by Martin Walker
Paris (UPI) Aug 27, 2008
“The extraordinary European summit to be convened Monday by French President Nicolas Sarkozy is intended to agree on a common policy toward Russia in the wake of its short, sharp war with Georgia. Given the divisions of interest between those who depend on Russian oil and gas and those more concerned with a resurgence of Russian bullying, only optimists think it is likely to succeed.
But there are intriguing signs in Russia that those whose jobs and markets and investments are most integrated with Europe and the global economy are starting to count the cost of Vladimir Putin, the former Russian president who is now prime minister but who still seems to rule the Kremlin. The costs to Russian democracy and its chances of joining the World Trade Organization are already unpleasantly clear. The costs in cash and in Russia’s economic prospects are still being reckoned.
Russian officials have sought to explain away the $16.4 billion outflow in foreign reserves in the week of the invasion of Georgia and also the 32 percent drop in Moscow’s stock market since Putin began expressing his displeasure with the Mechel coal group in May. Mechel shares alone lost $8 billion after Putin’s first remarks. Finance Minister Alexei Kudrin claimed Friday that the outflows had stopped.
But Russian debt and equity markets also have gone into decline since the conflict with Georgia began Aug. 8, with yields on domestic ruble bonds increasing by up to 150 basis points over the last month. That is the equivalent of a 1.5-point jump in interest rates, the kind of panic measure that few central banks would risk taking except in extreme circumstances.”
http://www.spacewar.com/reports/Walkers_World_The_price_of_Putin_999.html
