Originally posted by the Voice of America. Voice of America content is produced by the Voice of America, a United States federal government-sponsored entity, and is in the public domain. Russia Gets Giant Boost from Rising Oil Prices James Brooke | Moscow March 18, 2011 Customer pumps gasoline into automobile tank Photo: AP As much of the world reels from civil unrest and natural disasters, Russia is cashing in on high oil prices that may allow it eliminate its budget deficit in 2011. Libya suspends oil exports. Political revolts put the Persian Gulf on edge. And Germany and Japan close one quarter of their nuclear reactors. In todayâs energy world, Russia seems to be the winner. Producing 11 percent of the worldâs energy output, Russia is the worldâs biggest energy exporter. âThis is a huge amount of energy - about five times more than Russiaâs share of global GDP or population. This is the basic number,â said Leonid Grigoriev, who studies Russiaâs energy economics at Moscowâs Higher School of Economics. With prices expected to average over $100 a barrel this year, the oil bonanza is expected to erase Russiaâs budget deficit this year. This is timely for the Kremlin, which is handing out pay and pension raises as the nation starts an election cycle. The latest came Friday when President Dmitry Medvedev announced that salaries for soldiers will triple next January - just 10 weeks before election day. Oil and gas pays for about 40 percent of Russiaâs budget. Once prices rise over $27 a barrel, Russiaâs Finance Ministry takes in 90 cents for each dollar. âThis is why the Russia depends so much on oil and on oil prices,â said Leonid Grigoriev. âAnd thatâs why any turmoil in the world immediately brings money to the Ministry of Finance.â Today, foreign currency reserves are growing at $100 million a week. By the end of March, Russiaâs total reserves are to hit $500 billion - the worldâs third largest, after China and Japan. Now, economists are now raising Russiaâs economic growth estimate for 2011 to five percent - the highest level since 2008, the year the economic crisis hit. Higher oil earnings filter down to Russian consumers. Last year, car sales and overseas travel jumped by one third. The equivalent of 10 percent of Russian took foreign vacations. Next year, Russia is to displace Germany as Europeâs largest car market. In February, Ford, GM and Volkwagen announced new joint ventures to produce more cars in Russia. Russians spend now, because they are never certain about the future. In one decade, the oil price gyrated wildly - from a low of $8 a barrel in 1998 to a peak of $147 in 2008. Looking at the long term, analysts say Japan's nuclear crisis may benefit Russia by pushing the world energy pendulum away from nuclear toward natural gas. Germany imports almost half of its gas from Russia. Even before the crisis, Russia was investing to increase gas production by 50 percent over the next 20 years. The downside is that high prices ease pressures to cut corruption, to diversify the economy and to lighten the hand of government on business. Chris Weafer, chief strategist with Uralsib Capital, fears that the new flood of oil earnings is leading the Kremlin to slow its privatization program. âWe have seen it in the Gulf Arab countries. and we saw it in Russia in the last 10 years that as the oil price is rising governments talk about the need for reform and using the money wisely, but as the price goes up too high, the whole process slows down, people become complacent, they become lazy, they live the good life as it were, until the collapse comes,â he said. âAnd then then whole process starts again.â In public opinion polls, corruption rivals food prices as the number one public complaint for Russians. According to Transparency International, Russia is the most corrupt of the Group of 20 major economies. Last week in a speech in Moscow, U.S. Vice President Joe Biden clearly warned Russia that corruption scares away investors. âNo amount of government cheerleading or public relations or U.S. support or rebranding will bring wronged or nervous investors back to a market they perceive to have these shortcomings,â he said. âOnly bold and genuine change.â As Biden spoke, new economic data came in. Despite the oil price rises, despite the run up in the Russian stock markets, the country suffered a net loss in investment capital in February. âDespite the stock market and despite the oil prices, people are still very skeptical that there is going to be material change in Russia,â said strategist Chris Weafer. âRight now, they are voting with their wire transfers." Another cloud on Russiaâs horizon is demographic. Over this decade, the Russian workforce is expected to shrink by 10 million people, or 15 percent. Solutions are not popular: raising the retirement age, increasing immigration, and raising productivity through more foreign investment. And those measures will not be taken until after Russiaâs presidential election - one year from now. .