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Strategies & Market Trends : Investment in Russia and Eastern Europe -- Ignore unavailable to you. Want to Upgrade?

To: Rob Shilling who wrote (1023)	5/17/1999 3:09:00 PM
From: jbe	Read Replies (1) \| Respond to of 1301

Rob, by this time, I would think that international investors in Russia would have acquired enough experience to know that the picture of Good Reformers vs. Bad Communists is simplistic, to say the least. This cliche served Yeltsin well for a long time, but it is beginning to creak. (Let us not forget that Yeltsin occupied a far higher place in the Communist Party than any of the CP critics challenging him now.) I am no economist myself, but plenty of economists whose opinion I value argue that many of Russia's present economic problems were caused by ill-thought out "reforms". (Let the Western advisors take their lumps here as well.) In any event, a continued economic tailspin is widely expected, IMF or no IMF. See, for example: csis.org Of course, you might welcome a bit more "depression", meaning you would hope to get a piece of some good companies at fire-sale prices. There are two problems with that point of view, IMO. One is that we do not know what economic policy will be; and in Russia, anything can happen. What kind of security can international investment count on? I submit -- not much. The second is that this continued economic downslide is coupled with continuing political instability for the foreseeable future. The failure to impeach Yeltsin does NOT mark the decisive defeat of the "Communists" (or of the left wing in general). After all, an overwhelming majority of the deputies voted in favor of impeachment; it just was not overwhelming enough. Besides, the left wing does not pose the only threat to Russia's economic future. (Yeltsin's habit of pulling the rug out from underneath his Prime Ministers is another one, for example.) Some more major political crises coming up: 1) Stepashin's confirmation (or non-confirmation); 2) Dissolution of the Duma, if Stepashin is not confirmed; 3) Russian presidential elections next year. Furthermore, I personally would not expect Stepashin, if confirmed, to launch any major new "reforms". First of all, his will essentially be a caretaker government, probably lasting only till the elections, so there's not time to organize, let alone to adopt, a really meaningful program. Secondly, if EIN'S interpretation of a remark he made is correct, he is cool to the "market reformers" who were his erstwhile buddies: Stepashin promised on Sunday that the mainstays of the old government would stay on. "There will be no reshuffles in the government. Naturally, no odious figures, as many have been saying recently, will be allowed in," he said, apparently referring to advocates of liberal market reforms from previous government teams. russiatoday.com Just my opinion, of course. jbe