On another list, She-Who-Is-Not-To-Be-Named-But-Her-Intials-Are-Y-F posted this related NYT article on Russia.
http://www.nytimes.com/2008/01/25/business/worldbusiness/25ruble.html> January 25, 2008 Russia Talks of a Stability Beyond Ties to the U.S. By ANDREW E. KRAMER
MOSCOW — In almost a decade since the Russian debt crisis of 1998, finance officials here have amassed an enviable war chest with the largest per capita currency reserves in the world while paying down nearly all sovereign debt.
They are now describing Russia as the most insulated from the ill effects of a United States recession among the chief emerging-market economies, an extraordinary role for a country on its knees not so long ago.
Russia will be an "island of stability," Finance Minister Aleksei L. Kudrin boasted this week at the World Economic Forum in Davos, Switzerland.
Foreign currency reserves of $478 billion, derived from windfall oil profits, are now the largest in the world per capita among big economies and will "play the role of an air bag" for the country, Mr. Kudrin said, as quoted by the Russian Information Agency. "Russia will soon be the focus of attention as a haven of stability."
Some large banks are agreeing, though cautiously, that Russia seems tobe the strongest of the so-called BRIC leading emerging-market countries, a group that also includes China, India and Brazil. Russia stands out as potentially least susceptible to an American recession based on trade, reliance on international capital markets and the degree to which growth is driven by exports.
"Russia is probably more insulated than other BRIC emerging-growth economies," said John A. Thain, the new chief executive of Merrill Lynch, who was visiting Moscow on Wednesday.
Mr. Thain added the caveat that "the world is a very interconnected place, and we saw all the world's equity markets react negatively."
To be sure, a steep downturn in crude oil prices below a now improbable $50 a barrel would flatten Russia's growth, according to Julia Tsepliaeva, Merrill's chief economist for the republics of the former Soviet Union. (Oil settled in New York on Thursday at $89.41, up $2.42.)
Russian officials and Moscow-based equity analysts have been strong proponents of the idea known as decoupling, which holds that some developing nations are strong enough and self-sufficient in the face of the declining dollar and waning American influence to part ways with Washington economically, amid a reordering of global finance.
The theory was debunked somewhat by the worldwide stock sell-off this week, including the downturn on the Russian Trading System stock exchange, which was off 20 percent from a high on Dec. 12 before rebounding 4.8 percent on Thursday. In its gyrations, it has largely mirrored big European and Asian exchanges.
Yet other evidence is emerging that at least some investors are differentiating between emerging markets based on their degree of vulnerability to an American recession and are opting for Russia.
Last Friday, a day when investors pulled $4 billion out of emerging markets in general, Russian-dedicated funds had a modest inflow of $30.7 million, according to EPFR Global, a company based in Cambridge, Mass., that monitors global fund flows. Russian funds have recorded inflows for 19 consecutive weeks in the face of worsening United States economic news.
"It has been suggested by a number of strategists that Russia is among the more attractive among emerging markets," Brad Durham, managing director of EPFR, said in a telephone interview. "It is one of the least correlated to the United States economy."
This results in part from Russia's minuscule trading relationship with the United States and the sour political relations between the countries over NATO expansion, missile defense and energy policy, among other issues.
Russia's exports to the United States account for only 3 percent of its total, compared with 16 percent to Brazil, 19 percent to India and 21 percent to China, Mr. Durham said. Its largest trading partner is Germany, a leading customer for Russian natural gas.
In the long term, this will work to Russia's disadvantage by isolating the country from the benefits of exposure to the world's largest economy, said Yaroslav Lissovolik, chief economist at Deutsche Bank here. In the short term, it will cushion the country from an American downturn, he said.
Lyubo, bratsy, lyubo, lyubo, bratsy, zhit!
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