Russia » Economics
Author`s name Dmitry Sudakov

Euro's future lies in Kremlin's hands

Euro's future lies in Kremlin's hands. 44698.jpegEurope continues to drown in the swamp of the world financial crisis. The countries of the eurozone have taken tough measures to cut budget deficits, but the southern part of the continent faces a serious danger of bankruptcy. Russia appears to be an island of stability amid major wars between currencies. The IMF asked Russia for $15 billion to stabilize global markets - this is an outstanding event in the world of finance indeed. It seems that the fate of the joint European currency now depends on the Kremlin.

Greece continues to shatter the European economy. The European Commission urges the Greeks to tighten their belts, but it seems that the nation is unable to do it. The political crisis in the country only adds more fuel to the fire.

Germany is fed with with supporting its troubled neighbors. The administration of Germany put forward a suggestion to leave the Balkan nation alone at least before July. Germany also declined the requirement to participate in the plans to restructure the Greek debt. Instead, the country supported the offer from the European Central Bank within the scope of which bondholders will be able to assist Greece voluntarily. Great Britain, which is not a member of the eurozone, began to cut the volume of unsecured loans. Therefore, there is nothing surprising about the fact that the euro began to slide against other currencies on the market.

Also read: Russia next on the list after Greece?

US experts on economy say that the European Union should wrap the dangerous experiments with the joint currency not to spread chaos and poverty on the continent. However, the American economic experience is not good for the Old World, and the US Federal Reserve System is aware of that. Cutting the budget spending is a way to a slow economic recovery, and no one wants to refuse from it. The US tries to push its primary competitor into the abyss of debts. America offers Germany to pull out from the eurozone to make the euro cheaper. As a matter of fact, the USA wants to stabilize the dollar, which has been plummeting for a long time already.

However, Germany and France decided to seek help in the country, which appears to be an island of economic stability amid currency wars - Russia. Russia's gold and currency reserves have been growing steadily during the recent years. Now the country is fully capable of sharing its reserves to stabilize the economic financial system.

"We are ready to invest in Europe. Russia has assets for it, and we have already promised $15 billion to the IMF. We believe that a part of our reserves will contribute to stabilization on credit. We can invest $30-40 billion, and the money will return with interest. We can only profit from it," RBC quoted Russia's Finance Minister Aleksey Kudrin as saying.

Also read: Plummeting euro to send global economic tsunami to every nation

It is about time Russia should use its economic levels of influence at full capacity. Russia's economic development has already become economically beneficial to such countries as Ukraine, Moldavia, Belarus, Tajikistan, Bulgaria, Finland, Slovakia and Hungary.

However, Kremlin's financial assistance to Europe is a two-edged sword. On the one hand, the Russian government can run lucrative policies in the strategic region and win Europe's friendship and support. On the other hand, Russia can put a debt leash on Europe.

Nevertheless, Russia should be cautious about the fact that Russian banks have attracted attention from the speculative financial sector. Russia's Central Bank may eventually be forced to buy a lot of dollars to stabilize the exchange rate in the country because the ruble may grow against the dollar. America wants the euro to collapse to give the dollar a break and redirect investments in the dollar zone.

Darya Deryabina
Newsinfo

Read the original in Russian

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