Russia Collasping ?

The U.K. Guardian says that Russia is “close to economic collapse.”

Russia is now lurching towards a major economic crisis, experts predicted today, following news that the price of oil had slumped to under $50 a barrel.

The collapse in the value of oil was likely to have several catastrophic consequences for Russia including a possible devaluation of the rouble and a severe drop in living standards next year, they warned. . . .

The fall in oil prices from $147 this July to below $50 today has blown a gaping hole in the government’s budget calculations. It is now facing a $150bn shortfall in its spending plans - and will have to slash expenditure in 2009. . . .

The oil slump, however, exacerbates Russia’s already severe economic problems. Since May Russian markets have lost 70% of their value. Russia’s central bank, meanwhile, has been spent $57.5bn in two months trying to prop up the country’s ailing currency.

“If the current trend continues with the government supporting the rouble, oil prices falling and a slowing economy we are going to have a major crisis,” said Chris Weafer, an analyst with the Moscow brokerage Uralsib.

He added: “There will be more pressure on the rouble and an extremely difficult first quarter next year.” Russia was more vulnerable than other countries because it was still an oil state, and had failed to diversify its economy, Weafer added.

No word how this figures into the current military exercises off Venezuela.