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MOSCOW (AP) - Russia would come under crippling financial pressure and may need to raise money externally if oil languishes at an average of $30 a barrel over the next two years, the World Bank predicted Friday.

The bleak scenario would mark a rapid unraveling of Russia's oil-fueled economic gains over the past eight years, during which time the government has paid down most of its foreign debt and built up a vast stockpile of international reserves.

"If oil prices in 2009 and 2010 average $30 a barrel, that would be a nightmare scenario for a global economy," Zeljko Bogetic, the World Bank's chief economist in Russia told investors on Friday. "The pressures on the current account and public finances in Russia would quickly rise to a point where the financing constraint would become so sharp that it's possible even to envisage Russia's return from a creditor to international organisations to (that of) a borrower."

At $50 a barrel, Russia could drain much of its reserve funds and run budgetary deficits, but would not face a "meltdown" scenario, said Bogetic.

[dissident]

The World Bank should put the crack pipe down. The oil price averaged $25 between 1999 and 2005 when Russia's GDP growth averaged 6%. Just as in the US, the current economic decline is due to the end of cheap credit. Russian domestic interest rates are over 11% while western ones were under 4%. The Russian banking industry is too small to service the domestic economy partly because of high interest rates, so borrowers take their business abroad and the assets of the domestic banks (i.e. loans) stay small.

But Russia's current foreign reserves, $485 billion US, are larger than the total amount of its private and public debt, $480 billion US. This does not count the $200 billion US in the two sovereign wealth funds. About $320 billion US has been allocated to prop up the banking industry. Unlike the US banks that destroyed themselves on the subprime mortgage racket, there is no equivalent problem in Russia. The country still has a positive trade balance.