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.