maxresdefault copyAs Russia moves steadily toward annexing Crimea — and the United States and Western countries respond with sanctions and other steps — the risk of an extended global confrontation is growing. Although any confrontation between the West and Russia would likely differ significantly from the Cold War because of today’s massive economic imbalance between the two sides, it may also look like the Cold War in some respects. Among these may be a struggle for influence in the Middle East with unpredictable results.  With 1.3% economic growth last year — without a major geopolitical crisis or Western sanctions — Russia’s financial resources will be strained and its options limited. Still, the Central Bank has nearly half a trillion dollars in reserves, which could help Moscow to manage an economic slump for some time, possibly two or three years at current energy price levels (oil and gas revenues make up about 50% of Russia’s federal budget revenue, with oil providing the vast majority of this).  If Western-Russian tensions escalate, the Russian government’s immediate priorities will be to inject state funding into the economy in order to sustain political support and to find additional revenue. The new money will be especially important; a Russian newspaper’s analysis puts the costs of annexing Crimea at $20 billion over the next three years. MORE