Russia’s foreign-exchange reserves are draining fast and may take almost a decade of economic stability with them.
Russia’s international reserves, the third-biggest after China’s and Japan’s, have fallen $122.7 billion, or 21 percent, since Aug. 8 as the central bank tried to shore up the ruble. At the same time, President Dmitry Medvedev, 43, has pledged more than $200 billion of tax cuts, loans and other measures to maintain economic growth, threatened by plummeting oil prices and investor flight.(via Bloomberg.com: Europe)
Spirit is willing, but the flesh is weak …
The Russian economy remains weaker than widely perceived. High oil prices of the last 5 years built up foreign exchange reserves - as did inflows in the Russians stock market. Russian entrepreneurs remain an endangered species. Large swathes of Russian enterprise have reverted back to the state - albeit in a corporate form. The world has not yet forgotten the Russian debt default.
Russia should get off its high military horse. Instead Putin-Medvedev should build alliances, sign agreements within the BRICS framework and rebuild the Russian system.
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