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Strategies & Market Trends : Investment in Russia and Eastern Europe
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To: jbe who wrote (1028)5/17/1999 5:54:00 PM
From: Rob Shilling  Read Replies (1) of 1301
 
jbe, I agree that there will always political instability in Russia, but if the communists were going to take over it would have happened after the devaluation in 1998. The reformers were thouroughly discredited and the communists forced Yeltsin to put in somebody like Primakov. Yet there was no nationalization of industry and a return to the command economy. Now, the new PM will be totally allied with Yeltsin ending any hint of returning to the old ways.
--You are right the new PM may not bring in the young reformers, but he will be working towards reforms and not just stability (like Primakov). The reason why the reformist government failed in 1998 (IMHO), was that the IMF gave bad advice to Russia to support the ruble at an artificially highe level (6.4, vs 24 today), and oil prices were at 50 year lows. But now everything has been reversed, the devaluation is over, oil prices are higher. Heck, now that the GKO restructructuring is over, the net result is that Russia has less domestic debt. Add to that an IMF/World bank loan deal and a banking system that has been "clensed" of many bad banks from the crisis, and a reenergized domestic industry thanks to the devaluation and Russia may indeed recover quickly (IMHO).
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