by CLIFFORD G. GADDY & BARRY W. ICKES
Well over a year and a half into the global economic crisis, it is still not clear how events will ultimately play out. It has been a dramatic time for all countries, including Russia. Prior to the start of the crisis, many in Russia thought that they were “decoupled” from what happened in the leading industrial economies. But the Russian economy was hit hard. The world financial crisis and the bursting of the asset bubble presented Russia with a double shock. Oil prices collapsed, which had a huge direct impact. And capital was withdrawn from Russia in the flight to safety. Both of these shocks were primarily due to events abroad. It is important to stress this point, because some observers have argued that Russia’s crisis is home grown. It is not. Russia’s structures and policies have determined how the shock played out in Russia, but the shock itself was external.
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