Russia May Be an Energy Powerhouse, but It's an Economic Basket Case

Russian adventurism pushed the G-7 countries—United States, Japan, Germany, United Kingdom, Canada, France and Italy—to oust it from the group of industrialized democracies. That step was long overdue. These free and open countries are the economic powerhouses of the world; Russia is none of the above.
 
According to the World Bank (2012), at $16.4 trillion the U.S. has far and away the largest economy. China is number two, but only half the size, $8.2 trillion. Japan comes in third with $6 trillion, followed by Germany ($3.4 trillion), France ($2.6 trillion), U.K. ($2.5 trillion), Russia ($2 trillion), Italy ($2 trillion) and Canada at $1.8 trillion).
 
In short, the Russian economy is one/eighth the size of the U.S. economy. Even geographically limited Japan has an economy three times the size of Russia’s, without any natural resources while Russia is brimming with them.
 
Indeed, natural resources are the primary reason Russia isn’t scraping the bottom of the GDP barrel. The country’s economy is largely built on oil and natural gas production. According to the U.S. Energy Information Administration, oil and gas revenues account for 52 percent of Russia’s federal budget and 70 percent of the country’s exports.
 
Thus, if the G-7 countries want to discourage further Russian military mischief, they need to encourage more energy competition. Even slight declines in the price of oil and gas would have a big negative impact on the Russian budget.
 
That means more energy production in the U.S., including on federal lands and offshore. The Obama administration can accelerate that process by approving more permits to drill.
 
The federal government can also accelerate the approval of liquefied natural gas (LNG) export terminals, most of which appear to be on the “slow-track” approval process. And even though it will take a few years to get those terminals up and running, greater supplies of oil and gas frees ups coal, which is easy to export to countries under the Russian energy thumb.
 
Finally, we should help those European countries with hard-to-extract oil and gas resources by providing the needed expertise.
 
Russia is not an economic powerhouse. It is a struggling, top-down, crony-infested economy that depends on energy to keep it afloat. Undermine its ability to extract huge energy profits from its neighbors and that economy will sink.