World Bank: Russia needs a bailout, too

posted at 2:30 pm on December 19, 2008 by Ed Morrissey
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Color me unsympathetic.  It turns out that exploiting high oil prices to rebuild the Russian Empire turns out to be a bad business decision.  The World Bank predicted a “nightmare scenario” for Russia if oil falls to $30 per barrel and it cannot pay its bills:

Russia would come under crippling financial pressure and may need to raise money externally if oil languishes at an average of $30 a barrel over the next two years, the World Bank predicted Friday.

The bleak scenario would mark a rapid unraveling of Russia’s oil-fueled economic gains over the past eight years, during which time the government has paid down most of its foreign debt and built up a vast stockpile of international reserves.

“If oil prices in 2009 and 2010 average $30 a barrel, that would be a nightmare scenario for a global economy,” Zeljko Bogetic, the World Bank’s chief economist in Russia told investors on Friday. “The pressures on the current account and public finances in Russia would quickly rise to a point where the financing constraint would become so sharp that it’s possible even to envisage Russia’s return from a creditor to international organisations to (that of) a borrower.”

At $50 a barrel, Russia could drain much of its reserve funds and run budgetary deficits, but would not face a “meltdown” scenario, said Bogetic.

I’d be a lot more sympathetic if Russia used the high oil prices to rebuild its democracy and improve relations with its neighbors.  Instead, over the past few years of high prices, Russia rebuilt its military and went on a punitive adventure in Georgia, extorted Ukraine and Belarus by cutting off energy supplies, and focused on its return to global hegemony.  And just this week, Vladimir Putin and Dmitry Medvedev pushed legislation that will allow them to treat dissent as treason and deny the accused jury trials.

Now the World Bank wants its members to prepare to assist Russia after watching how Putin spent the cash.  Do we really want to fund more attacks on Georgia and the return of the Czars in all but name?  Pass.

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