The financial panic that struck Russia Wednesday had distinctly Russian causes: The government cannot collect taxes; it suffers from an economy that is nearly moribund; and it has a well-regarded but untested new economic team. But in Washington, the Russian crisis looks very much like the next phase of the Asian crisis.
In fact, the two are related. In recent days, as President Suharto was being toppled in Indonesia, the yen was falling in Tokyo and workers were striking in South Korea against long-delayed layoffs, investors began to fear that Asia's troubles are far from over and could easily spread to other emerging markets.In that atmosphere, one senior American official noted, "Russia is particularly vulnerable."
Like Indonesia, its banking system is rocky. Like South Korea last November, its foreign currency reserves are dwindling to alarming levels. Russia's foreign debt - $145 billion - is not huge as a percentage of its economy, but lenders around the world are clearly unwilling to put more on the line.
And while the economic plan put together by Prime Minister Sergei Kiriyenko has impressed American officials, no one yet knows whether the 35-year-old premier has the clout to turn reform into reality.
"Russia is facing substantial financial strains, arising from a combination of factors," a senior Treasury official said Wednesday. But he tried to dampen speculation that it was about to suffer an Asian-style meltdown, and suggested that the government might rise to the challenge - much as Brazil did last fall, when it appeared to be in danger of catching the Asian flu.
He may be right: Russia's recent economic history has been a series of flirtations with disaster. It has repeatedly gone to the brink, requiring assistance from the International Monetary Fund.
But if its economy requires massive help anytime soon, it is not clear where the assistance might come from. Pinned down in Asia, the IMF - the world's lender of last resort - says it is strapped for cash. It estimates that it has only $10 billion to $15 billion easily available to fight another national meltdown. Congress has declined so far to commit $16 billion more to the IMF, and until it acts other nations refuse to increase their contributions.
So if Russia's troubles deepen, the IMF's remaining funds could prove wildly insufficient to support the Russian currency and help the country meet its debt payments. After all, Korea needed a bailout package that totaled more than $50 billion from the fund and other sources - though only a fraction of that has been spent so far - and its economy is far healthier and more developed than Russia's.
Clinton administration officials insisted Wednesday that they had not discussed using American funds to help out the Russians, even with the kind of backup financing they offered to Indonesia and Korea.
Instead, they are offering plenty of private advice - Deputy Treasury Secretary Lawrence Summers visited Kiriyenko 10 days ago - and public encouragement designed to calm the markets. The State Department spokesman, James Rubin, said Wednesday that the United States was confident that the Russian government was "capable of leading the economy in a direction of successful economic growth."
But unlike Washington, the world's currency traders and investors don't dwell on Russia's strategic importance or its nuclear capabilities. They are interested in hard evidence that the country can pay its debts. And these days, they have a lot of reason for doubt.
Declining oil prices have cut into the country's revenues and prevented Russia from getting the price it wanted at the auction of the last big government-owned oil company. The outlook has worsened with disturbances triggered by coal miners, and the government's inability to force profitable companies to pay their taxes. While none of these problems are particularly new, the revival of the Asian crisis - which makes investors nervous about any emerging market - is creating a bad case of economic contagion.