From CNBC
Things are getting bad in Russia — so bad that the country is weighing sacrificing its future in order to survive its present.
A conflict is simmering in Russia as the country’s Finance Ministry pushes for increased taxation of the country’s oil industry in order to support its budget. A contracting economy and a persistently low oil price have severely hurt the country’s budget, so officials are seeking to draw more revenue from domestic energy companies — instead of severely cutting costs, which Moscow fears could bring dire political consequences.
This plan likely makes short-term sense to the Kremlin, but it could cripple the oil industry — and by extension Russia’s long-term growth prospects — for years to come, experts told CNBC.
“This would have decadeslong effects,” Lauren Goodrich, a senior Eurasia analyst at geopolitical intelligence firm Stratfor, said of a strong tax on the oil industry. If Russia’s energy resources don’t see new investments in the next two years, she said, then the country could experience lengthy declines in oil production — old Soviet-era wells drying up, without new ones coming on.
