Investors pulling out of Russia

Discussion in 'Political Zone' started by Doomsday101, Aug 22, 2008.

  1. Doomsday101

    Doomsday101 Well-Known Member

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    Russia has seen foreign reserves decline, a sign that the market is more nervous about investing in the region since the recent conflict in Georgia.

    Central Bank figures show reserves were sharply down in the week ending 15 August, marking a fall of $16.4bn (£8.8bn) from $597.5bn a week earlier.

    Tensions with the west have also been strained by Russia's objection to the US placing a missile defence in Poland. Georgia has urged the west to invest in the region as it seeks to rebuild.

    According to the Financial Times, the latest drop in capital reserves is the largest "since comparable figures began" in 1998, though similar funds were taken out during the currency crisis.


    Finance ministers from the group of seven richest nations have said they are "ready to support" Georgia's economic reconstruction in the wake of conflict with Russia.

    The US Treasury issued a statement on the G7 countries' behalf saying they would be ready to help Georgia "to maintain confidence in Georgia's financial system and support economic reconstruction."

    He also called on Georgian authorities, the World Bank, European Bank for Reconstruction and Development, Asian Development Bank, European Investment Bank, and European Commission to "identify and support reconstruction needs and the restoration of services that will build a base for future economic growth".

    Oil risk

    The US and Poland signed a deal earlier this week to locate part of the US missile defence system on Polish soil, but Russia has warned the base could become a target for a nuclear strike.

    Such geopolitical concerns have been a factor pushing up oil prices, amid fears that supplies might be hampered.

    "Investors are realising that the bear has put its paw on the pipeline, and geopolitical risk is likely to remain a theme for the next month or so," said Justin Urquhart Stewart, investment director at Seven Investment Management.

    ABQCOWBOY Moderator Staff Member

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    I posted something touching on this just the other day. Essentially, Russia can not afford a War with the U.S./NATO. This is a message being sent to Russia on what the world will do for Georgia and where the cost of supporting that effort will come from. Essentially, if you wreck havock on Georgia, we will rebuild it and the cost will come out of the aid that Russia has been enjoying for the last several years. The second part of this message is basically telling Russia that if you get cute with the oil reserves, you will pay for it in hard currancy losses. Yeah, we will feel the pinch but you will feel it more and longer.

    At least, that is how I read this.

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