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Crimea Worsens Economic Crisis

Published: April 30, 2014 (Issue # 1808)


It is no simple task foreconomists tocalculate thecosts ofRussias current foreign policy course, thelosses resulting fromfrightened investors andcreditors andthe damage that sanctions will cause. Some claim that any lack ofenthusiasm forthe economy however justifiable is patently unpatriotic. Others hold just theopposite view, condemning any attempt topropose this or that economic policy given theposition inwhich Russia now finds itself.

Before seizing Crimea, thegovernment should have done more toreduce corruption andimprove theclimate forbusinesses andforeign investors. Theevents inCrimea andeastern Ukraine make both foreign anddomestic investors even more skittish. They also lower Russians faith inthe ruble andin Russian banks.

There is now aneven greater need toimprove theenvironment forbusiness andinvestors. Thequestions Russias leaders need toask themselves are: How can we give businesspeople more investment opportunities? How can we facilitate technology transfer given theworsening situation?

Under thecurrent circumstances, Russia must focus onachieving aradical reduction inthe bureaucracy forbusinesses bysimplifying all procedures. Forstarters, Moscow could simplify therules forobtaining aRussian visa andwaive theneed forcertification if imported products have already been certified inthe U.S. or theEuropean Union.

Instead, it seems that authorities are competing with each other tosee who can do themost harm tothe economy. One top Russian official proposed selling off thecountrys dollar andeuro reserves without explaining how they would be replaced. Perhaps he would prefer theyen andyuan. But aquick look atthe currencies preferred bythe central banks ofother countries is enough toshow that they are far less reliable. Maybe he feels Russia should keep its money ingold.

Forevery difficult andcomplex situation, leaders should respond with better andmore responsible economic policy andnot just make matters worse.

Konstantin Sonin, acolumnist forVedomosti, is Professor ofEconomics andVice Rector atthe Higher School ofEconomics inMoscow.





 


ALL ABOUT TOWN

Sunday, Nov. 23


Get in the holiday spirit at todays Winter Bazzar at the Astoria Hotel. Featuring gifts from around the world such as French eclairs, Dutch cheeses and Indian jewelry, the annual event organized by the International Womens Club will feature 18 international stands and raise money for charity through the sales of a diversity of products that further illustrate the citys international connections.



Monday, Nov. 24


Dr. Axel Schulte, Department Head at Fraunhofer Institute for Material Flow and Logistics in Dortmund, Germany, is the featured speaker at the SPIBA Industrial Committee lecture on The Fourth Industrial Revolution: Digitalization of the Supply Chain. The event begins at 4 p.m. at the Graduate School of Management at 3 Volkohvsky Pereulok and registration is required by Nov. 21 either by emailing office@spiba.ru or calling 325 9091.



Tuesday, Nov. 25


Tag along with AmCham during their Industrial St. Petersburg Tour program today. This incarnation of the ongoing series will visit Philip Morris Izhora and include an Environmental Health and Safety Committee meeting.


Find out how to expand your business east during the Business With China forum beginning today and concluding tomorrow at the Lenexpo convention center. The largest Russian forum dedicated to business with the Asian giant, topics that will be discussed include logistics, customs clearance, trade financing and many more.



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