MOSCOW, Oct 18: After a decade of economic expansion, portents of a financial storm are gathering over Russia, from foundering banks to a Moscow skyline of idled construction cranes.

If oil prices keep falling, the question becomes whether the Kremlin, which so confidently went to war with Georgia just two months ago, will have to scale down its ambition of reclaiming a big role on the world political stage.

A stunning stock market collapse has sent the benchmark stock market index down 73 per cent from its May peaks, and shown how shallow are the roots of Russia’s energy-fuelled boom.

Six months from now, warn investors, things could look very bleak.

“Things are going to crash. Of the high-end restaurants, you’re going to have the vast majority of them closing. If you’re stuck in traffic, just refer to it as pre-crisis traffic. In six months, it’s going to be a different story,” said James Fenkner, director of Red Star Asset Management.

In a little over eight years, the filtering down of oil cash has transformed Moscow from one of the grimmest capitals in Europe to one of the glitziest, with marble-floored shopping malls and upmarket boutiques.

The Kremlin has used its economic triumph to political advantage, dictating terms in energy spats with its European customers, sending its warships and planes across the globe, going to war with Georgia and lecturing the West about its shortcomings.But the climate is changing, and analysts say the economy may force the Kremlin to act more cautiously.

“We’re likely to see some posturing, but also less likely to see any real confrontation,” said Sam Greene, an analyst at the Carnegie Moscow Centre. “They don’t want to risk making the business climate worse.”

The war, combined with concerns about Kremlin interference in business, hammered Russia’s markets. But it was sliding oil prices and foreign bank failures that finally triggered the biggest stock plunges here in a decade. Some $33 billion left the country in August and September, said Finance Minister Alexei Kudrin.

Cranes stand idle around Moscow, industries have slashed production and many companies have laid off staff. High-end retailers are already noticing a slowdown in trade. At the same time, inflation is in double digits.—AP