AFF
Russian economic collapse coming now
ISA 7/29 (International Strategic Analysis, 7/29/2014, ISA is a world leader in the fields of country
intelligence, economic forecasting and international market analysis, isa-world.com, http://www.isaworld.com/company/about_isa.php)
While the Russian economy was already weakening before the crisis in Ukraine, this crisis has
dramatically added to the economic woes facing Russia. First and foremost, the Russian economy
suffers from a lack of investment, both in its vital energy sector and in new industries that are needed
to diversify the country’s natural-resource-dependent economy. Moreover, international pressure in
the form of economic sanctions by the West and recent court rulings are significantly raising the
pressure on Russia. As a result, a recession is a real threat in 2014, while Russia’s long-term economic
outlook has dramatically worsened. Despite the impact of the crisis in Ukraine, the greatest threat to
the Russian economy remains its overall structure. Over the past few decades, the Russian
government has done far too little to diversify the country’s economy and to develop modern, hightech and high-growth industries. Instead, the government was content to benefit from the high oil,
gas and mineral prices that allowed Russia to record relatively healthy rates of economic growth
between 1999 and 2008 (6.9% average GDP growth). However, 2009’s economic crisis was a wake-up
call for the Russian economy and since 2010, GDP growth rates have fallen each year, with the Russian
economy growing by just 1.3% in 2013 and now facing a severe recession in 2014. The economic
situation this year in Russia has been significantly impacted by Russia’s intervention in the crisis in
Ukraine and the international response to this crisis. First, the United States and (belatedly) the
European Union have enacted increasingly severe economic sanctions against many key sectors of the
Russian economy. Second, a recent ruling by an international tribunal that ordered Russia to pay $50
billion in damages to former shareholders of the Yukos oil company could have major repercussions
for many of Russia’s leading state-owned firms. This has forced Russia to shift its economic ties to
non-Western countries such as China, but this will not offset the loss of trade and investment with the
West that Russia is now experiencing. Looking ahead, the Russian economy is on the brink of a major
crisis. As things stand now, the Russian economy is forecast by ISA to contract by 0.4% in 2014 and to
grow by just 0.6% in 2015. However, as the situation in eastern Ukraine deteriorates further, and as
evidence mounts of Russia’s activities there, the West could be forced to enact even harsher sanctions
against Russia. Not only will this further reduce foreign investment in Russia, while reducing Russian
export revenues, but it will also accelerate the pace of capital flight from Russia that has risen
dramatically in recent months. Should this happen, Russia could be on the brink of a long-term
recession that proves much worse than is currently forecast.
Neg
Less inflation proves Russia’s economy is stable
Tamas 8/4/14 (Olga, writer for Bloomberg news, “Russian Inflation Decelerates in July for First Time in Year” Bloomberg,
August 4th, 2014, http://www.businessweek.com/news/2014-08-04/russian-inflation-decelerates-in-july-for-first-time-in-year)
Russian inflation decelerated for the first time this year after the government capped regulated utility fees, while price
growth remains above the central bank’s target for the 23rd month. Consumer prices rose 7.5 percent in July from
a year earlier after 7.8 percent growth in June, the Federal Statistics Service in Moscow said today in an e-mailed statement. That matches the
median estimate in a Bloomberg survey of 19 economists. Policy makers, set to miss their inflation target of 5 percent this year, have raised the
benchmark interest rate three times since February amid Russia’s worst standoff with the U.S. and its allies since the Cold War. The
central bank, led by Chairman Elvira Nabiullina, pointed to “geopolitical factors” for tighter monetary policy, as the U.S. and the European Union expanded sanctions
to target Russia’s economy. “There is no great joy in the July figures, taking into account tax increases under discussion and a burst of activity from Russia’s
consumer protection watchdog,” Dmitry Polevoy, chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow, said by email. Russia’s public health regulators have imposed a series of bans on foods from Ukraine, EU member countries and the U.S., putting pressure on prices.
President Vladimir Putin backed the return of regional sales taxes starting from 2015 to narrow deficits, Vedomosti newspaper reported July 31. Regional budgets
had a gap of 642 billion rubles ($18 billion) last year. Biggest Challenge The ruble, which has lost 8.1 percent against the dollar this year, is among the 10 worstperforming currencies, according to data compiled by Bloomberg. The Russian currency depreciated 0.1 percent against the greenback to 35.7770 by 3:45 p.m. in
Moscow, about 3 kopeks from the weakest closing level in three months on July 29. Russians see inflation as the biggest challenge facing the country, followed by
issues in housing and utilities, a poll published by the state-run VTsIOM research center July 10 showed. According to a survey published today by the Public Opinion
Foundation, 83 percent of Russians expect prices to continue rising. While the government capped increases in regulated utility prices starting July 1, helping to rein
in inflation last month, the slowdown was less than expected, according to a central bank statement last month when policy makers raised their benchmark by 50
basis points to 8 percent. Scrapping Preferences “The raft of food import bans suggested recently poses risks to the pace of disinflation over the coming quarters,”
Vladimir Kolychev, chief economist at VTB Capital in Moscow, said in a research note. Russia is also preparing to scrap trade preferences with Ukraine, which has
chosen closer ties with the EU, after imposing higher import taxes on goods from Moldova after the country’s parliament ratified an association agreement with the
EU. The list of Ukrainian goods that are subject to higher tariffs includes goods from vegetables to cars to bricks. Inflation risks will increase if intensified geopolitical
tensions affect the ruble exchange rate, while potential changes in tax and tariff policy may speed up consumer-price growth, according to the central bank’s July
statement. The
central bank is laboring to slow consumer-price growth to a 4 percent target in the medium term.
Policy makers expect consumer-price growth will decelerate to a range of 6 percent to 6.5 percent by
the end of the year.
Exports are stabilizing the economy despite sanction
Ostroukh 8/4/14 (Andrey, writer for MarketWatch, “Russia eyes industrial-output growth of 2%: report” MarketWatch
Aug. 4, 2014 http://www.marketwatch.com/story/russia-eyes-industrial-output-growth-of-2-report-2014-08-04?reflink=zacks)
Russia's industrial output may grow by up to 2% this year, exceeding expectations, the minister of industry and trade
said Monday, the Interfax news agency reported. Russia is on track to post economic growth close to zero this year ,
as already challenging conditions were exacerbated by Western sanctions. Risks for overall growth stem from the industrial
sector, which was expected to expand by 1% this year. Speaking at a meeting with President Vladimir Putin, Mr. Manturov
said industrial output may grow by 1.8%-2% this year thanks to reviving activity in the manufacturing
sector. Data showed last month that industrial production grew 0.4% on the year in June after expanding
2.8% in May. Monthly data showed that industrial production shrank 0.1% in June after contracting by
0.4% in May.
OCS Cards
Oil dependence causes conflict over the Straits of Hormuz to go nuclear
Glaser 11 (Charles, Professor of Political Science and International Relations Elliot School of International
Affairs The George Washington University , Reframing Energy Security: How Oil Dependence Influences
U.S. National Security,
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CF8QFjAA&url=http%3A
%2F%2Fdepts.washington.edu%2Fpolsadvc%2FBlog%2520Links%2FGlaser_-_EnergySecurity-AUGUST2011.docx&ei=Wf0qUPXYGIrc9ASht4GYDQ&usg=AFQjCNHTus7nNaD7coupoSU7c3LGSu7tg&sig2=Xt_iWePfWtNRvDmeYR1Hlw&cad=rja, August 2011, PC)
Energy dependence could draw the United States into a conflict in which a regional power was interrupting,
or threatening to interrupt, the flow of oil. The economic costs of a disruption would determine whether the costs of fighting
were justified. Similarly, the potential economic costs of a disruption would determine whether U.S. foreign
and military policy should be devoted to deterring states from interrupting the flow of oil; more precisely,
these economic costs would determine how much the United States should invest in the policies required for deterrence. Given the
geographical distribution of oil, such a conflict would likely occur in the Persian Gulf. The greatest
danger is probably posed by Iran—the Iraq War has greatly increased Iran’s power relative to Iraq, and
Iran is acquiring improved missile capabilities and making progress toward having the capability to
build nuclear weapons. The most disruptive Iranian action would be closure of the Strait of Hormuz,
through which the vast majority of Persian Gulf oil must pass. Having identified the danger posed by
dependence on oil that transits this strait (as well as the Strait of Malacca), a recent Council on Foreign Relations study
concluded that the “United States should take the lead in building an infrastructure protection program that would be based on practical steps
by relevant countries and address critical infrastructures and transit routes. Initial efforts should focus on joint planning, technical assistance,
and military exercises, especially involving naval units operating near ports or along critical sea-lanes.” Although difficult to estimate the
probability that Iran would attempt to close the strait, analysts have offered reasons for expecting the probability to be quite low: Iran would
lose the oil revenue from its own exports; and Iran would likely be deterred by the probable costs of U.S. intervention, which could include the
Because so much oil flows through the strait, the
United States would almost certainly respond to keep it open. Nevertheless, there are plausible scenarios in which
Iran blocks the strait, for example, as retaliation for an attack against is nuclear weapons program or as a
coercive measure if losing a conventional war. Careful analysis suggests that the United States would
prevail, but that a successful campaign could take many weeks or more, and that oil prices would increase significantly during
this period. Iranian acquisition of nuclear weapons would increase the risk of this scenario in two basic
ways. First, Iran might believe that the possibility of escalation to nuclear weapons would deter the
United States from responding, making Iran more willing to interrupt tanker traffic. Although basic deterrence
destruction of key military bases and occupation of some of its territory.
logic says this calculation points in the correct direction, the United States might nevertheless intervene. The United States would question
Iran’s willingness to escalate to nuclear use because America’s far larger and more capable nuclear forces would pose a formidable retaliatory
threat. In addition, the
United States would have incentives to make clear that possession of a small
number of nuclear weapons by a much weaker state would not deter the United States from using
conventional weapons in a limited war. Being deterred by the Iranian nuclear force would suggest that small nuclear arsenals
provide tremendous potential for launching conventional aggression. As Barry Posen argued in a related context (the counterfactual case in
which Iraq possessed nuclear weapons before deciding to invade Kuwait), “If the Iraqi conquest of Kuwait is permitted to stand, nuclear
weapons will come to be viewed as a shield that protects conventional conquests from any challenger, including a great power heavily armed
with its own nuclear weapons.” Consequently, the
United States would have incentives to respond to Iranian
aggression both to preserve its ability to deter conventional aggression by small nuclear states and to support its
nonproliferation policy. Second, once a conventional conflict occurred, there would be the danger that U.S.
conventional operations could increase the probability nuclear war . A number of paths are possible. The U.S.
mine clearing operation required to open the strait would likely be accompanied by attacks against land-based
Iranian targets. The United States would want to destroy the land-based anti-ship cruise missiles that Iran could use to threaten U.S. mine
clearing ships; in addition, the United States would want to destroy Iranian air defenses that could be used to
protect these missiles. These U.S. strikes would require large numbers of carrier-based aircraft flying
sorties over a period of a few weeks or more. If Iran lacked confidence that U.S. aims were limited, it could feel compelled to
put its nuclear forces on alert to increase their survivability, which would increase the probability of
accidental or unauthorized nuclear attack. The United States could then have incentives to attack Iran’s
nuclear force, either preemptively because it believed Iran was preparing to launch an attack or
preventively because it faced a closing window of opportunity after which Iran’s nuclear forces would
be survivable. A more subtle danger is the possibility of inadvertent nuclear escalation resulting from a
situation in which Iranian leaders decide to escalate because they believe, incorrectly, that the United
States has decided to destroy their nuclear force (or ability to launch it). U.S. conventional operations could
create this danger by destroying Iranian radars, and command and control systems, leaving Iranian leaders unable to
assess the U.S. conventional campaign and fearing that the United States was preparing to launch a
full-scale invasion or a conventional attack against their nuclear forces.
Extinction
Hirsch, 06 (Jorge Hirsch (San Diego Union Tribune) January 3, 2006 “America’s nuclear ticking bomb”
http://www.signonsandiego.com/uniontrib/20060103/news_mz1e3hirsch.html)
If only conventional bombs are used in an unprovoked U.S. or Israeli aerial attack against Iran's facilities, Iran is likely to retaliate with missiles
against coalition forces in Iraq and against Israel, as well as possibly a ground invasion of southern Iraq, that the 150,000 U.S. troops in Iraq
would not be able to withstand. Iranian missiles could potentially contain chemical warheads, and it certainly would be impossible to rule out
such possibility. Iran has signed and ratified the Chemical Weapons Convention (in 1993 and 1997 respectively), however it is still likely to have
Early use by the United States of low-yield nuclear
bombs with better bunker-busting ability than conventional bombs targeting Iranian nuclear, chemical
and missile installations would be consistent with the new U.S. nuclear weapons doctrine and could be
argued to be necessary to protect the lives of 150,000 U.S. soldiers in Iraq and of Israeli citizens. It would
also send a clear message to Iran that any response would be answered by a far more devastating
nuclear attack, thus potentially saving both American and Iranian lives. However, the nuclear threshold is a line of no
return. Once the United States uses a nuclear weapon against a nonnuclear adversary, the 182 countries
that are signatories of the Nuclear Non-Proliferation treaty will rightly feel at risk, and many of them will
rush to develop their own nuclear deterrent while they can. A new world with many more nuclear
countries, and a high risk of any regional conflict exploding into all-out nuclear war, will be the
consequence. The scientific community (which created nuclear weapons) is alarmed over the new U.S. nuclear weapons policies. A
supplies, as determined by the U.S. State Department in August 2005.
petition to reverse these policies launched by physicists at the University of California San Diego has gathered over 1,500 physicists' signatures
including eight Nobel laureates and many prominent members of the U.S. scientific establishment (http://physics.ucsd.edu/petition/). Scientists
object strongly to the concept of WMD, that lumps together nuclear weapons with other "weapons of mass destruction" and blurs the sharp
An escalating nuclear war could lead
to the destruction of civilization. There is no fundamental difference between small nuclear bombs and
large ones, nor
line that separates immensely more destructive nuclear weapons from all other weapons.