Orkhan Sattarov, the head of the European Bureau of Vestnik Kavkaza
Despite the relative stabilization of the ruble after the Central Bank adopted a package of measures on normalization of the financial market and Vladimir Putin’s press conference on December 18th, Western experts continue to express serious concerns about the risks connected with the ruble crisis for the world financial system.
It seems the West has every reason to chortle. One effect of the sanctions launched against the Russian economy is obvious; according to President Vladimir Putin, they are the reason the ruble has fell 30%. But is it a purely Russian problem? Considering the integration of Russian financial institutions into the world economy, apparently it is not. And the concerns of Western financial analysts are reasonable.
The German periodical Die Zeit presents an expert view by the economist Jürgen Matthes from the Institute of Economics in Cologne. He thinks that the weakening of the Russian economy brings risks for Germany. Jürgen Matthes doesn’t compare the current developments in Russia with the ruble crisis of 1998, when investors escaped the country with their money, and the ruble fell 60% in a few hours, while panic on financial markets shifted to other developing countries, for example, to Brazil.
“Russia is thought to be a special case in financial markets,” the economist says. There is a threat that the crisis will spread to developing countries, but at the moment there are no signs of such a tendency. However, like almost any expert who comments on the effects on the world economy caused by the ruble fluctuations, Jürgen Matthes warns: “If Russia goes bankrupt in the end, the West will be hurt. Their credit institutions are still fighting the consequences of the economic and financial crisis.” Marcel Fratzscher, the President of the German Institute of Economic Studies, predicts that in case of Russia’s bankruptcy, Germany and the euro zone, as well as developing countries, will be hurt. “We shouldn’t have illusions that Russia could stay isolated,” Marcel Fratzscher warns.
However, Die Zeit reports that the huge monetary reserves of Russia, more than $400 billion, and low debts, resist a scenario under which Russia could go bankrupt. At the same time, the Russian Central Bank allocates billions of dollars to support the ruble exchange rate, and this is leading to exhaustion of the country’s monetary reserves. Marcel Fratzscher, a financial advisor to the German government, gives a 30% chance of Russia’s bankruptcy in such conditions.
According to the periodical, brokers in Frankfurt are concerned about the situation in Russia. They think that depositors should be ready for “shock waves” which would touch on world financial markets.
