Russia helps Iran

by most accounts, russia budgeted their government spending by pricing oil at somewhere around $80 / barrel. with oil trading at $40, the government is in severe trouble of facing default, runaway inflation or some other similarly disastrous scenario.

the market vectors russia etf (RSX) is down from a high of nearly $60 to $10.

many of these disasters that Russia faces are cured by higher oil prices. assuming that russia is not concerned with the pain and suffering and death of other humans (outside of russia in particular) then it's in russia's best interest to see some sort of conflagration in the middle east which would bolster hard asset prices, in particular oil prices.

when Obama suggests that the russians should help the US keep Iran from attaining nuclear weapons, i think he fails to understand that (a) it's inevitable that Iran will attain nuclear capability and (b) that it's Russia's best interest for increased tensions if not all out war in the middle east.

with regard to (a), human history has shown that technology cannot be kept in the bottle forever. one need only look at the palestinians who had crude rocks during the first intifada of 1987 and now have rockets that can nearly reach Tel Aviv from Gaza. with determination and funding, everything is within reach.

regarding (b), not only is it in Russia's best interest, but also Venezuela and all other oil producing countries that would not see a supply disruption from a conflict. so far from preventing Iran, Russia is likely to help Iran.