Over the last few months there have been dramatic changes to the world as we knew it a year ago. The price of a barrel of oil slid below $40 after a high of $147 in July last year. In Russia this has had profound effects, taking into account that the bulk of Russia’s income is provided through the sale of oil. In late November 2008, several analysts were predicting the total collapse of Russia燿ue to this change.

Ontop of falling oil revenues, Russia’s Gazprom has seen it’s share price fall 76% in one year and a quarter of the country’s cash reserves have been spent to prop up the ruble. So where does this leave Russia? And what does the future hold for Russia? Or even more importantly; how will Russia use this moment to shape its future?

According to Ellen Barry in an article published in the NY Times, there are only two ways this can go:

“SCENARIO 1: COOPERATION In the global financial collapse, as Alexander Rahr of Germany抯 Council on Foreign Relations put it: 揥e have all become weaker. We have all become poorer.� So, pressed by domestic concerns, both sides pare back their foreign ambitions. Washington slows its timetable on NATO expansion and missile defense; Russia defers the dream of recapturing the Soviet 損rivileged sphere of influence.� Leaders in Moscow present this to the public as a victory.”

“SCENARIO 2: RETRENCHMENT AND NATIONALISM 揕ess resources means more selfish behavior,� as Sergei A. Markov, director of the Institute of Political Studies in Moscow, has said. In this case, Russia finds itself facing internal dissent and the threat of regional separatism, and lacking large piles of oil money to disburse in hopes of keeping control. Forced to fight for their own survival, political leaders tailor their policies to domestic public opinion. They focus on an external enemy � the United States, which leaders have already blamed for Russia抯 financial crisis, and with whom Russia is already deeply irritated over the prospect of American military influence reaching Ukraine.”

One thing that cannot be debated is that Russia has had two fundamental issues with the west (especially the U.S.) over the past months:

Possible NATO expansion to Ukraine and Georgia

The U.S.’ plan to station missile-defense facilities in Poland and the Czech Republic

Those concerns have definitely not faded and with President-elect Obama on the verge of taking office, it would appear essentially logical for Russia to take a hard stance, to ensure they are taken seriously on these issues.

Similar to their risky invasion of Georgia in late August 2008, Russia is now in a highly volatile battle with Ukraine over gas deliveries to Europe - having left hundreds of thousands without gas since the end of 2008. Do you still think Russia will act upon cooperation?