divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/85170?ns=guardianpageName=Business%3A+From+the+Kremlin+to+Caracas%2C+how+oil+collapse+changes+everythingch=Businessc3=The+Guardianc4=Oil+and+gas+companies+%28Business%29%2CGlobal+economy+%28Business%29%2CRussia+%28News%29%2CSaudi+Arabia+%28News%29%2CIran+%28News%29%2CBusiness%2CVenezuela+%28News%29%2CCredit+crunch+%28Business%29%2CEnergy+%28Environment%29%2CEnvironment%2CWorld+news%2CMiddle+East+%28News%29%2CSaudi+Arabia+%28Football+club%29c5=Football+World+Cup%2CCredit+Crunch%2CNot+commercially+useful%2CBusiness+Markets%2CEnergy%2CEthical+Livingc6=Luke+Harding%2CIan+Black%2CRory+Carrollc7=2008_11_21c8=1121611c9=articlec10=GUc11=Businessc12=Oil+and+gas+companiesc13=c14=h2=GU%2FBusiness%2FOil+and+gas+companies" width="1" height="1" //divh2Russia/h2pRussia is lurching towards a major economic crisis, experts predicted yesterday, following news that the price of oil had slumped to under $50 (pound;33.72) a barrel. The collapse was likely to have catastrophic consequences including a possible devaluation of the rouble and a severe drop in living standards next year, they said. /ppWith oil prices tumbling and his credibility at stake, Russia's prime minister, Vladimir Putin, yesterday insisted that the economy was still robust. The country would survive the global financial turmoil - which he blamed on the US - he told delegates from his United Russia party./ppBut the Kremlin is aware that any loss of confidence in the Russian economy could lead to a loss of confidence in Putin and his ally Dmitry Medvedev, who took over from Putin as president in May. /ppPutin said his administration would do everything it could to prevent a recurrence of the last oil-related crash in 1998, which saw the savings of many ordinary Russians wiped out. But the plummeting oil price leaves him little room for manoeuvre. Experts suggest Russia's economy is facing profound difficulties, despite two huge stabilisation funds accumulated during the booming oil years. /ppThe fall in oil prices from $147 this July has blown a hole in the government's budget calculations. It is now facing a $150bn shortfall in its spending plans and will have to slash expenditure in 2009. Putin sought to assure hard-up Russians that their social benefits would not be affected. "We will do everything in our power ... so that the collapses of the past years should never be repeated," he said./ppThe oil slump, however, exacerbates Russia's already severe problems. Since May Russian markets have lost 70% of their value. Russia's central bank has spent $57.5bn trying to prop up the ailing currency. "If the trend continues, with the government supporting the rouble, oil prices falling and a slowing economy, we are going to have a major crisis," said Chris Weafer, of the Moscow brokerage Uralsib.br /strongLuke Harding in Moscow/strong/ph2Iran/h2pIran is the second largest Opec oil producer and already feeling the pain of declining prices more than any other in the Middle East. Its "rainy day" oil stabilisation fund, used to release profits when revenues decline, is reportedly badly depleted as a result of mismanagement by Mahmoud Ahmadinejad's government. The precise figure is a state secret, but a member of parliament revealed recently it was $7bn - just enough to cover one year of imported petrol./ppAhmadinejad has seen two central bank governors resign and faces daily criticism of his policies. A strike by the powerful "bazaari" class over a new VAT tax - which would have aggravated inflation already at nearly 30% - was seen as a warning. Iran is especially vulnerable because 80% of its revenue comes from oil. The IMF calculated recently that for Iran to balance its budget, the price of crude oil must not fall below $95 a barrel. With prices now below $50 the shortfall could be staggering./ppThe effect of declining oil prices will be felt both domestically and internationally. Ahmadinejad is expected to stand for a second presidential term next June but the lack of cash will restrict his plans to replace subsidies with direct cash payments - widely seen as a vote-buying tactic. US and UN sanctions imposed over the nuclear issue are already limiting Iran's ability to issue letters of credit and thus increasing its cost of trade./ppSaudi Arabia has been happy to use high Opec production levels and low prices to contain Tehran's plans for regional hegemony. US experts and lobbyists now talk openly of exploiting the drop in oil prices to make the sanctions more effective.br /strongIan Black, Middle East editor/strong/ph2Saudi Arabia/h2pSaudi Arabia, the world's leading oil producer and exporter, is expected to cut back on current spending and also adjust ambitious long-term development plans in the light of the slump in prices./ppBut cautious fiscal policies will place the kingdom in a relatively strong position, with the current budget based on a price of around $45-50 a barrel. Expansion next year will require around $55-62./ppThe worry must be that in a country with no elections, parliament, political parties or taxes, the combination of slowing development projects and a widening gap between the wealthy elite and ordinary people could be destabilising./ppPublicly, the message from the top has been that there is no need to panic, even as falling prices of crude oil and the global financial crisis were becoming inextricably linked and starting to wreak havoc in the Gulf economies./ppBy mid-November, the stock exchanges of Dubai, Saudi Arabia and Kuwait had declined by 62.5%, 50.4% and 29.5% respectively. Kuwait, which sits on 9% of world oil reserves, is expected to see its first budget deficit in 10 years if prices continue to fall. That will mean a long-term incentive to diversify away from oil./ppIn Kuwait, Qatar, and the United Arab Emirates, government-run investment funds have also suffered from heavy exposure to US and European stocks. But the UAE's Abu Dhabi Investment Authority has assets of $500bn to $1tn./ppDubai, the glitziest part of the UAE, which has seen an oil-fuelled boom in property but has little oil of its own, is starting to see a slowdown. But some welcome that as a way of reducing the number of foreign expatriates and re-establishing a disappearing sense of national identity.br /strongIan Black, Middle East editor/strong/ph2Venezuela/h2pHugo Chávez has reduced Venezuela's support for foreign allies and is poised to make deeper cuts at home and abroad as plunging oil revenues hit his socialist revolution. The government has warned of austerity measures after years of high spending on social programmes, nationalisations, arms and diplomacy. South America's energy giant relies on oil for half its exports and 95% of government revenue, leaving the president's ambitions vulnerable to a crunch./pp"Oil revenues are the weapons he has been using to fight this war. He is going to have to make big changes," said Pietro Pitts, of Latin Petroleum magazine. "He will have to cut spending, or devalue the bolivar, or both."/ppChávez recently said Venezuela would ride out any financial storm and that oil prices of $80 or $90 a barrel would be sufficient. This now looks optimistic. With next year's budget in tatters, and foreign investment slowing, the government made cuts even before the latest price fall. Last month it postponed construction of a $4bn refinery in Nicaragua, a key ally, and announced tougher terms for subsidising oil exports to some Caribbean countries./ppThe state oil company slashed spending on the social programmes which have underpinned Chávez's popularity. Aid to Bolivia and Ecuador, and subsidised oil to Cuba, may be hit next. The finance minister, Alí Rodríguez, said the 2009 budget "will have significant restrictions" compared with this year's $63.9bn and officials would have to cut back on luxuries./ppSome analysts think Venezuela can weather the crisis with the help of rumoured $40bn reserves. But Venezuela is racked by 36% inflation, and previous governments crashed when oil crashed.br /strongRory Carroll in Caracas/strong/pdiv style="float: left; margin-right: 10px; margin-bottom: 10px;"ullia href="http://www.guardian.co.uk/business/oilandgascompanies"Oil and gas companies/a/lilia href="http://www.guardian.co.uk/business/globaleconomy"Global economy/a/lilia href="http://www.guardian.co.uk/world/russia"Russia/a/lilia href="http://www.guardian.co.uk/world/saudiarabia"Saudi Arabia/a/lilia href="http://www.guardian.co.uk/world/iran"Iran/a/lilia href="http://www.guardian.co.uk/world/venezuela"Venezuela/a/lilia href="http://www.guardian.co.uk/business/creditcrunch"Credit crunch/a/lilia href="http://www.guardian.co.uk/environment/energy"Energy/a/lilia href="http://www.guardian.co.uk/world/middleeast"Middle East/a/lilia href="http://www.guardian.co.uk/football/saudiarabia"Saudi Arabia/a/li/ul/divdiv class="guRssAdvert"a href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Businesscountry=(none)spacedesc=rsssystem=rsstransactionID=1227227727753112100421654622"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Businesscountry=(none)spacedesc=rsssystem=rsstransactionID=1227227727753112100421654622" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a

Pope Benedict XVI was the first to predict the global financial crisis in a prophecy contained in a paper he had written when he was a cardinal, according to Italian finance minister Giulio Tremonti.

divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/75?ns=guardianpageName=World+news%3A+De+Villepin+to+go+on+trial+over+alleged+plot+to+smear+Sarkozych=World+newsc3=The+Guardianc4=France%2CWorld+newsc5=Not+commercially+usefulc6=Angelique+Chrisafisc7=2008_11_20c8=1120734c9=articlec10=GUc11=World+newsc12=Francec13=c14=h2=GU%2FWorld+news%2FFrance" width="1" height="1" //divpThe former French prime minister Dominique de Villepin has been ordered to stand trial for his role in an alleged plot to smear Nicolas Sarkozy./ppThe scandal, known as the "Clearstream affair", is a tangled web of alleged spying and political manoeuvres at the heart of the French government. It dates back to 2004, when De Villepin and Sarkozy were both ministers under Jacques Chirac and vying to succeed him as president. /ppDe Villepin has consistently denied all wrongdoing. But a source close to the case said he has been charged with "complicity in libel". /ppHis trial, along with that of four others, is expected to take place next year and promises to lay bare the poisonous atmosphere and rivalries of the final years of the Chirac era. De Villepin could face up to five years in prison if convicted. /ppThe affair began in summer 2004, when an anonymous source wrote to a judge accusing a string of politicians and businessmen of holding secret bank accounts for laundering bribes at the Luxembourg bank Clearstream. On the list was Sarkozy, the then finance minister. But the accusations were false and the accounts did not exist. /ppSarkozy complained that the affair was used to discredit him in the run-up to the presidential race. A judicial inquiry has since examined whether senior members of the government prolonged the bogus corruption scandal, using intelligence officials in a deliberate plot to smear Sarkozy. /ppSarkozy became a plaintiff in the Clearstream case in 2006, asking magistrates to find those behind the scandal. /ppIn a statement issued late on Tuesday, De Villepin complained he was a victim of legal bias. "Nothing justifies this decision to go to trial," he said. He added that throughout the investigation "the reality of the facts and of the law has been twisted in favour of a single plaintiff" who happened to be the French president. /ppThe MP Jean-Pierre Grand, close to De Villepin, told Agence France Presse that he was being treated like a "Soviet dissident" and was the victim of harassment. The centrist Franccedil;ois Bayrou said the case smacked of score-settling. /ppThe Elyseacute;e declined to comment. /ppDe Villepin, who served as foreign minister and interior minister, was a proteacute;geacute; and righthand man of Chirac. He was said to have detested the ambitious Sarkozy when they were in government together. /ppAmong the other four figures who will stand trial is Jean-Louis Gergorin, a former senior executive of the European aircraft maker EADS, who had close ties to the intelligence services. He was revealed to be the informant who handed over the original list of names and fake bank accounts to a judge, setting off the scandal. /ppExamining magistrates believe De Villepin may have prompted Gergorin to hand over the documents. The state prosecutor has said that at the very least he did not prevent Gergorin from acting, despite doubting the authenticity of the files./pdiv style="float: left; margin-right: 10px; margin-bottom: 10px;"ullia href="http://www.guardian.co.uk/world/france"France/a/li/ul/divdiv class="guRssAdvert"a href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Newscountry=(none)spacedesc=rsssystem=rsstransactionID=1227142268618112000542038307"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Newscountry=(none)spacedesc=rsssystem=rsstransactionID=1227142268618112000542038307" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a