No Safe Haven

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					     THEWORLDTODAY.ORG NOVEMBER 2008
PAGE 10   RUSSIA AND THE ECONOMIC CRISIS
          Julian Cooper, PROFESSOR IN THE CENTRE FOR RUSSIAN AND EAST EUROPEAN STUDIES, UNIVERSITY OF BIRMINGHAM; ASSOCIATE FELLOW,




          No Safe Haven




                           | INDEPENDENT THINKING ON INTERNATIONAL AFFAIRS
                                                                                    THEWORLDTODAY.ORG NOVEMBER 2008
                                                                                                                                                 PAGE 11

RUSSIA AND EURASIA PROGRAMME, CHATHAM HOUSE



        Russia is caught in the global crisis and cannot escape its impact. The
        crucial question is how the Dmitri Medvedev-Vladimir Putin leadership
        will respond. Putin has presided over a steadily strengthening economy;
        he now appears ill-equipped to handle crisis and contraction. The signs
        are not encouraging. Trust and confidence, two essential ingredients vital
        to resolving any financial crisis, are in short supply. The public could pay a
        heavy price for the hubris and schadenfreude of their leaders, still ‘dizzy
        with success’ from years of economic revival and what they perceive as a
        successful reaffirmation of the country’s great power status.




       o                  N FRIDAY OCTOBER      10, AT THE END OF A WEEK
                            which saw the largest falls on world equity
                            markets since the great crash of 1929,
                            Moscow’s two stock markets were closed,
                            not for the first time in recent weeks. The
                            wariness of the market regulator can be
        understood. From its mid-May peak of 2,487 the Russian
        Trading System index had already fallen to 762 and there was
        clearly a fear of total collapse.
           Yet only a few months ago the leadership was boasting
        that Russia was a ‘safe haven’, an ‘island of stability’, in an
                                                                              Late last year, in the run up to parliamentary and
                                                                           presidential elections, the characteristic fiscal rigour,
                                                                           enforced by liberally minded finance minister Aleksei
                                                                           Kudrin was relaxed. Billions of roubles were dispersed as
                                                                           start up capital for ‘state corporations’ – non-transparent
                                                                           business structures, answerable only to the President,
                                                                           some headed by long-standing colleagues of Putin, notably
                                                                           Russian Technologies, an industrial and arms trading
                                                                           empire led by Sergei Chemezov.
  
				
DOCUMENT INFO
Description: To add to the negative signals, the stock market began to slide, investors unsettled by Putin's crude attack on the chief executive of the Mechel metal and coal company and the ongoing TNK-BP affair. By the end of the year, almost $7 billion is to be used for this purpose by the Development Bank, chaired by Putin, but no selection criteria have been revealed; $50 billion to help companies refinance foreign loans; $37 billion in long-term loans to leading banks, and improved protection for personal bank deposits, the limit raised from $17,000 to $26,800.
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