Wednesday, January 28, 2009

Economic crisis? Where?

I have been watching the snow fall - in Davos, Switzerland. That is - I’ve been watching the television coverage of the meeting from the comparatively balmy Baku. It’s just gray and drizzly here.

And the economic news also seems less cold here. I’m not sure why. Azerbaijan’s financial system may be less integrated into the world system than, say, Russia’s. I know that when I was in Russia last fall, conversation about the global economic crisis was unavoidable. A Russian friend last week told me that the situation there has become, if anything, worse.

Another friend of mine, a native of Azerbaijan, recently made an interesting remark when we were standing in a bank together, watching the currency exchange rates flash across a screen. The Azerbaijan government is devoting excessive capital to propping up the Azerbaijan currency, he said. Could be. I haven’t made a detailed study of this currency, although I did live through and later study the Russian ruble crisis of 1998. The recent financial news doesn’t look so promising either. Russia’s international reserves recorded their second largest drop on record last week, falling by $30.3 billion. The ruble is roughly 30 to the dollar today. When I lived in Moscow last year, the rate was about 24 to the dollar.

The situation in Russia is different than what we face here, but it’s possible that the current exchange rate of the manat will become unsustainable in the coming year. If anything, the Azerbaijani manat has been growing stronger against the dollar over the last three months.

While Azerbaijan seems quite economically secure on the surface, the news today from Davos is that no corner of the globe will be spared economic pain in this global recession. Global job losses could total more than 51 million, according to figures released today by the International Labour Organization. The developing world may be especially hard hit, because many of these countries don’t have the “safety nets” to assist the unemployed, warns the the International Monetary Fund.

But all of this grim news still seems far away from us at the moment. The leading Internet news portal in this country has an article today about falling prices for commercial real estate in Baku, but few people outside of the real estate business are probably concerned by this fact. The big news from Davos that concerns Azerbaijan is that the president of Azerbaijan and Armenia had a private meeting there.

In the picture, they aren’t shaking hands.


Ani said...

Armenian governmental officials also expressed that they weren't part of the global economy and thus hadn't suffered, but then went to ask Russia for money and got a World Bank loan as well: cognitive dissonance rules the day, huh?

And not expressing an opinion about the meeting, but here's a picture of them shaking hands, so they did do that:

Eric said...

Thanks, Ani, for the photo link. I continue to hope that progress toward peace is possible.

And thanks for the Armenian perspective. Funny - asking Russia for more money. The financial crisis could actually make peace more likely on some fronts. OK - I'm an optimist. But maybe.

Eric said... had an "updated" picture today. It was just larger than the previous stilted one. Interesting - that an Armenian source showed the two men shaking hands - but such image isn't shown here.

Федоренко said...

Global crisis as Russians see it
The corridors in office buildings have either pluses or minuses. Let’s not speak about minuses but about pluses. Everybody knows each other; you can hear helloes, greetings, goodmornings.

But the last few months silence dominates here.

Crowds of clients just disappeared, nobody enters and asks:”Sorry, where can I find?..” , there are no more strangers smoking in common rest rooms, girls from nearby offices don’t rush in asking to change money for a change. The director of real estate office drooped off, you can’t hear scissors and hairdryers from a hairdressing salon, and women from the office you never could spell its name frequently hang “Closed for today” card. People drink a lot in the offices and it’s impossible to breathe in smoking areas. Visits of Santa and parties had been cancelled this year.

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