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Fostering Interdependence

This idea comes from a column by Aleh Tsyvinski in the Moscow Times:

Trying to erect an Iron Curtain around Russian funds and businesses will prove counterproductive. Indeed, a large-scale “invasion” of Russian business would be a positive development, because it would foster economic interdependence. This is true even if the economic expansion is led by state-owned companies and by Russian wealth funds. By investing in U.S. and European assets, Russia’s government and business elites are buying a stake in the global economy. This should bring better mutual understanding and a more rational and accountable foreign policy.

Sure, sounds great, but what kind of companies are we talking about, and who would the prospective owners be? The private sector getting into debt markets, or some yet to be created Ministry of Foreign Holdings looking for energy and defense? Most importantly, exactly who is refusing investment from abroad right now – I think pretty much any U.S. financial institution would be absolutely delighted to take a few billion from Pol Pot if he were still around. Also, is rushing in to snap up assets a really smart move at the moment? Take a look at the Chinese, who have been very conservative throughout the recent financial crisis, after having been burned in three to four consecutive attempts to make big moves in the United States. I often wonder to what extent the Russians are strategically thinking in the long-term vs. the short-term.