Oil and Gas in the Capitals ///

The crisis has hit the Russian economy at last. The GDP fell considerably, by 12.3% in first-quarter 2009, an unprecedented drop since the blackest days of 1992. Of course, this puts Russia back to its 2007 level, which was not bad at all. The drop is not due to the reasons usually given in the Western press, however. Oil prices, which fell precipitously during last fall and winter, have rebounded since February. They are now significantly greater than US$60/bbl, and spent much of June above $70. So, if the oil price slump was so brief, why has the Russian economy now been hit by the crisis? This is seriously placing in doubt the assumption that Russia is another “oil state.” Though energy plays an important role in Russia, it seems the economy is not an energy-centered one.

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