Northwestern Russian Oil

Document Sample
Northwestern Russian Oil Powered By Docstoc
					▌▌▌   ▌▌▌
INDEX – RUSSIAN OIL ....................................................................................................................................................................................................... 2
INTRO/NOTES ..................................................................................................... Error! Bookmark not defined.Error! Bookmark not defined.
RUSSIAN OIL 1NC SHELL (1/4) ....................................................................................................................................................................................... 5
Shell (2/4) .................................................................................................................................................................................................................................... 6
Shell (3/4) .................................................................................................................................................................................................................................... 7
Shell (4/4) .................................................................................................................................................................................................................................... 8
Russian Econ High - Cars ........................................................................................................................................................................................................ 9
Econ High – African Expansion...........................................................................................................................................................................................10
Econ High – Oil (1/4) ............................................................................................................................................................................................................11
Econ High – Oil (2/4) ............................................................................................................................................................................................................12
Econ High – Oil (3/4) ............................................................................................................................................................................................................13
Econ High – Oil (4/4) ............................................................................................................................................................................................................14
Russian Econ High – Generic (1/3).....................................................................................................................................................................................15
Econ High – Generic (2/3)....................................................................................................................................................................................................16
Econ High – Generic (3/3)....................................................................................................................................................................................................17
Russian Econ Low – Corruption/Bureaucracy ..................................................................................................................................................................18
Russian Econ Low - FDI .......................................................................................................................................................................................................19
Russian Econ Low - Inflation................................................................................................................................................................................................20
Russian Econ Low – Foreign Tech ......................................................................................................................................................................................21
Russian Econ Low – Energy Dependency ..........................................................................................................................................................................22
Russian Econ Low - Generic .................................................................................................................................................................................................23
Russian Econ Low – Oil Production Slowing ....................................................................................................................................................................24
Russian Econ Low – Capital Outflow .................................................................................................................................................................................25
Oil Prices Turn Warming .......................................................................................................................................................................................................26
Oil Prices Will Remain High (1/2) .......................................................................................................................................................................................27
Oil Prices Remain High (2/2) ................................................................................................................................................................................................28
US Prices Spillover...................................................................................................................................................................................................................29
I/L Extension (1/6) ................................................................................................................................................................................................................30
I/L Extension (2/6) ................................................................................................................................................................................................................31
I/L Extension (3/6) ................................................................................................................................................................................................................32
I/L Extension (4/6) ................................................................................................................................................................................................................33
I/L Extension (5/6) ................................................................................................................................................................................................................34
I/L Extension (6/6) ................................................................................................................................................................................................................35
I/L to Nationalism ..................................................................................................................................................................................................................36
Nationalism  NW Impact Scenario ..................................................................................................................................................................................37
High Oil Prices Aren’t Bad ....................................................................................................................................................................................................38
US Key to World Econ – China and India follow .............................................................................................................................................................39
NW turns Global Warming - Generic..................................................................................................................................................................................40
Arms Sale Impact .....................................................................................................................................................................................................................41
Inflation Key to Stop Nukes ..................................................................................................................................................................................................42
Global Econ Collapse Impact Scenario ...............................................................................................................................................................................43
Ext: Russian Econ Key to Global Econ ..............................................................................................................................................................................45
Internal Measures ≠ Solve ......................................................................................................................................................................................................46
A2 Russian Inflation ................................................................................................................................................................................................................47
Uniqueness – Oil Prices Won’t Fall in Squo .......................................................................................................................................................................48
Uniqueness Ext – US is Reliant .............................................................................................................................................................................................49
Oil is Abiotic (1/2) ..................................................................................................................................................................................................................50
Oil is Abiotic (2/2) ..................................................................................................................................................................................................................51
Alternative Energy Inevitable ................................................................................................................................................................................................52
Oil Prices Key to Stability ......................................................................................................................................................................................................53
EXT – Prices Based on Demand ..........................................................................................................................................................................................54
A2: Speculators (1/5) ..............................................................................................................................................................................................................55
A2 Speculators (2/5) ...............................................................................................................................................................................................................56
A2 Speculators (3/5) ...............................................................................................................................................................................................................57
A2 Speculators (4/5) ...............................................................................................................................................................................................................58
A2 Speculators (5/5) ...............................................................................................................................................................................................................59
A2 Stabilization Fund  No Impact...................................................................................................................................................................................60
A2 ―But Our Oil’s From Canada!‖ (Oil = Fungible) ........................................................................................................................................................61
A2 Non-Unique: ANWR (1/2) .............................................................................................................................................................................................62
A2 ANWR (2/2) ......................................................................................................................................................................................................................63
A2 Non Unique: Peak Oil ......................................................................................................................................................................................................64
A2 Peak Oil: Impact to Belief ................................................................................................................................................................................................65
A2 Dutch Disease – Generic (1/2).......................................................................................................................................................................................66
A2 Dutch Disease – Generic (2/2).......................................................................................................................................................................................67
A2 Dutch Disease – WTO Scenario ....................................................................................................................................................................................68
2NC/1NR — Link Magnifiers (Perception) .......................................................................................................................................................................69
***AFFIRMATIVE ANSWERS*** ....................................................................................................................................................................................70
Aff – No Link – Institutional Investors (1/2) ....................................................................................................................................................................71
Aff – Institutional Investors (2/2) ........................................................................................................................................................................................73
Aff – Dutch Disease (1/3) .....................................................................................................................................................................................................74
Aff – Dutch Disease (2/3) .....................................................................................................................................................................................................75
Aff – Dutch Disease (3/3) .....................................................................................................................................................................................................76
Aff – Ruble Appreciation  Inevitable Collapse ..............................................................................................................................................................77
Aff – Econ Collapse Inevitable – Inflation .........................................................................................................................................................................78
Aff- No Link .............................................................................................................................................................................................................................79
Aff – Russian Oil Dependence Bad (1/2) ...........................................................................................................................................................................80
Aff – Russian Oil Dependency Bad (2/2) ...........................................................................................................................................................................81
Aff - Price Fall Won’t Affect Russia Immediately .............................................................................................................................................................82
Aff – Prices Won’t Drop Short Term ..................................................................................................................................................................................83
Aff – Oil Prices Will Fall (1/3) ..............................................................................................................................................................................................84
Aff – Oil Prices Will Fall (2/3) ..............................................................................................................................................................................................85
Aff- Oil Prices Will Fall (3/3) ................................................................................................................................................................................................86
Aff- Oil Prices are a Lie ..........................................................................................................................................................................................................87
Aff – Stabilization Fund .........................................................................................................................................................................................................88
Aff – Russian Econ Not Growing From Oil ......................................................................................................................................................................89
Aff - No Reliance Now ...........................................................................................................................................................................................................90
Aff – A2 Nuclear Winter Turns ............................................................................................................................................................................................91
Aff – A2 Oil is Abiotic............................................................................................................................................................................................................92
Aff – A2 Global Economy Scenario ....................................................................................................................................................................................93
***Impact Analysis*** ............................................................................................................................................................................................................94
NW  Extinction ...................................................................................................................................................................................................................95
NW Outweighs GW AND Turns Environment ...............................................................................................................................................................96
NW Turns Agriculture – Nuclear Winter ............................................................................................................................................................................97
NW Turns Biodiversity – Nuclear Winter...........................................................................................................................................................................98
NW Turns Biodiversity – Generic ........................................................................................................................................................................................99
Turns GW – Ozone Layer .................................................................................................................................................................................................. 100
Russian Econ Collapse Kills US Heg ................................................................................................................................................................................ 101
2NC/1NR Impact Calc. – Schell ....................................................................................................................................................................................... 102
A2 Deterrence – It’s Outdated ........................................................................................................................................................................................... 103
GW is Unstoppable .............................................................................................................................................................................................................. 104
Aff – GW = NW .................................................................................................................................................................................................................. 105
Aff – Deterrence Solves NW .............................................................................................................................................................................................. 106
Aff – A2 NW Causes GW (NW Delays GW) ................................................................................................................................................................. 107
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.


                                                                                                    is described by Bloomberg
   Unlike South Africa, a net exporter of valuable commodities like platinum but a net importer of increasingly costly oil, Russia
   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.



<Insert if necessary.>
(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.
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 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.
                                    Putin tested a weapon more deadly than any           used by the       Soviet
Union.

                       Putin was sending a message.


The target could have easily been Los Angeles          and the launch signifies that Russia means business.




                      there is no surprise that Mr Putin's new rocket takes off so fast that no missile defence
system can detect it.                 new Topol-M missile has multiple warheads which splinter so it can't be
shot down                       missile defence system wouldn't stand a chance of intercepting




                 a country dependant on oil money is particularly vulnerable to a drop in oil prices. Combine
this with a demographic picture worse than any non African country and Russia begins to look very fragile.
(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.
(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.




  '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 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.
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.
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.




                         (“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.
                        (“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.
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.




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 economic cooperation with Russia, particularly
                                                     The Russian economy is seen more and more by European business
in energy but increasingly in broader investment and economic terms.
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.



                            .
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 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, Tokyo and
                                                                             Russian banks Renaissance Capital and
Singapore saw a major influx of expatriates to staff roles, many of whom stayed to build long-term careers within the region.
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
                         (“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 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
among all global emerging markets".
(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)

                                                                           Medvedev seems to be aware of the structural
Russia's new president takes over the reins of a country in full economic swing. Dmitry
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.

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.
( 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.

"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."
(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.




(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
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.
(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.)
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."
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.
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.
Gaddy,
                                                07
  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.
The Economist 08 (“Trouble in the pipeline,” May 8,
http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=349002&story_id=1133231
3)
   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.




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




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 growth‖ (Ahrend, 2004).
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
              Oil now also accounts for about 60 percent of total exports. Higher oil revenues allow for additional spending room, but
specializing in oil.
                                                                                                          While this has not
they also complicate macroeconomic management and lead to an increased dependence on a highly volatile and uncertain source of income.
been a 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.

                                                        Russia’s well documented demographic trends—declining
And as we move forward the problems identified here are only likely to get worse.
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.



                                                                               Declining levels of productivity growth
And sustainability of pensions and health spending isn't the only issue that Russia's demography presents us with.
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.
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.
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)
                                                                       

Victor Israelyan, was a Soviet ambassador, diplomat, arms control negotiator, and leading political scientist, 1998 Winter, Washington Quarterly.

                                                                                                                  the name of a "united and undivided Russia,"
The first and by far most dangerous possibility is what I call the power scenario. Supporters of this option would, in
                                             Many would seek to revive a dictatorship and take urgent military steps to mobilize the
radically change domestic and foreign policies.
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 influence on other issues. Of those means, even the use of direct military force in places like the
Baltics cannot be ruled out. Some 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 U nited S tates 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 U nited S tates 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."
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.
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.
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.
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)
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.




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.
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.




Martin Gilman, 1/16/2008. 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 U nited S tates 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.




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 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.
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.




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.
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.
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.
(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.


(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.

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.
(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.
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.
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
                  fact, no one with any credibility can deny that fact. It has been demonstrated in the laboratory and
my "kindred spirit"). In
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.
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.
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.
(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.
(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.
(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.
(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.


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.
(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 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."
(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.




(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.
                                                                 

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.
(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.

                                            oil production becomes part of the world supply, and the price of oil
Getting back to Dilbert and oil, the point is that all
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.
(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 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.
(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.



(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.

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.
(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 )

                              There will still be oil in the ground 10 years from now, and 50 years from now and 500
At least not in a physical sense.
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.
Jerry           200 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.
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 a fair description of another country, at the start of the 20th century. The United States has come
a long way since then.
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
                                                        The so-called resource curse is no fatalité, and there is no
largely determine how successfully the economy adapts to its new terms of trade.
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.


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.
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.



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.
Robert Shiller, 11/8/20     04. Prof. Econ @ Yale. ―The perception of declining prices triggers a massive sell-off and price collapse,‖ The Edge (Malaysia), Lexis. (Leech
7wk oil DA)

But whatmatters for oil prices now and in the foreseeable future is the perception of the story, not the ambiguities behind it. If there is a
perception that prices will be higher in the future, then prices will 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 .




Andrew Leonard, 8/21/20          06. 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)

The theory goes like this: First, there's the supposition that some portion of the spike in oil prices over the last 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.



The                            (Canada), 10/12/20   07. ―Speculating on the future of those pesky oil and gas speculators,‖ Lexis. (Leech 7wk oil da)
              analysts vary widely on this subject, but a sample of respected ones says the speculative premium in crude adds
Probably not. Oil
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.
(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



(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
barrels, an increase of 920 million barrels. Over the same five-year period, Index
Speculatorsʼdemand 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.
(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.



(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
                                                                                              is a crucial distinction between
markets could go a long way in explaining the extraordinary commodities price increases in the beginning of 2008? There
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.
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.
(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.
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.


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
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.




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.

"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.
                                                                       

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.
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 signs of strain.
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.




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.
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.

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




[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.
(July 17, http://www.russiatoday.com/business/news/27632 JFF)
                             prices have fallen sharply for the second straight session, in a sign that markets are
[all emphasis from original article]Oil
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.
(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.
(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.
(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.
(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.
(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.
(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.
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

                                                                                              oil and gas presently
At the same time, however, oil and gas add less to overall Russian gdp and economic growth than the above figures would suggest. In fact,
contribute only about 20 percent of Russian gdp.10 Moreover, the 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
                                                was strongly devalued, which led to greater competitiveness of Russian
consequence of the Russian government’s default, the ruble
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.
(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.




(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%.
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.



(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.
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 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.
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.

                                                                                 oil prices are hurting the global economy, but not
We think it would take clear evidence of a slowdown in demand for oil for prices to retreat. Higher
by as much as analysts had expected. A benchmark study by the I nternational E nergy A gency (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.
  *In the US, taxes are much lower than in Western Europe (they account for around 26 percent of the gasoline price) and there has been not been a beneficial exchange
rate impact. Nonetheless, the retail price of gasoline is up by only 140 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.
                                                       

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.
(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.
(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.
(―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.
(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.
(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.



(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.
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.
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
                                                                                   Yet at the same time we are compelled to admit that there may be a
holocaust is unlikely, and they tend to calm our fear and reduce our sense of urgency.

holocaust, that the adversaries may use all their weapons, that the global effects, including effects of which we are as yet unaware, may be severe, that the ecosphere may suffer catastrophic breakdown, and that
our species may 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 path of nuclear armament was a dead end for
     The discovery of the energy in mass—of ―the basic power of the universe‖—and of a means by which man
mankind.

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 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.
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
(―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."
               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.
                                                                     .
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, succinctly reflected the current U.S. deterrent policy last year in testimony to the U.S. Senate:
Deterrence of aggression is a cornerstone of our 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
                                                                                   we should rely on the catastrophic nature of nuclear weapons to
the public at large. Nuclear weapons must never be considered as war fighting tools. Rather

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 armaments emanating from a rogue state could well eliminate that rogue nation's
                              If any attack against the U.S., its allies, or its forces should be undertaken with nuclear
ability to dissuade the U.S. from taking military actions.

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 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
                                       effective nuclear weapons strategies and policies are necessary ingredients to
aggression on the part of nations. But to succeed in harnessing this power,

help shape and maintain a stable and peaceful world.
(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.

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:114
posted:7/7/2011
language:English
pages:107