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Russia Faces Foreign Capital Crisis
Neil Richard Leslie | September 10, 2008Bankers claim Russia is facing its worst financial crisis since the August 1998 default as foreign capital is removed from the market in reaction to the conflict in Georgia, according to the Financial Times. Analysts estimate that up to $20bn (€14bn, £11bn) has been removed since the beginning of the conflict. This has led to problems with liquidity. One senior banker said, "There are real estate developers who can’t finish projects. They can’t get money from anyone, state banks included." However Russian central bank says the figures are exaggerated, and that only $5bn left the country in August.
Hans-Jörg Rudloff, chairman of Barclays Capital, warns that lack of investor confidence and the decline in the Russian stock market could have adverse effects around the globe. He said: "Geopolitical tensions always interfere with economic planning and could derail growth patterns around the world.”
