OOoh! I see... you're on a Holy Crusade to rescue the poor, the orphan, and the bereaved widow the world over, aren't you? But then, I've got a hopeless basket case for you to help --a macro-economic tear-jerker:
The economic crisis
According to official data, between 1989 and 1995, the Russian economy contracted by 49 percent. From 1995 onwards things improved a bit and resulted in a more positive outlook towards the Russian economy. By 1993 all prices had been liberalised, helping to fuel extremely high levels of inflation (1,526.5 percent in 1992 and 874.3 percent in 1993) which were caused by a complex range of factors resulting from the collapse of the Soviet command economy. The tight monetary policy of the Chernomyrdin government, a condition demanded by the IMF before granting Russia any loans, brought monthly inflation down by the end of 1995 to 131 percent. Inflation in 1996 was 21.8 percent and only 11.0 percent in 1997. The decline in GDP reached 12.6 percent in 1994, but was reduced to 4.1 percent in 1995. Industrial production reached rock-bottom in 1994 with an annual decline of 20.9 percent, but this reduced a year later to 3.3 percent.
However, these developments did not last. The poorly functioning distribution channels, the loss of state subsidies, the lack of diversification and inflexibility of many industries, worsened. Weaknesses in public finances have also made Russia increasingly vulnerable to changes in financial market sentiment, in particular as the continuing fiscal deficits have led to a rapid build-up of short-term government debt. The immediate cause of the 1998 crisis was the collapse of the world financial markets? confidence in Russia. By July, the Russian government had lost its ability to roll-over maturing treasury bills. Investors were growing fearful of default and devaluation, and they started to pull their money out. Problems were mounting in the banking sector as well, mainly because asset prices were falling. Global investors were growing increasingly risk-adverse after the spectacular collapse of some once dynamic Asian economies.
A succession of destabilizing events in late 1997 and 1998 contributed to the mid-1998 financial market pressures, including the effects of the Asian crisis, the drop in world energy prices, the changes in government, and social unrest. Confronted with these financial problems the Russian Federation faced, the Russian government stalled payments of foreign debts and allowed a devaluation of the rouble in August 1998. The Russian stock market crashed and the rouble plummeted into free fall and has lost about 70 percent of its value against the American dollar since then.
The Russian Federation is in financial chaos. In 1998, inflation soared to 84.4 percent compared with only 11.8 percent in the previous year. Industrial output has shrunk by 5.2 percent compared to 1997 and exports dropped to 87 percent of previous years? output. According to ING Barings Investment Bank, Russian companies lost about USD 100 billion during the August 1998 crisis.
The Russian Federation has no means to pay its employees. Teachers, soldiers, miners and other workers have not received their salary for months going up to a year. Even Gazprom, the only corporation in Russia which seemed to remain more or less stable after the crisis of August 1998, skipped payments to its employees. According to the latest reports from the Russian Science Academy?s Institute for Socio-Economic Research, over 60 million people, or 40 percent of the population, live below the poverty line.
Many Russians own a small piece of land where they grow food in order to survive. The barter system, already existing in the Communist era, is still in place and has grown in importance. During the last two years, half of the transactions between companies have been done in cash substitutes like barter and promissory notes. Some sources estimate this to be even higher: 75 percent of all companies are suspected of trading by barter. Since the devaluation of the rouble, barter has emerged as an effective safeguard against the financial chaos.
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Excerpted from:
europeanforum.bot-consult.se
Re: But if you slackers in Europe can't step up to the plate and meet your obligations within the mid-east,....
Look, we "slackers in Europe" are a bit tired of your Dubya... The US has entered an election year, right? (chuckle) Tell me, why would you expect France and Germany to do Prez Bush any favor?? Do I need to draw you a picture? Oh, don't worry, the French and the Germans are all too willing to talk it over and over again with the incumbent US administration --time is on our side, after all. But, at the end of the day --and on the eve of election day-- no EU troops will be dispatched to Iraq... If you wanna European or NATO troops in Iraq, dump Dubya, verstehen?
Gus |
