The year started poorly for Russia, but it has certainly ended well.And from the International Monetary Fund's iMFdirect blog:
In January, the price of oil was moldering — below $30/b on occasion. Given Russia’s dependence on oil and gas revenue, the budgetary outlook was bleak. Hillary Clinton was going to be elected as the next president of the United States. Sanctions against Russia, imposed over its role in the Ukraine conflict, would continue, and the EU would further frustrate Russian plans for major new gas pipelines and its goal of a total Ukrainian bypass.
In addition, Russia’s Syrian ally, President Bashar al-Assad, was under severe pressure not just from democratic rebels, but radical Islamist forces, a particular concern for Russia given its own problems in Chechnya.
What a difference 12 months can make.
In the US, the election of Donald Trump as president and his nomination of ExxonMobil CEO Rex Tillerson as secretary of state could not be better for Moscow. Tillerson is a noted critic of sanctions against Russia, where ExxonMobil has substantial oil interests, arguing that they hurt not so much the target country, but US companies trying to do business there.
If nominated, he is expected to recommend their removal. Trump has also made indications that he will seek a much more cooperative relationship with Russian President Vladimir Putin and, if the CIA is to be believed, Russia appears to have had a direct hand in Trump’s election.
In Syria, a key bastion of the rebels, eastern Aleppo, finally fell in December, after a bloody and lengthy conflict which has caused huge civilian suffering. The victory for the Assad regime, which the UN has confirmed has used chemical weapons against opposition forces and civilians, could not have been achieved without Russian airpower and other assistance.
The message is not so much about Moscow’s disregard for human rights, but that Russia is both capable of and willing to defend its allies, while the West stands by impotently. Although this does not resolve the Syrian conflict by any means, the message has become fact.
The EU, meanwhile, looks weak and divided. The UK, one of its largest economies, has voted to leave, while there have been a rash of votes for populist candidates across Europe, suggesting that devotion to the European ideal is somewhat less heartfelt at ground level than in the upper echelons of Brussels....MORE
Commodity Commotion
Terms of trade is the price of a country’s exports relative to its imports. The commodity terms of trade refers to a country’s commodity exports relative to its commodity imports.
When the price of commodities, like oil, plummeted in 2015, economies that rely on exporting commodities had their terms of trade drop by an average of about 10 percent of GDP that year. Economies that rely more on importing commodities saw about a 2 percent of GDP benefit from the 2015 drop in prices....
