Georgia 'opportunity' cost: $8B

POST: Is Putin getting outflanked on the right?, Passport Foreign Policy Blog, 09/03/2008

Money quote:

I believe that one of the reasons the fighting stopped was not because there weren't people in the defense ministry who thought it should go on for a bit longer, but because in the first two working days of the war, there was a total of some $8 billion net capital outflow from Russia.

Again, the truth emerges that there is some over-reach here on Putin's part. The minute the oligarchs feel that Putin does more harm than good to their economic connectivity, then he starts being interpreted more as a function than "the man."

"Founders" get tossed by angry boards of directors all the time, so remember, a business masquerading as government isn't ambivalent about the bottom line.

(Thanks: Se√°n J. Kreyling)

Comments

[Brian Peroceschi]

Russia's economy is definitely feeling it. I have been watching the RTS index and when the situation starts to stabilize it starts going back up. When Russia starting talking about annexation it started going back down. It's still about 20% lower than it was a few days before the war started. Realclearworld.com has also had some links to good articles. Some of the very rich in Russia are not happy with this war.

[Mark in Texas]

This article suggests that $25 billion in FDI has left Russia since they invaded Georgia.

http://www.nytimes.com/reuters/world/lifestyle-russia-business-mood.html?_r=2&oref=slogin&oref=slogin

Yes, they are pulling in lots of dollars and Euros with > $100 oil but now that hurricane Gustav did not damage the gulf oil wells and the offshore drilling ban is set to expire on October 31, the price per barrel is going to drop significantly.

For a country with a GDP the size of Russia's and not much of an economy besides oil, this is a real serious problem.

[Michael]

That part about the Russian Far Right is a little ominous, though. At risk of violating the "no panicked predictions of doom" policy, their ascension to power really could be the start of a new cold war:(