Russia might not have much to fear militarily from its skirmish with Georgia, but its currency and stock market are taking it on the chin:
FT: Russia’s central bank intervened heavily to support the rouble on Thursday as analysts said $21bn of foreign capital might have been pulled out of the country as Moscow paid the price for its conflict with Georgia.
The rouble fell as low as R30.41, its weakest level since the Russian central bank adopted its euro/dollar basket in February 2007. The central bank governor admitted there had been capital outflows since the war but said the amount was much lower.
Since the west has no chance of reasoning with Putin, it’s now trying to pressure Russian billionaires:
The New York Times: As the European Union seeks a unified diplomatic approach to Moscow, some policy makers are starting to suggest that the best way to influence the Kremlin would be to put more pressure on the Russian business community in Europe, particularly here in London, where many of the oligarchs have substantial financial interests.
“This is a big blow, a shock for all these people,” said Anders Aslund, a critic of the Russian government who is an expert in Russian and East European studies at the Peterson Institute for International Economics in Washington. “Relations with the West will be difficult. There will be sanctions, the stock market is down and governance is going down the drain, and it is all Putin’s doing.”
Russia’s clash with the West follows a six-year, commodity-fuelled boom that has pumped new life into a once destitute economy and catapulted the country’s business elite to the top ranks of the world’s billionaires. It also comes as some of the country’s leading businessmen have begun to expand their international operations and loosen their ties to Russia.
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