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Nigeria staring into $5 billion budget hole due to the oil-price swoon

Extracts from the Bloomberg article: Capitalism Freezes in Worldwide Winter of Discontent (Update2) 

By James G. Neuger

Jan. 12 (Bloomberg) — As capitalism staggers through its first globalized economic crisis, the costs won’t be measured only in dollars and cents.

From newly rich Russia to eternally impoverished sub- Saharan Africa, social strains are threatening the established political order, putting some countries’ very survival at risk.

In the past month, Nigerian rebels threatened renewed warfare against foreign oil producers, Russia sent riot police from Moscow to quell an anti-tax protest in Siberia and China’s communist leadership warned of social agitation as the 20th anniversary of the Tiananmen Square massacre looms.

The frailest nations are those concentrated south of the Sahara desert, plagued by a legacy of despotism, corruption, disease and economic misfortune — often all at once. The region accounts for seven of the top 10 countries in a ranking of “failed” states compiled by the Fund for Peace, a Washington- based research group.

Nigeria, holder of Africa’s biggest fossil-fuel reserves, is staring into a $5 billion budget hole due to the oil-price swoon. It also confronts an emboldened guerrilla movement in the southern Niger Delta, the oil-producing region that has attracted the likes of Royal Dutch Shell Plc and Chevron Corp.

‘Not Optimistic’

“The outlook is not optimistic,” says Pauline Baker, president of the Fund for Peace, which ranks Nigeria 18th on the most-at-risk list. “Unless Nigeria begins to pull itself together, I think with the lowering oil price in particular it is quite vulnerable.”

COMPLETE BLOOMBERG ARTICLE

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