Russian ambitions in the energy sphere and the global financial crisis

Abstract

"For the time being, the current financial crisis has halted the Russian economic boom. The government is compelled to invest $ 100 billion for the bail-out of the banking system, money that comes from the Kremlin's foreign-currency reserves totalling $ 600 billion. Currently, capital outflow exceeds the inflow. Having financed their acquisitions with Western money, Russian oligarchs feel the pain too, as credits, due to the liquidity crisis, are not granted anymore. The reform and modernization programme, proposed by Russian president Medvedev earlier this year seems to have been postponed. The state appears to be gaining ground again. If the global price of oil continues to fall, Moscow will not be able to implement the ambitious budget set for 2009. As yet, however, it is too early to issue an obituary to Russia's economy. Speaking at the 'Russia Breakfast' on the implications of the financial crisis for Russian energy policy, Tatiana Mitrova, head of the Centre for International Energy Market Studies at the Energy Research Institute of the Russian Academy of Sciences emphasized that the current condition represents a serious test case for the Russian economic system." (author's abstract)