May 25th, 2012

Russia faces crisis if Greece leaves Euro

The Center for Strategic Studies in Moscow reports that Vladimir Putin is facing discrete political and economic risks due to Eurozone turmoil.

Greece leaving the euro could trigger a global crisis that would drop the price of oil, writes institute chief Mikhail Dmitriev, meaning a worsened Russian economy. That could lead to increased anti-Putin sentiment and more political repression.

Ksenia Yudaeva, chief economist at Sberbank, the country’s biggest lender, said Russia’s economy could contract 2.1 percent, with $95 billion in capital leaving the country in a year, should the euro start to crumble.

“This [departing] capital,” added Dmitriev in Bloomberg News, “is flying into the epicenter of the global financial crisis, which is in Europe. That is actually the same as creating a food supply in the center of an atomic explosion.”

Bank of America sees Russian oil dropping to $60-$80 should Greece and other nations leave the Eurozone. Russian oil prices need to stay around $127 per barrel for the government to balance the budget this year.

Read more about the study in Bloomberg News.

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