Sleepless Russia and Infected Ukraine

In flashback, one must remember the tightening of the quantitative easing declared by the Federal Reserve and the prognosticated impacts seen in the communities of developing and emerging markets. The impacts that were observed in Russia, Turkey, Brazil, China among others had not even settled down when the globe has been hit with turbulence with its epicenter at Ukraine and as has been the global trend, expectations show up  other aligned-ones to get dragged into. Though the mother of Russia and Ukraine is same, they have never ever been able to establish any good relation always trying to contend one another.

While Ukraine was going through eco-political tussles, the sufferer happened to be Russia. The possessions of the investors in Russia shattered down to the lowest level during December and have not been able to capitalize well since. The situation looks worsened enough owing to the current fragility in Ukraine. The statistics show that the outflow of the investment from Russia increased by 23.9 percent in response to the neighboring hassle.  The death tolls and the extremely vulnerable financial instability in Ukraine made the Russian market weak. The investors and investment facilitators in Russia have started discussing that in such situation, the remaining ones might also think otherwise. People might disagree when I say that the Russian inflation needs to be controlled within 7 percent whereas the current inflation holds around 10 percent. According to the Moody’s Investment Service, Russia and the Russian securities are rated as Baa1 which represents the third-lowest investment grade.

The dimension of world has changed now, where the colonies were about interposing the land and making the citizens’ slaves, with the evolution of time the concept of colonization has dragged in the economic variables and “Aid” is the best means to colonize any economy these days. With the flow of aid follows the exposure of the sector and the impact is exponentially multiplied. These days when the Ukrainian economy is in jeopardy and the chances of debt-defaults are increasing, the path of aid inflows is said to be opened up which in the long run might repeat the history sufferings caused by the Aid dependency.

Though the newly formed government is expected to minimize the socio-economic fragility in the country, the stability is yet to be achieved and most of the world is happy at “wait-and-watch” state. Meanwhile, the credit rating of the country has kneeled down to CCC as per the Standard & Poor’s ratings indicating the possible defaults of the state. There is no option rather than expecting that the situation becomes eco-politically and financially pleasant after the proposed political settlement. Ukraine tried to boycott Russia for the trade deal choosing EU for the same which led to the cut supplies of the natural gas; therefore it will definitely be a matter to observe what two half-brothers do in the globalized ecosystem.

Note: The article was published in the Perspectives of The Himalayan Times.