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A New World Order Take Two

We have previously blogged about the effect of the current financial crisis on the influence of western countries and whether the crisis will change current power balances. Today’s NY Times has a good story on how the financial crisis, as it slowly makes its way into the real economy, affects countries like Russia, Iran and Venezuela – countries that have recently grown increasingly assertive. On the back of in particular high oil prices these countries have over the last couple of years gone on to assert themselves politically and military both internationally and regionally. However, as oil prices are now below $80, the coffers of, in particular, Venezuela and Russia might be stretched to the effect that it will have a knock-on effect on their revived antagonism. The article speculates that this will in particular be the case for Venezuela where President Chavez has promised a string of domestic reforms, which were planned with much higher oil prices in mind. Similarly, Russia will struggle should the demand for oil remain low although to a lesser extent than Venezuela. Although Russia’s main share indexes have suffered harder from the current crisis than its European equivalents these past weeks, Russia maintains an advantage in the continuing European demand for Russian gas. Thus, it is likely that Russia will remain revived for a good while yet – in particular now that some European countries are willing to restore normal relations with Russia in light of its withdrawal from Georgia.

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