prices made hard currency revenues scarcer, bringing the crisis to a head. Russian "infection", spreading the neighboring countriesAs for Russia's impact on the rest of eastern Europe, the fallout has been quickest to hit banks, notably in the Baltic states, and stock markets, with Hungary's liquid bourse taking the worst pounding. But financial market contagion was not the real evil to the region; the genuine menace lied in the economic impact of ruble and Russian recession. Take the little Caucasian republic of Armenia, for example. Although Armenia has made good progress in recent years in strengthening trade links with Iran, Russia remains Armenia's dominant economic partner. That's true of actual trade, and the supply of credits, and joint projects. In addition, there are hundreds of thousands of Armenians now living in Russia working unofficially. They send back millions of rubles in wages to their families at home. It's obvious then that Armenia had direct impact of catastrophe in Russia.Looking further east, to Central Asia, we find similar ties between Kazakhstan and Russia. The Kazakh government has made efforts to re-align trade southwards and westwards, to Pakistan and Turkey. But Russia still supplies the bulk of the consumer and industrial market in Kazakhstan, and likewise takes Kazakh exports. The results and suggestionsThere are many underlying aspects to Russia's crisis. The "Asian crisis" spooked fund managers into withdrawing from most "emerging markets." World oil prices have fallen dramatically, seriously impacting Russia's exports and balance of trade, Russian tax collections continued to disappoint and, in the few years since economic reform commenced, no significant, viable world class industries have yet emerged in Russia. The Russian Government couldn't ease the Asian economic crisis or raise international oil prices, and development of competitive world-class businesses within Russia, if it is to happen, will...
