Russia takes a hit as oil revenue declines

January 4, 6:26 PMProgressive Politics ExaminerJay McDonough

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Filling up the car with gas for under $25 is pretty sweet.  Especially when it's so easy to remember only a few months ago when it was costing $60.  But, believe or not, not everyone is thrilled with cheap gas.

As the per barrel price of oil dropped from the high of $140 to now near $40, Iran is getting hit hard by their falling oil revenues. Foreign imports are in decline, inflation is on the rise, their currency is weakening and the median income is falling.  The political future of Iranian President Mahmoud Ahmadinejad is now in jeopardy as his popularity is in decline as he's forced to cut the programs that keep poor Iranians, Ahmadinejads core consituency, employed.

Another nation feeling the pinch from falling oil prices is Russia.   McClatchy had an article the other day on Russia's attempts to adjust:

There are many oft-quoted indicators of Russia's suffering economy — the nation's international reserves have fallen by more than 25 percent since August; the major stock indices recently plummeted by 70 percent; and the ruble has been sliding — it's now selling at exchange houses for about 30 to the dollar, compared with 23.5 five months ago.

Only last spring, downtown Moscow was a place where Russia's nouveau riche walked out the door of boutiques with fists full of bags from Hermes, Cartier and Gucci. In a city with more billionaires than any other in the world, Bentleys and BMWs idled outside the shops with drivers waiting to put the bags in the trunk and zip to the next shop.

That was before the war with Georgia in August, which kicked off an exodus of foreign capital; the global financial crunch, which dried up lines of credit used by heavily leveraged Russian businessmen; and, finally, the crash of oil prices that had underwritten much of the boom.

"The stability based on oil wealth proved an illusion," observed a guest columnist in Tuesday's edition of Vedomosti, a business journal.

It's no coincidence that the petro-nations are the most repressive, the most corrupt in the world.  Securing all that governmental wealth and power takes some real strong arm tactics at the expense of personal liberties and democratic ideals.  They'll, no doubt, have their day again but, for now, it's hard to feel too much sympathy.