2008 was a very good...half-year for Russia.
From its historic victory against Canada in the world ice hockey championships to skyrocketing oil revenues and growing international muscle, Russia spent at least the first half of the year the way it likes -- a winner on all fronts.
The signs were auspicious as early as January 2, 2008, when world oil prices passed the $100-a-barrel mark for the first time.
In energy-rich Russia, where the economy depends almost exclusively on resources, a single $1 rise in oil prices can translate into $1 billion in extra revenues a day. So by July, when prices hit their peak at $147 a barrel, Moscow appeared unstoppable.
It continued its revenue-fueled advance through Europe and Asia, buying up billions in energy holdings.
The EU's failure to progress with its plans for the Nabucco pipeline allowed Russia to inch closer to a monopoly on natural-gas shipments to Europe via its proposed South Stream and Nord Stream pipelines.
Moscow also remained the foreign-policy bully, delighting in the failure of Georgia and Ukraine to advance further in their NATO membership bids, and maintaining a fighting stance over Washington's Central European missile-defense plans.
The Kremlin even pulled off a potentially tricky political transition that moved Vladimir Putin from the presidency to the premiership with no apparent loss of power or public affection.
His presidential replacement, Dmitry Medvedev, proved a competent but unremarkable successor who appeared content to stay in Putin's shadow.
Paul Quinn-Judge, a Russia expert with the International Crisis Group, describes the first seven months of the year as a heady combination of "hubris and oil."
"This hubris reached its highest point when [Georgian President] Mikheil Saakashvili tragically gave them the opportunity to go to war in South Ossetia," says Quinn-Judge. "It was certainly seen in Moscow, and I think by Vladimir Putin personally, as a once-in-a-lifetime opportunity to take on one of his biggest enemies and most disliked people, and he moved in. Since then, the situation has changed totally."
Reversal Of Fortune
The August war -- and Russia's subsequent recognition of independence declarations in South Ossetia and Abkhazia -- was seen by many observers as a brazen move to reimpose Moscow's will on its "near abroad." But Russia, in the end, drew only mild censure from the West.
The United States, a key Georgia ally, was the most vocal of the Western countries in condemning Russia. It sent humanitarian aid to the Black Sea on NATO warships, but stopped short of a stronger response.
The European Union, whose energy needs have driven a more pragmatic Russia policy, had sharp words for Moscow, but waited only three months before resuming talks on a key partnership deal.
But if the Georgia war passed largely without penalty, a far bigger blow was awaiting Moscow in the form of the gathering global economic storm.
Although its early ripples could already be felt in Russia months before the Georgia campaign, the massive scale of its impact is becoming clear only now.
Oil prices dipped to $50 a barrel and lower, depriving Russia's monolithic economy of its primary revenue source.
Some estimates put capital flight since August at over $200 billion, as Russian and foreign investors flee a ruble that has sunk to a four-year low against the euro and which is being steadily devalued against the U.S. dollar.
The power struggle over TNK-BP -- which ended with the British chief of the Anglo-Russian joint venture being forced out the country -- was one of several high-profile cases to raise doubts about conditions for large-scale investment in Russia.
The stock market has dipped over 70 percent on the year, and the country's credit rating has been cut for the first time in nine years.
Despite the fall in oil prices, November 2008 marked a sharp dip in the country's industrial output -- the first month to register such a fall since early 1999.
Finally, a Russian economic official on December 13 announced that Russia had entered a period of recession, thus bringing to a definitive end a period of robust growth that had lasted for nearly a decade.
'Putin's Russia Has Reached Its End'
Perhaps the most visible symbol of the sudden halt in Russian prosperity is the collapse in the construction market. In Moscow and St. Petersburg, numerous ambitious corporate projects now stand unfinished, with no certainty of completion.
... Payvand News - 01/03/09 ... --