibility of
war between the U.S. and Iran, and the antics of Venezuela's Hugo Chavez threatened to disrupt oil supplies. That analysis may have
once made sense, but most of those tensions have abated in recent months. Nevertheless, it remains true that most of the world's oil is
produced in volatile regions and by erratic governments, so the price of crude must still include some kind of political risk premium.

What effect does the falling dollar have on the price of crude? Most oil price contracts are denominated in
dollars. The dollar has fallen in value by more than 30 percent against a Federal Reserve index of major
currencies since 2002. This means that the price of imports, including oil, has gone up. To some extent, the
chief of the Organization of Petroleum Exporting Countries (OPEC), Chakib Khelil, was correct when he said
earlier this week, "What's happening in the oil market is due to the mismanagement of the U.S. economy."
Continuing U.S. trade and fiscal deficits along with lower interest rates are stoking inflationary fears.

That brings us to speculation. Evans observes that since September 2003, the total number of open crude oil futures and options
contracts rose by 364 percent. Meanwhile the global demand for petroleum rose by just 8.2 percent. "So the futures and options
market has become more important than the physical supplies in driving the price," concludes Evans. "We are seeing investment flows
into the oil market that don't have anything to do with the demand and supply of oil."

Investors are treating oil as a hedge against inflation and a falling dollar. Oil markets are part of a negative feedback loop in which
higher oil prices contribute to higher inflation, which in turn lowers the value of the dollar, which boosts oil prices, and so forth. In
other words, the oil market is coming to resemble the gold market (which has also been soaring). Evans notes that most gold traders
don't even ask the question of how much gold was mined last year or how much spare gold mining capacity there is.

In the short run, oil prices are very inelastic: a large change in price produces only a small change in demand. If
the price of gas goes up a dollar per gallon overnight, you still have to fill your tank to get to work. However,
over the long run, consumers and producers respond to higher oil prices. For example, Americans are driving
less and have switched to buying more fuel-efficient cars.

Higher prices also encourage innovation. Economist Richard Rahn from the Institute for Global Economic
Growth believes battery technologies are improving so rapidly that the majority of cars sold in 10 years will be
all-electric. This would certainly help drive down the price of oil. Supply is also inelastic— it takes a long time
to do the exploration, drilling, and refining necessary to boost production in response to higher prices. This
inelasticity of demand and supply means that petroleum prices are very sensitive to relatively small changes in
either. This means that prices can fall as steeply as they rose.

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Aff- Oil Prices are a Lie


Oil prices are artificially inflated – multiple warrants prove that the bubble will
soon burst. Bower 08
(Tom, reporter for Panorama and biography author, May 26,
http://www.news.com.au/story/0,23599,23758163-5007146,00.html JFF)

No one it seems is willing to proclaim the truth: there is no oil shortage.

The fact is that we are all being forced to pay an artificially high price because of a
combination of factors.

First there is the greed of the oil traders, bankers and speculators in the world's financial
centres who are pocketing billions from our misery. Then there is the venality of oil
producing countries, whose economies profit massively from artificially keeping the oil
price high.

And next there are the scare stories - from hurricanes heading for oil rigs in the Gulf of
Mexico to power failures in Iraq, that these two groups exploit together in an unholy
alliance to push the prices up.

On top of this OPEC - the organisation of the world's major oil producers - stands accused
of slyly engineering the crisis in order to drive up prices.

The claim, made by both President Bush and Gordon Brown, is that OPEC is a self-
interested cartel which is refusing to increase oil production and bring down prices.

The result of the conspiracy is awesome. Since oil prices started rising in 2003, the OPEC
states amassed over $US1 trillion in so-called sovereign wealth funds.

But it would be wrong of us in the West to despair. Firstly, after inflation and the weak
dollar is taken into account, oil is only marginally more expensive than during the oil
crisis of the 1980s.

Back then, the bubble eventually burst and prices collapsed.

Secondly, if consumers quickly commissioned alternatives including nuclear power,


renewable energy and environmentally acceptable coal-fired power stations, the oil
producers would become terrified that their source of income was endangered.

So throughout the pain remember two things: all price bubbles burst, and there are still
vast untapped oil fields that will supply the world's needs for centuries to come.

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Aff – Stabilization Fund


Russia has used its profits to pay off debt and create a stabilization fund that
will save it from collapse based on oil prices. Washington Post 07
(Nov. 10, http://www.washingtonpost.com/wp-dyn/content/article/2007/11/09/AR2007110902573_pf.html
JFF)

Russia, the world's No. 2 oil exporter, shows oil's transformational impact in the political
as well as the economic realm. When Vladimir Putin came to power in 2000, less than
two years after the collapse of the ruble and Russia's default on its international debt,
the country's policymakers worried that 2003 could bring another financial crisis. The
country's foreign-debt repayments were scheduled to peak at $17 billion that year.

Inside the Kremlin, with Putin nearing the end of his second and final term as president,
that sum now looks like peanuts. Russia's gold and foreign-currency reserves have risen
by more than that amount just since July. The soaring price of oil has helped Russia
increase the federal budget tenfold since 1999 while paying off its foreign debt and
building the third-largest gold and hard-currency reserves in the world, about $425
billion.

"The government is much stronger, much more self-assured and self-confident," said
Vladimir Milov, head of the Institute of Energy Policy in Moscow and a former deputy
minister of energy. "It believes it can cope with any economic crisis at home."

With good reason. Using energy revenue, the government has built up a $150 billion
rainy-day account called the Stabilization Fund.

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Aff – Russian Econ Not Growing From


Oil
Consumption has driven the Russian economy – energy is a minor factor.
Goldthau 08 (Andreas, “Resurgent Russia? Rethinking Energy Inc.” Feb.-Mar. 08 Issue of Policy Review
[peer-reviewed journal], http://www.hoover.org/publications/policyreview/14931716.html JFF)

What has driven the Russian economic recovery has mainly been a boom in domestic consumption and
investment, not energy. Russia has been growing impressively during recent years, at annual growth rates
between 6 and 10 percent. The country’s gdp hit $1 trillion in 2006, rendering Russia one of the world’s ten
largest economies again. True, due to the country’s natural endowments, hydrocarbons are a major factor in the
Russian economy and in state finance. The export of raw materials, mainly oil, gas, and refined oil products, has
soared since the 1990s, accounting for about two-thirds of Russian exports overall in 2006.8 Still, hydrocarbon
sales account for a major part of state revenues, just as recent oil price increases have resulted in soaring tax
revenues. The total share of government revenues stemming from hydrocarbon sales has more than doubled
during the past four years, amounting to almost 40 percent in 2006.9

At the same time, however, oil and gas add less to overall Russian gdp and economic growth than the above figures would suggest.
oil and gas presently contribute only about 20 percent of Russian gdp.10 Moreover, the
In fact,
energy sector grew below the Russian average during recent years. The gas sector
performed especially poorly. 11

Moreover,
the initial kick-start of Russian economic recovery did not lie in oil prices but in
the 1998 financial crisis: As a consequence of the Russian government’s default, the ruble was strongly
devalued, which led to greater competitiveness of Russian products abroad, favored
domestic over foreign goods, and thus spurred consumption of domestic Russian
products. 12 In addition, the rise of oil and gas prices supported economic recovery, as did
general improvements in management and technology of private companies, a cut in
government spending, and the introduction of a new tax system in 2000. Double-digit
annual increases in capital and labor productivity have further contributed to securing a
stable Russian growth path.

Finally, while energy revenues are dominant on the income side of the governmental
budget, they are far less important in financing governmental expenditures. In fact, as
experts have noted, more than half of Russian oil and gas revenues are saved in a
“Stabilization Fund.” The latter, a lesson learned from the 1998 plunge in oil prices and
its devastating effects on state finances, presently contains financial reserves equal to
around 9 percent of gdp.13 Hence, and counter to conventional wisdom, the six-year-long
Russian economic growth has mainly domestic roots.

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Aff - No Reliance Now


Despite massive profits from oil, Russia’s growth is largely due to other
sectors, and Russia’s stabilization fund is rapidly growing. Rohznov
07
(Konstantin, BBC Reporter, Nov. 30, http://news.bbc.co.uk/2/low/business/7096426.stm JFF)

There are those, though, who question the sustainability of Russia's economic expansion as, they
argue, it is based mostly on rising oil prices and strong global demand for fuel.

Russia's exports are clearly dominated by mineral resources and fuels.

Critics warn that oil revenues have prevented the Russian government from implementing
painful but necessary reforms to diversify the economy.

But Deutsche Bank's Mr Lissovolik says the economic expansion has been driven largely by non-
fuel sectors as the huge oil revenues have been locked in a so called "stabilization fund" - in case
of future economic difficulties.

Telecoms, banking, insurance, foods and some other sectors have been expanding fast as
consumer and investment spending has become a significant factor in Russia's economic growth.

The Russian economy is growing, and construction and manufacturing account


for much of the growth. WPS Info 07
(June 18, What The Papers Say is a daily international service geared to the needs of journalists,
researchers, diplomats and businessmen - all who have a genuine interest in the political situation in
Russia and the CIS. Lexis, JFF)

In the first quarter, gross domestic product topped the level of the first quarter of
2006 by 7.9%, the Federal State Statistics Service says. It amounted to 6,566.2
billion rubles. Economy has been increasing since the last quarter of 2006. GDP of
the last three months of 2006 was 7.8% higher than in 2005.

The same growth rate of GDP to the amount of 8% was observed in the fourth
quarter, 2005. The Federal State Statistic Service maintains that the best showing
took place in the construction sector: 23.2% for the first quarter this year and 23.9%
in the fourth quarter of 2006. Earlier in 2006 the amount of work exceeded the level
of 2005, but not more than 18%. Manufacturing has also increased to a high degree:
in the fourth quarter, 2006 it was 6.6% more than in 2005 and in the first quarter,
2007 it added 11.8%.

Value added in mining returned to last year's figure (+2.4%) after the period of
stagnation at the end of 2006 (0.5%) and in trading it went up to 9.1% from 6%.

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Aff – A2 Nuclear Winter Turns


Nuclear winter is empirically denied- Krakatoa.

Pry, US Arms Control and Disarmament Agency, 1990 (Peter, The Strategic Nuclear Balance, p. 201)
(backfiles)

The history of natural disasters that produced global smoke and dust events far
greater than those expected from a nuclear war do not support the nuclear winter
theory. Crommelin and Sullivan point out that:….events in observed nature tend
to discredit even further Dr. Sagan’s bizarre concept. First, in 1883, the
Indonesian volcano Krakatoa exploded with a blast equivalent to 10,000
megatons of nuclear power, a detonation roughly equal to the entire global
nuclear arsenal. The weather effect of this cataclysmic explosion with the millions
of tons of debris (an entire island) scattered widely in the stratosphere was
negligible.
The nuclear winter theory is flawed – it makes too many conjectures, is based
on politics, and was not peer-reviewed properly. Seitz 86
(From The Wall Street Journal, Russell Seitz is a former associate of the John M. Olin Institute for Strategic
Studies at Harvard University’s Center for International Affairs.
http://www.textfiles.com/survival/nkwrmelt.txt JFF)

The TTAPS model entailed a long series of conjectures: if this much


smoke goes up, if it is this dense, if it moves like this, and so on. The
improbability of a string of 40 such coin tosses coming up heads approaches
that of a pat royal flush. Yet it was represented as a "sophisticated one-
dimensional model" -- a usage that is oxymoronic, unless applied to Twiggy.
To the limitations of the software were added those of the data. It
was an unknown and very complex topic, hard data was scant, so guesstimates
prevailed. Not only were these educated guesses rampant throughout the
process, but it was deemed prudent, given the gravity of the subject, to
lean toward the worst-case end of the spectrum for dozens of the numbers
involved. Political considerations subliminally skewed the model away from
natural history, while seeming to make the expression "nuclear freeze" a
part of it.
"The question of peer review is essential. That is why we have
delayed so long in the publication of these dire results," said Carl Sagan
in late 1983. But instead of going through the ordinary peer-review
process, the TTAPS study had been conveyed by Mr. Sagan and his colleagues
to a chosen few at a closed meeting in April 1983. Despite Mr. Sagan's
claim of responsible delay, before this peculiar review process had even
begun, an $80,000 retainer was paid to Porter-Novelli Associates, a
Washington, D.C., public-relations firm. More money was spent in the 1984
fiscal year on video and advertising than on doing the science.

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Aff – A2 Oil is Abiotic


Oil is not abiotic – no scientific basis.

Pfeiffer No date given (Dale Allen, science editor of From the Wilderness and author of multiple books
on peak oil http://www.questionsquestions.net/docs04/peakoil1.html JFF)

There is some speculation that oil is abiotic in origin -- generally asserting that oil is
formed from magma instead of an organic origin. These ideas are really groundless. All
unrefined oil carries microscopic evidence of the organisms from which it was formed.
These organisms can be traced through the fossil record to specific time periods when
quantities of oil were formed.

Likewise, there are two primal energy forces operating on this planet, and all forms of
energy descend from one of these two. The first is the internal form of energy heating
the Earth's interior. This primal energy comes from radioactive decay and from the heat
energy originally generated during accretion of the planet some 4.6 billion years ago.
There are no known mechanisms for transferring this internal energy into any secondary
energy source. And the chemistry of magma does not compare to the chemistry of
hydrocarbons. Magma is lacking in carbon compounds, and hydrocarbons are lacking in
silicates. If hydrocarbons were generated from magma, then you would expect to see
some closer kinship in their chemistry.

The second primal energy source is light and heat generated by our sun. It is the sun's
energy that powers all energy processes on the Earth's surface, and which provides the
very energy for life itself. Photosynthesis is the miraculous process by which the sun's
energy is converted into forms available to the life processes of living matter. Following
biological, geological and chemical processes, a line can be drawn from photosynthesis
to the formation of hydrocarbon deposits. Likewise, both living matter and hydrocarbons
are carbon based.

Finally, because oil generation is in part a geological process, it proceeds at an


extremely slow rate from our human perspective. Geological processes take place over a
different frame of time than human events. It is for this reason that when geologists say
that the San Andreas fault is due for a powerful earthquake, they mean any time in the
next million years -- probably less. Geological processes move exceedingly slow.

After organic matter has accumulated on the sea floor, it must be buried by the process
of deposition. In geological time, in order for this matter to be a likely prospect for
hydrocarbon generation, the rate of deposition must be quick. Here is an experiment you
can conduct to get an idea how slow the rates of deposition are. Place a small stone on
the bottom of a motionless pond. Take another stone of about the same size and place it
at the mouth of a small stream, a stream where the current is not so great that it will
sweep the stone away. Check both of these stones yearly until they have been buried by
deposition. You might see the stone at the mouth of the stream covered over within a
few years, but it is unlikely that you will see the stone in the pond buried within your

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lifetime.

It is a simple geological fact that the oil we are using up at an alarming rate today will
not be replaced within our lifetime -- or within many lifetimes. That is why hydrocarbons
are called non-renewable resources. Capped wells may appear to refill after a few years,
but they are not regenerating. It is simply an effect of oil slowly migrating through pore
spaces from areas of high pressure to the low-pressure area of the drill hole. If this oil is
drawn out, it will take even longer for the hole to refill again. Oil is a non-renewable
resource generated and deposited under special biological and geological conditions.

Aff – A2 Global Economy Scenario


High prices slow the global economy but don’t do serious damage—the prices
are demand-driven and are not being passed on to consumers.
Brad Bourland, 5/9/2008. Chief Economist & Head of Research Jadwa Investment. “Oil's surge: what's behind it and what it means
for Saudi Arabia,” http://www.saudi-us-relations.org/articles/2008/ioi/080509-bourland-oil.html.

Higher oil prices are hurting


We think it would take clear evidence of a slowdown in demand for oil for prices to retreat.
the global economy, but not by as much as analysts had expected. A benchmark study by the
International Energy Agency (in conjunction with the IMF and OECD) in 2004 concluded that a 40 percent increase in oil
prices takes around 1 percent off global GDP. Since the end of 2002, oil prices have risen by nearly 500 percent, yet
global growth last year was 4.9 percent and even with recession looming in the US, it is expected to be around 3.7 percent this year,
above its 20-year average. In part,the resilience of the global economy to the ongoing run-up in oil prices
is because the price rise is the result of a shift in demand rather than a shock to supply (as was the
case with the price surges in the mid-1970s and the early 1980s). In addition, the full extent of the prices rises has not
been passed on to the consumer for the following reasons:
*In many emerging markets gasoline is sold at a fixed price that is not adjusted in line with movements in
the global oil price. In China, for example, the retail price for gasoline has been increased by 95 percent since the end of 2002. In
most Middle Eastern countries, prices have not been changed at all and in some cases they have been cut (Jordan is a notable
exception; it removed all oil subsidies in February).
*In Western Europe fuel is heavily taxed. In the UK, for example, tax accounts for 55 percent of the retail price of
gasoline.As crude oil prices account for less than half of the final retail price (refining, transportation and
other costs make up around 10 percent of the total) the impact of the run-up in oil prices on final prices is less
pronounced. Since the end of 2002, the retail price of gasoline in the UK has climbed by only 80 percent.
*The weakness of the dollar against most leading currencies over the last five years has offset some of the rise in international oil
prices, which are denominated in dollars. For example, in euros the oil price has increased by just less than half of the increase in
dollar terms.
*Inthe US, taxes are much lower than in Western Europe (they account for around 26 percent of the gasoline price) and there
the retail price of gasoline is up by only 140
has been not been a beneficial exchange rate impact. Nonetheless,
percent, as refiners have absorbed much the higher costs. Margins for US West Coast refiners have plunged
since the middle of last year, from over $22 per barrel to less than $6 per barrel. As a percent of the oil price the decline is even more
marked.
Analysts assumed that higher crude prices would pass more directly to final consumers and this
would cause inflation, leading central banks to raise interest rates and ultimately slowing
economic growth. It is the lack of impact on inflation to date that explains why high crude prices
have not significantly slowed global GDP growth.

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***Impact Analysis***

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NW  Extinction
NUCLEAR WAR WOULD LEAD TO EXTINCTION; NO ONE COULD SURVIVE THE
DESTRUCTION AFTER IT
IPPNW, 04, The Human Tragedy of Proliferation and Nuclear Rearmament, The IPPNW was founded in December
1980 by the cardiologists Dr. Bernard Lown of the Harvard School of Public Health and Dr. Evgueni Chazov
of the USSR Cardiological Institute. Based on research they produced a "medical warning to humanity" of
the medical and environmental dangers of nuclear war. The group's campaign produced books and also
articles for professional journals and more popular media. IPPNW was awarded the UNESCO Peace
Education Prize in 1984 and the Nobel Peace Prize in 1985
[http://www.ippnw.org/ResourceLibrary/NPTPrepCom2004.pdf] (backfiles – DDI)

We know what almost 60 years under the nuclear shadow have done to the hundreds of
thousands of victims, whether they be hibakusha, downwinders, nuclear industry
workers, or communities in the Global South and elsewhere who have been deprived of
true health and security because of the enormous amount of resources squandered on
acquiring, testing, and developing nuclear weapons. In a more general sense, we are all
victims of the preparations for nuclear war, because we are all held hostage to the ever
present threat of extinction.

The atomic bombings of Hiroshima and Nagasaki were devastating and cruel. In an
instant they created many tens of thousands of fatalities and several hundred thousand
surviving victims whose terrible injuries have extended over generations. To achieve the
abolition of nuclear weapons, those victims have told their stories of terror and suffering,
believing that this is the only way to save human beings from the crisis of extinction. We
wish to honor the lives and the voices of the hibakusha here and now. Even more
important, we urge the nuclear weapon states and the nonnuclear States Parties to the
NPT to listen to their experiences, to learn from them, and to embrace continued human
survival by abandoning nuclear weapons and the ambition to acquire them. Such effects
certainly warrant characterizing chemical and biological weapons as "weapons of mass
destruction." Nevertheless, the consequences of nuclear weapons are exponentially
greater. Moreover, there is no medical response to nuclear war something that is not
universally true of chemical and biological attacks. The explosion of a single modern
nuclear warhead over a major city could cause hundreds of thousands -- even millions --
of deaths in a matter of moments. Blast, burn, and radiation injuries among the survivors
would overwhelm any possible medical response. Long term health consequences,
including leukemias and other cancers would affect the survivors and their children
throughout entire lifetimes. Other genetic effects would persist across generations.
Hospitals and other medical infrastructure would be destroyed in the overall carnage,
rendering the kind of medical response that would be available in the aftermath of a
chemical or biological attack virtually inconceivable. Vast areas of land stretching out
from the epicenter of a nuclear explosion would remain uninhabitable for years, while
contamination from radioactive fallout would persist in some places for hundreds, or
even thousands of years, causing new illnesses in future generations. An all-out nuclear
war involving a significant number of the weapons that are currently held by the nuclear
weapon states could initiate a nuclear winter, threatening the extinction of human and
countless non-human species.

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NW Outweighs GW AND Turns


Environment
Nuclear war is more important than global warming and nuclear winter
outweighs all other environmental impacts and turns the case.
Baskind 07
(July 6, Chris, http://lighterfootstep.com/2007/07/five-things-that-are-worse-than-global-warming/ Chris
Baskind is a writer and serves as Publisher of Vida Verde Media, a green lifestyle media company. He's
also a speaker on environmental issues, appearing on programs such as National Public Radio's Morning
Edition. JFF)

Granted, climate change is a significant issue. We needn’t agree on its causes to realize its potential impact: a
shifting climate means the shifting availability of things like fresh water and viable farmland. While natural
resources follow wind and tide, human populations do not. The resulting stresses are likely to produce regional
instabilities at a very fragile moment in history.

But the effects of global warming, whatever they are, will be measured on a scale of decades or centuries. In the
meantime, beyond the unblinking stare of MTV — far from the well-heeled audiences of London, Hamburg,
and Giants Stadium — away from the celebrity and speechmaking, humanity’s collective lack of environmental
wisdom is already grinding nature underfoot. While some propose spending billions of dollars to combat the
uncertain foe of climate change, more pressing matters already threaten to upend our everyday lives.

[Continues…]

Out of sight, out of mind: we like to think the end of the Cold War stuffed the nuclear genie back into the bottle.

But as Russian President Vladimir Putin’s recent threat to re-target European cities demonstrates, the idea that
the risk of a nuclear war has abated is largely an illusion. It’s not really necessary to recount the horrors of a
potential nuclear exchange, other than to remind ourselves that a nuclear winter would be the ultimate
environmental disaster, and humanity’s last insult to the planet.

There remain approximately 20,000 active nuclear weapons, slumbering away in the missile silos, bunkers, and
submarines we hide around the world. They’re a miscalculation or a sharp political crisis away from being
called to duty — a sword that’s been hanging above us so long that we’ve come to mistake it for the sky.

If the political resolve being marshaled to combat global warming could be channeled into achieving the
complete destruction of these awful weapons, it would go a long way toward the safeguarding of our survival as
a species.

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NW Turns Agriculture – Nuclear Winter


Even a minor nuclear war would cause a nuclear winter which would destroy
agriculture – computer simulations prove. Davidson 06
(Keay, Keay Davidson has been a science writer for newspapers since 1979: the San Francisco Chronicle
(2000-present), the San Francisco Examiner (1986-2000), the Los Angeles Times San Diego bureau (1981-
85), and the Orlando, Fla. Sentinel Star (1979-1981). He has written three books, most recently the first
biography of Carl Sagan, and is finishing a biography of Thomas S. Kuhn. Also, he has won the AAAS and
NASW science journalism awards, and has written for numerous magazines such as Scientific American,
New Scientist and National Geographic. http://www.sfgate.com/cgi-bin/article.cgi?
f=/c/a/2006/12/12/MNGE5MTRI31.DTL JFF)

A regional nuclear war between Third World nations could trigger planetwide cooling that would likely ravage
agriculture and kill millions of people, scientists reported Monday.

For many years, Western military scientists and strategists have assumed that the damage from small-scale
regional nuclear wars would be limited to continents on which they occurred. Now, in a revamping of the
"nuclear winter" debate of the 1980s, new and far more sophisticated computer models show that even these
little nuclear wars could create global devastation.

Scientists, reporting their findings at the American Geophysical Conference in San Francisco, said vast urban
firestorms ignited by war would send thick, dark clouds into the upper atmosphere, blocking the sun's rays and
cooling much of the planet, with severe climatic and agricultural results.

The soot might remain in the upper atmosphere for up to a decade.

"All hell would break loose," said Prof. Richard Turco of UCLA's department of atmospheric and ocean
sciences.

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NW Turns Biodiversity – Nuclear Winter


Even a regional nuke war would drop temperatures below freezing and cause
turns biodiversity -extinction of species likely including humyns.
Sagan et. al. 83
(“Nuclear Winter: Global Consequences of Multple Nuclear Explosions,” R. P. Turco 1, O. B. Toon 2, T. P.
Ackerman 3, J. B. Pollack 2, and Carl Sagan 1 From the peer-reviewed journal Science
http://www.sciencemag.org/cgi/content/abstract/222/4630/1283 JFF)

The potential global atmospheric and climatic consequences of nuclear war are
investigated using models previously developed to study the effects of volcanic
eruptions. Although the results are necessarily imprecise due to wide range of possible
scenaros and uncertainty in physical parameters, the most probable first-order effects
are serious. Significant hemispherical attenuation of the solar radiation flux and
subfreezing land temperatures may be caused by fine dust raised in high-yield nuclear
surface bursts and by smoke from city and forest fires ignited by airbursts of all yields.
For many simulated exchanges of several thousand megatons, in which dust and smoke
are generated and encircle the earth within 1 to 2 weeks, average light levels can be
reduced to a few percent of ambient and land temperatures can reach -15 ° to -25 °C.
The yield threshold for major optical and climatic consequences may be very low: only
about 100 megatons detonated over major urban centers can create average
hemispheric smoke optical depths greater than 2 for weeks and, even in summer,
subfreezing land temperatures for months. In a 5000-megaton war, at northern mid-
latitude sites remote from targets, radioactive fallout on time scales of days to weeks can
lead to chronic mean doses of up to 50 rads from external whole-body gamma-ray
exposure, with a likely equal or greater internal dose from biologically active
radionuclides. Large horizontal and vertical temperature gradients caused by absorption
of sunlight in smoke and dust clouds may greatly accelerate transport of particles and
radioactivity from the Northern Hemisphere to the Southern Hemisphere. When
combined with the prompt destruction from nuclear blast, fires, and fallout and the later
enhancement of solar ultraviolet radiation due to ozone depletion, long-term exposure to
cold, dark, and radioactivity could pose a serious threat to human survivors and to other
species.

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NW Turns Biodiversity – Generic


TURN: Nuclear war kills biodiversity – radiation. Grover and Harwell 85
(From the peer reviewed journal Bioscience, JSTOR, JFF)

For several hundred square kilometers surrounding a surface-burst nuclear detonation,


radiation doses from local fallout could exceed 104 rads, enough to cause severe
biological damage. Doses averaged regionally or hemispherically would be much lower,
perhaps 10-100 rads, but in local areas external exposures would be sufficient to affect
sensitive species adversely (Pittock et al. 1985). Internal doses become important when
considering global fallout effects, but these are the most difficult to determine because
of uncertainties in many species' dietary habits and subsequent repercussions through
the food chain.

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Turns GW – Ozone Layer


TURN: Nuke war destroys the ozone layer – increases radiation and warming.
Davidson 06
(Keay, Keay Davidson has been a science writer for newspapers since 1979: the San Francisco Chronicle
(2000-present), the San Francisco Examiner (1986-2000), the Los Angeles Times San Diego bureau (1981-
85), and the Orlando, Fla. Sentinel Star (1979-1981). He has written three books, most recently the first
biography of Carl Sagan, and is finishing a biography of Thomas S. Kuhn. Also, he has won the AAAS and
NASW science journalism awards, and has written for numerous magazines such as Scientific American,
New Scientist and National Geographic. http://www.sfgate.com/cgi-bin/article.cgi?
f=/c/a/2006/12/12/MNGE5MTRI31.DTL JFF)

The nuclear explosions and smoke could also damage the ozone layer in the upper
atmosphere, they said. That layer shields Earth's surface from cancer-causing radiation
from the sun.

TURN: Nuclear weapons would inflict massive damage on the ozone layer that
would inevitably increase temperature. Koslow 77
(Evan E., in the June 1977 issue of the peer-reviewed journal Bioscience, JSTOR JFF)

Modifications of the ozone column caused by SST or other similar technologies would be
gradual, giving time for the social and political processes to control their use; they are,
therefore, reversible. On the other hand, there is little likelihood that nuclear weapons
will be banned in the coming years. As a result, nuclear war presents an even more
difficult situation from both a political and technical standpoint, since the effects on the
planetary ozone shield following a nuclear exchange between the superpowers would be
relatively rapid and irreversible. The National Academy of Sciences, in a recent report
(1975), estimated that nuclear detonations of 10,000 megatons would introduce 5 to 50
times the quantity of nitrogen oxides naturally present in the stratosphere and would
result in a 30 to 70% decline in the ozone column over the Northern Hemisphere.

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Russian Econ Collapse Kills US Heg


Russian collapse will shift the balance of power away from the US towards
China—this terminally kills hegemony.
Zeyno Baran et al, Summer 2007. Senior Fellow and Director Center for Eurasian Studies, Hudson Institute. “U.S. – RUSSIAN
RELATIONS : IS CONFLICT INEVITABLE?” Hudson Institute Symposium on US-Russian Relations,
www.hudson.org/files/pdf_upload/Russia-Web%20(2).pdf. (7wk)

The West needs a stable Russia in order to maintain the global balance of power against
China. In the event of Russia’s disintegration, her resources will go to China, not the
West. The West cannot stop Russia’s slide into a systemic cri- sis, and can only help get
out of it once it has begun. This is a challenge for the future. Currently, the West needs a
“Cold War” only with Russia’s new masters, not with the Russian people. Russians are
protesting against the politics of the Russian bureaucracy, and their protest should not
be re-directed at the bureaucracy’s strategic partners in the West. If the West
understands and accepts this, it needs to learn to acknowledge Russians’ rights to
patriotism and to a normal level of freedom—not as a religious symbol, but as the only
path to prosperity and justice. Russian “democrats” and “liberals” have forgotten these
demands and rights, and therefore the terms “dem - o crat” and “liberal” are cursed in
Russia. Official propaganda uses this to divert Russian citizens from asserting their
interests and rights to fighting the West. The West needs to explain to Russia that these
rights have been destroyed not by rivalry with the West, but solely by the avarice of the
new Russian leaders. It is true that in the future, the issue of global competition will
arise. Currently, however, there is only one key problem—corruption (including, of
course, corruption in the interests of the West) and a lack of bureaucratic integrity. After
Russia experiences a systemic crisis the West must be able to say to Russians; “You see?
We are for democracy, but not for “democrats,” for law, but not for lawyers, for
prosperity, but not for prospering oligarchs.” All of these are things that the West could
not say after the 1990s. Russia will be useful to the West if the West can side with Russia
against China and global Islam in foreign policy and with the Russian people against the
Russian bureaucracy in domestic policy. If the West attempts to transform Russia
according to its own conceptualization of the correct societal order, or simply to seize
Russian raw materials, intellect, and money, it will destroy Russia and pay dearly for the
relatively small gain. As a consequence of doing so, the West will experience large-
scale, global systemic problems.

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2NC/1NR Impact Calc. – Schell


A risk of nuclear war precludes any other framework – uncertainty mandates
that every policy decision must be able to guarantee the continued
existence of the human race, and to ignore this possibility is in itself
immoral and unjustified.
Schell, policy analyst and proliferation expert, 1982 (Jonathan, “The Fate of the Earth”, p. 94-5) (backfiles) (This card has been
gender-modified.)

To say that human extinction is a certainty would, of course, be a misrepresentation—


just as it would be a misrepresentation to say that extinction can be ruled out. To begin
with, we know that a holocaust may not occur at all. If one does occur, the adversaries may not use all their weapons. If they do
use all their weapons, the global effects, in the ozone and elsewhere, may be moderate. And if the effects are not moderate but extreme, the ecosphere may prove resilient
enough to withstand them without breaking down catastrophically. These are all substantial reasons for supposing that mankind will not be extinguished in a nuclear holocaust, or

even that extinction in a holocaust is unlikely, and they tend to calm our fear and reduce our sense of urgency. Yet at the same time we are
compelled to admit that there may be a holocaust, that the adversaries may use all their weapons, that the global effects,

and that our species may


including effects of which we are as yet unaware, may be severe, that the ecosphere may suffer catastrophic breakdown,

be extinguished. We are left with uncertainty, and are forced to make our decisions in a
state of uncertainty. If we wish to act to save our species, we have to muster our resolve in spite of our awareness that the life of the species may not now in
fact be jeopardized. On the other hand, if we wish to ignore the peril, we have to admit that we do so in the

knowledge that the species may be in danger of imminent self-destruction. When the existence of
nuclear weapons was made known, thoughtful people everywhere in the world realized that if the great powers entered into a nuclear-arms race the human species would sooner
or later face the possibility of extinction. They also realized that in the absence of international agreements preventing it an arms race would probably occur. They knew that the

The discovery of the energy in mass—of “the basic power of


path of nuclear armament was a dead end for mankind.

the universe”—and of a means by which man could release that energy altered the
relationship between [humans] and the source of [their] life, the earth. In the shadow of this
power, the earth became small and the life of the human species doubtful. In that sense, the question
of human extinction has been on the political agenda of the world ever since the first
nuclear weapon was detonated, and there was no need for the world to build up its present tremendous arsenals before starting to worry about it.
At just what point the species crossed, or will have crossed, the boundary between merely having the technical knowledge to destroy itself and actually having the arsenals at

hand, ready to be used at any second, is not precisely knowable. But it is clear that at present,with some twenty thousand megatons of
nuclear explosive power in existence, and with more being added every day, we have
entered into the zone of uncertainty, which is to say the zone of risk of extinction. But the
mere risk of extinction has a significance that is categorically different from,
and immeasurably greater than, that of any other risk, and as we make our
decisions we have to take that significance into account. Up to now, every risk
has been contained within the frame of life; extinction would shatter the
frame. It represents not the defeat of some purpose but an abyss in which all human
purposes would be drowned for all time. We have no right to place the possibility of
this limitless, eternal defeat on the same footing as risks that we run in the
ordinary conduct of our affairs in our particular transient moment of human
history. To employ a mathematical analogy, we can say that although the risk of
extinction may be fractional, the stake is, humanly speaking, infinite, and a fraction of
infinity is still infinity. In other words, once we learn that a holocaust might lead to
extinction we have no right to gamble, because if we lose, the game will be over, and
neither we nor anyone else will ever get another chance. Therefore, although, scientifically speaking, there is all the
difference in the world between the mere possibility that a holocaust will bring about extinction and the certainty of it, morally they are the same, and we have no

choice but to address the issue of nuclear weapons as though we knew for a certainty
that their use would put an end to our species. In weighing the fate of the earth and, with it, our own fate, we stand before a
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mystery, and in tampering with the earth we tamper with a mystery. We are in deep ignorance. Our ignorance should dispose us to wonder, our wonder should make us humble,
our humility should inspire us to reverence and caution, and our reverence and caution should lead us to act without delay to withdraw the threat we now pose to the earth and to
ourselves.

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A2 Deterrence – It’s Outdated


Nuclear deterrence never worked and is increasingly irrelevant in the modern
day.
Carranza 99 (Mario E Carranza. is Associate Professor of Political Science at Texas A & M University-Kingsville. He has published articles in Asian Survey,
The Journal of Peace Research, Latin American Perspectives, and International Politics, as well as a book (in Spanish) on the armed forces in Latin America. He
has
been a MacArthur postdoctoral fellow at the University of Wisconsin-Madison. http://cns.miis.edu/pubs/npr/vol06/63/carran63.pdf JFF)

The realist claim that India and Pakistan are more secure after the May 1998 nuclear
explosions is based on the assumption that nuclear weapons are a “peacemaker”
because their overwhelming destructive capacity has a stabilizing effect on international
relations and regional balances of power. Today, the arguments about the utility of
nuclear weapons in keeping the Cold War peace no longer appear to be as compelling as
they once were. Even during the Cold War, the thesis that nuclear weapons bring peace
was controversial.4 Recent reassessments of the Cuban missile crisis show that the
superpowers came much closer to nuclear war than it was once thought, and that
nuclear war was avoided less because of deterrence stability than because of sheer luck,
or as General Butler puts
it, “only by the grace of God.”5

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GW is Unstoppable
Even if the aff reduces CO2, it won’t stop for at least a century – nuke war
outweighs. Science Daily 02
(“Global Warming Will Persist At Least A Century Even If Emissions Curbed Now” 2002,
http://www.sciencedaily.com/releases/2002/02/020218094427.htm , JFF)

Though significant uncertainty remains regarding the amount of global warming that will
occur over the next century or two, scientists agree that the trend will continue for the
next hundred years even if fossil fuel consumption is dramatically reduced.

Scientists predict significant increases in global temperature and sea level this century.
And related changes in weather patterns are expected to affect agricultural production.
Global warming is likely to have the greatest human impact in poor countries unable to
adequately respond to the changes.

Professor Robert Dickinson of the Georgia Institute of Technology's School of Earth and
Atmospheric Sciences will present the evidence behind this assessment at the annual
meeting of the American Association for the Advancement of Science (AAAS) on Feb. 17
in Boston. Dickinson's presentation, titled "Predicting Climate Change," is part of the
symposium "Climate Change: Integrating Science, Economics and Policy."

"Current climate models can indicate the general nature of climate change for the next
100 to 200 years," Dickinson says. "But the effects of carbon dioxide (CO2) that have
been released into the atmosphere from the burning of fossil fuels last for at least 100
years. That means that any reductions in CO2 that are expected to be possible over this
period will not result in a cleaner atmosphere and less global warming than we see today
for at least a century."

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Aff – GW = NW
Global warming is on par with nuclear war; it’ll destroy the environment, the
economy, and human security. Christian Today 07 (“Global Warming Impact Like
'Nuclear War,’” September 12,
http://www.christiantoday.co.uk/article/global.warming.impact.like.nuclear.war/13120.htm)

Climate change could have global security implications on a par with nuclear war unless
urgent action is taken, a report said on Wednesday. The International Institute for
Strategic Studies (IISS) security think-tank said global warming would hit crop yields and
water availability everywhere, causing great human suffering and leading to regional
strife. While everyone had now started to recognise the threat posed by climate change,
no one was taking effective leadership to tackle it and no one could tell precisely when
and where it would hit hardest, it added. "The most recent international moves towards
combating global warming represent recognition ... that if the emission of greenhouse
gases ... is allowed to continue unchecked, the effects will be catastrophic -- on the level
of nuclear war," the IISS report said. "Even if the international community succeeds in
adopting comprehensive and effective measures to mitigate climate change, there will
still be unavoidable impacts from global warming on the environment, economies and
human security," it added. Scientists say global average temperatures will rise by
between 1.8 and 4.0 degrees Celsius this century due to burning fossil fuels for power
and transport. The IISS report said the effects would cause a host of problems including
rising sea levels, forced migration, freak storms, droughts, floods, extinctions, wildfires,
disease epidemics, crop failures and famines. The impact was already being felt --
particularly in conflicts in Kenya and Sudan -- and more was expected in places from Asia
to Latin America as dwindling resources led to competition between haves and have
nots. "We can all see that climate change is a threat to global security, and you can
judge some of the more obvious causes and areas," said IISS transnational threat
specialist Nigel Inkster. "What is much harder to do is see how to cope with them." The
report, an annual survey of the impact of world events on global security, said conflicts
and state collapses due to climate change would reduce the world's ability to tackle the
causes and to reduce the effects of global warming. State failures would increase the
gap between rich and poor and heighten racial and ethnic tensions which in turn would
produce fertile breeding grounds for more conflict. Urban areas would not be exempt
from the fallout as falling crop yields due to reduced water and rising temperatures
would push food prices higher, IISS said. Overall, it said 65 countries were likely to lose
over 15 percent of their agricultural output by 2100 at a time when the world's
population was expected to head from six billion now to nine billion people.
"Fundamental environmental issues of food, water and energy security ultimately lie
behind many present security concerns, and climate change will magnify all three," it
added.

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Aff – Deterrence Solves NW


Deterrence solves every scenario for nuclear war.
Robinson, director of the Sandia National Laboratories, 2001 (Paul, “A White Paper: Pursuing a Nuclear Weapons
Policy for the 21st Century”, http://www.mindfully.org/Nucs/Nuclear-Weapons-Policy-21stC.htm) (backfiles – DDI 07)

Additionally, throughout the Cold War and ever since,there has been a steady proliferation of nuclear weapons and
other weapons of mass destruction by other nations around the globe. The vast majority
of these newly armed states are not U.S. allies, and some already are exhibiting hostile
behaviors, while others have the potential to become aggressors toward the U.S., our
allies, and our international interests. Russia has already begun to emphasize the importance of its arsenal of nuclear weapons to compensate for its limited conventional
capabilities to deal with hostilities that appear to be increasing along its borders. It seems inescapable that the U.S. must carefully think

through how we should be preparing to deal with new threats from other corners of the
world, including the role that nuclear weapons might serve in deterring these threats
from ever reaching actual aggressions. I personally see the abolition of nuclear weapons as an impractical dream in any foreseeable
future. I came to this view from several directions. The first is the impossibility of ever "uninventing" or erasing from the human mind the knowledge of how to build such
weapons. While the sudden appearance of a few tens of nuclear weapons causes only a small stir in a world where several thousands of such weapons already exist, their
appearance in a world without nuclear weapons would produce huge effects. (The impact of the first two weapons in ending World War II should be a sufficient example.) I believe
that the words of Winston Churchill, as quoted by Margaret Thatcher to a special joint session of the U.S. Congress on February 20, 1985, remain convincing on this point: "Be
careful above all things not to let go of the atomic weapon until you are sure, and more sure than sure, that other means of preserving the peace are in your hands." Similarly, it
is my sincere view that the majority of the nations who have now acquired arsenals of nuclear weapons believe them to be such potent tools for deterring conflicts that they
would never surrender them. Against this backdrop, I recently began to worry that because there were few public statements by U.S. officials in reaffirming the unique role which
nuclear weapons play in ensuring U.S. and world security, far too many people (including many in our own armed forces) were beginning to believe that perhaps nuclear weapons
no longer had value. It seemed to me that it was time for someone to step forward and articulate the other side of these issues for the public: first, that nuclear weapons remain
of vital importance to the security of the U.S. and to our allies and friends (today and for the near future); and second, that nuclear weapons will likely have an enduring role in
preserving the peace and preventing world wars for the foreseeable future. These are my purposes in writing this paper. For the past eight years, I have served several
Commanders-in-Chief of the U.S. Strategic Command by chairing the Policy Subcommittee of the Strategic Advisory Group (SAG). This group was asked to help develop a new
terms of reference for nuclear strategy in the post-Cold War world. This paper draws on many of the discussions with my SAG colleagues (although one must not assume their
endorsement of all of the ideas presented here). We addressed how nuclear deterrence might be extended-not just to deter Russia-but how they might serve a continuing role in
deterring wider acts of aggression from any corner of the world, including deterring the use of nuclear, chemical or biological weapons. [Taken together, these are normally
referred to as Weapons of Mass Destruction (WMD).] My approach here will be to: (1) examine what might be the appropriate roles for nuclear weapons for the future, (2) propose
some new approaches to developing nuclear strategies and policies that are more appropriate for the post-Cold War world, and (3) consider the kinds of military systems and
nuclear weapons that would be needed to match those policies. The Role(s) of Nuclear Weapons The Commander-in-Chief of the Strategic Command, Admiral Rich Mies,

Deterrence of aggression is a cornerstone of our


succinctly reflected the current U.S. deterrent policy last year in testimony to the U.S. Senate: "

national security strategy, and strategic nuclear forces serve as the most visible and
most important element of our commitment ... (further) deterrence of major military attack on the United States and its allies,
particularly attacks involving weapons of mass destruction, remains our highest defense priority." While the application of this policy seemed clear, perhaps we could have said
even "straightforward," during the Cold War; application of that policy becomes even more complicated if we consider applying it to any nation other than Russia. Let me first
stress that nuclear arms must never be thought of as a single "cure-all" for security concerns. For the past 20 years, only 10 percent of the U.S. defense budget has been spent on
nuclear forces. The other 90 percent is for "war fighting" capabilities. Indeed, conflicts have continued to break out every few years in various regions of the globe, and these
nonnuclear capabilities have been regularly employed. By contrast, we have not used nuclear weapons in conflict since World War II. This is an important distinction for us to
emphasize as an element of U.S. defense policy, and one not well understood by the public at large. Nuclear weapons must never be considered as war fighting tools. Rather

we should rely on the catastrophic nature of nuclear weapons to achieve war prevention,
to prevent a conflict from escalating (e.g., to the use of weapons of mass destruction), or to help achieve war
termination when it cannot be achieved by other means, e.g., if the enemy has already escalated the conflict through the
use of weapons of mass destruction. Conventional armaments and forces will remain the backbone of U.S. defense forces, but the inherent threat to

escalate to nuclear use can help to prevent conflicts from ever starting, can prevent their
escalation, as well as bring these conflicts to a swift and certain end. In contrast to the situation facing
Russia, I believe we cannot place an over-reliance on nuclear weapons, but that we must maintain adequate conventional capabilities to manage regional conflicts in any part of
the world. Noting that the U.S. has always considered nuclear weapons as "weapons of last resort," we need to give constant attention to improving conventional munitions in
order to raise the threshold for which we would ever consider nuclear use. It is just as important for our policy makers to understand these interfaces as it is for our commanders.
Defenses Although it is beyond the scope of this paper to strictly consider "defensive" tactics and armaments, I believe it is important for the United States to consider a
continuum of defensive capabilities, from boost phase intercept to terminal defenses. Defenses have always been an important element of war fighting, and are likely to be so
when defending against missiles. Defenses will also provide value in deterring conflicts or limiting escalations. Moreover, the existence of a credible defense to blunt attacks by

If any attack
armaments emanating from a rogue state could well eliminate that rogue nation's ability to dissuade the U.S. from taking military actions.

against the U.S., its allies, or its forces should be undertaken with nuclear weapons or
other weapons of mass destruction, there should be no doubt in the attacker's mind that
the United States might retaliate for such an attack with nuclear weapons; but the choice would be in
our hands. If high effectiveness defenses can be achieved, they will enhance deterrence by eliminating an aggressor's confidence in attacking the U.S. homeland with long-range
missiles, and thus make our use of nuclear weapons more credible (if the conflict could not be terminated otherwise.) Whereas, nuclear weapons should always remain weapons
of last resort, defensive systems would likely be our weapons of first resort. Nuclear Weapons: An Enduring Strategic Tool? Throughout my career, I have had the opportunity to
participate in a number of "war games" in which the roles and uses of nuclear weapons had to be faced in scenarios that imagined military conflicts developing between the U.S.
and other potential adversaries. The totality of those games brought new realizations as to the role and purpose of nuclear weapons, in particular, how essential it is that
deterrence be tailored in a different way for each potential aggressor nation. It also seemed abundantly clear that any use of nuclear weapons is, and always will be, strategic.
Thus, I would propose we ban the term "nonstrategic nuclear weapons" as a non sequitur. The intensity of the environment of any war game also demonstrates just how critical it
is for the U.S. to have thought through in advance exactly what messages we would want to send to other nations (combatants and noncombatants) and to "history," should there
be any future use of nuclear weapons-including threatened use-in conflicts. Similarly, it is obvious that we must have policies that are well thought through in advance as to the
role of nuclear weapons in deterring the use of, or retaliating for the use of, all weapons of mass destruction. Let me then state my most important conclusion directly: I believe

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nuclear weapons must have an abiding place in the international scene for the foreseeable future. I believe that the world, in fact, would become more dangerous, not less
dangerous, were U.S. nuclear weapons to be absent. The most important role for our nuclear weapons is to serve as a "sobering force," one that can cap the level of destruction
of military conflicts and thus force all sides to come to their senses. This is the enduring purpose of U.S. nuclear weapons in the post-Cold War world. I regret that we have not yet
captured such thinking in our public statements as to why the U.S. will retain nuclear deterrence as a cornerstone of our defense policy, and urge that we do so in the upcoming
Nuclear Posture Review. Nuclear deterrence becomes in my view a "countervailing" force and, in fact, a potent antidote to military aggression on the part of nations. But to

succeed in effective nuclear weapons strategies and policies are necessary


harnessing this power,

ingredients to help shape and maintain a stable and peaceful world.

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Aff – A2 NW Causes GW (NW Delays


GW)
Nuclear war wouldn’t contribute to global warming – it would actually delay it
for a decade. Butler 06
(Rhett, background in economy and math – site is based on peer-reviewed journals, “Nuclear war could
cause global cooling (i.e. block global warming),” December 11, http://news.mongabay.com/2006/1211-
nuclear.html JFF)

Nuclear war would disrupt global climate for at least a decade according to new research
presented Dec. 11 at the annual meeting of American Geophysical Union in San
Francisco.
The research, based on findings from historic volcano eruptions, found that a small-scale,
regional nuclear war could produce millions of tons of "soot" particles that could block
solar radiation, in effect, cooling the planet.

"We examined the climatic effects of the smoke produced in a regional conflict in the
subtropics between two opposing nations, each using 50 Hiroshima-size nuclear
weapons to attack the other’s most populated urban areas," said Alan Robock, a
professor in the department of environmental sciences at Rutgers University. "A cooling
of several degrees would occur over large areas of North America and Eurasia, including
most of the grain-growing regions. As in the case with earlier nuclear winter calculations,
large climatic effects would occur in regions far removed from the target areas or the
countries involved in the conflict."

The team, also including scientists from the University of Colorado at Boulder (CU-
Boulder) and UCLA, say the global impact of nuclear would be akin to climate disruptions
caused by volcanic eruptions which cool the planet by releasing tons of particulate
matter into the atmosphere. They cite the 1815 eruption of Tambora in Indonesia as an
example.

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