Monday, June 9, 2008

Russia wants to host the new Wall Street

In his first economic speech, new Russian president Dmitry Medvedev makes it clear that the US are at fault for the current financial market mess and that Russia will establish itself as the new financial center of the world, the ruble becoming a leading currency. Dream on.

For a financial market to truly develop, let alone become the world leader, Russia needs to straighten a few things that are currently heading exactly in the wrong direction:

  1. Fix corruption. It is estimated even by Russian authorities themselves that bribes currently amount to about a third of the government's budget, and it is increasing. There is no way a financial market can efficiently function, especially if Russia claims to be regulating better that the US, if corruption is so rampant.
  2. Stop government meddling. Foreign businesses suffer from constant harassment from the government trying to influence them. Nowhere is this more obvious than in the energy sector, where the government is trying to create anew the old monopolies by pushing foreigners out. Most large firms are now again under state supervision.
  3. Have a consistent immigration policy. You do not build a world leading financial sector without foreign labor, especially in a sector that has no tradition in the country. Thus, deciding to suddenly refuse any work permit application does not help.
  4. Have a workforce that is savvy in Economics and Finance. While their is now an elite that can be described as such, the fact that the general population hates anyone making a profit is not encouraging.

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