By Chad Miner
Russia, like the United States and by now much of the rest of the world, is treading dangerously at the edge of financial despair. Four weeks ago, Finance Minister Alexsei Kudrin stated that Russia would not have to use its reserve funds. The government has since changed its position, and then some. In just the past two months Russia's reserves have decreased by nearly $50 billion [in Russian]. It looks like some (nobody knows yet how much) of Russia's reserves will now be employed in keeping its banks and firms from total collapse.
The Russian government took these steps, of course, without anything like the public debate recently seen here in the United States. Putin's government approved a $50 billion loan from the government-controlled Vneshekonombank to private companies unable to get credit extensions on their foreign debts. President Medvedev announced an additional $36 billion in junior loans to banks. How the government will conduct this process without the usual accompaniment of mass corruption is beyond anyone's guess.
Prime Minister Putin and President Medvedev have indicated to the Russian people the reason for their current financial pain: that the United States has abused its position as leader of global finance and has brought crisis upon itself and the entire financial world. Certainly, they are not the only prominent world figures to assert as much. Medvedev and Putin are right that the current mess did begin in the United States, and they also agree that its global resolution must also begin here. While the Russian government does everything within its means to stave off collapse, its citizens have no choice or say in the matter. They can only trust that their leaders know what they are doing.
Meanwhile, the U.S. government has tried to link Russia's financial crisis with its actions in the Caucasus. While it is true that Russia experienced some capital flight directly following August 7th, its stock market lost more value in the month preceding the war than in the month following it. Putin and Medvedev have both insisted that the global economy is now suffering a crisis. Russia is intricately tied into the global economy, they argue, and thus its crisis should be viewed in the broad context of global financial troubles, not the narrow context of its military actions in August. To some degree this makes sense. Yes, international investors are currently shunning Russia; but it's not as though they're flocking elsewhere.
Neither the Russian government nor its observers can accurately predict the long-term consequences of this crisis. Lower oil prices and slower growth will undoubtedly affect the country's plans for long-term social and economic development. But in the short-term the government is performing as it had promised it could: in hard times, it is providing stability. Ten years ago, when the ruble collapsed, the Russian economy collapsed with it. If that does not come to pass this time, the Russian people might well be secure in knowing that a strong leadership is worth just about any cost.
Chad Miner is a graduate student in the Global Theory and History program at the Johns Hopkins University Paul H. Nitze School of Advanced International Studies (SAIS) in Washington, D.C.
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The views expressed are those of the author and do not necessarily represent those of the Johns Hopkins University.
Comments (4)
I find it hard that Postglobal always harps on Russia's corruption. I do not dispute that there is corruption there, as in every other country in larger or lesser degree].
i find it disturing, the USA, the cause of the world wide financial crisis [as admitted by Mr Miner] has yet to find any corruption leading up to this mess. This is similar to the fiasco in Iraq, a war of choice consting trillion dollars, yet NON of the warmongers were even charged, nevermind convicted. In these two events, which caused major decrease in USA's stature, wealth, military capabilities without any charges, indicates a very great level of corruption.
I would suggest that the Commentators of WP quit bit**ing about corruption anywhere til they clean up their own
October 20, 2008 4:57 PM | Report Offensive Comment
Posted on October 20, 2008 16:57
"The only real difference is that the Russian bailout will be financed from reserves, and our by borrowing from China, Gulf and even, Russia."
...plus we will be 2nd or 3rd-downstream customers for Russian energy and raw-materials.
Gotta love that trade-deficit.
October 17, 2008 12:41 PM | Report Offensive Comment
Posted on October 17, 2008 12:41
For example, in the US the bailout plan was debated in public, with dissent, both from the public and in Congress. The first attempt to pass it failed. The bill was altered. The legislators, particularly the Congressmen and -women, will have to answer for their votes on November 4th. That is a real difference, and not just window-dressing.
October 16, 2008 7:02 PM | Report Offensive Comment
Posted on October 16, 2008 19:02
Miner:
"While the Russian government does everything within its means to stave off collapse, its citizens have no choice or say in the matter. They can only trust that their leaders know what they are doing."
How is this different than here in US? Or in UK, Japan, Germany, France...?
The only real difference is that the Russian bailout will be financed from reserves, and our by borrowing from China, Gulf and even, Russia.
October 16, 2008 3:33 PM | Report Offensive Comment
Posted on October 16, 2008 15:33