When Kiriyenko devalued the ruble on August 17th, the banking assests
were severely threatened. Rather than devalue the billions, all
available money was shipped out of country because the devaluation made
it that more impossible to pay back the Western banks with a devalued
currency. The solution, convert it to US dollars or Swiss Francs.
Anything except Russian Rubles. Rather than letting Kiriyenko
implement radical reforms which might have bankrupted some of these
oligarchs, he was sacked and replaced with Chernomyrdin, the mastermind
behind the natural resource auctions. The temporary funds to prop up
the Ruble have been used as bargaining tools to get better exchange
rates with Western currencies rather than to pay off creditors.
So, where does this leave mother Russia? It's a doomed country.
Welcome the end of the great nation-state. I can only predict further
fragmentation and the complete collapse of whatever shadow of a centralized
government they tried to keep in power. If this wasn't bad enough,
think of the following scenario. It's widely believed that one of the
former Soviet Union's last lines of defense was a nuclear doomsday
machine straight out of Dr. Strangelove because they couldn't keep up
with the military buildup of the 1980's. The Soviet union collapsed
before this could be announced. Also, US intelligence estimates report
that defending against the US and US attacks is still the number one
priority in the Russian military doctrine. Finally, add the fact that
Russian first alert Radar, missile systems, and command and control
systems are not Y2K protected and any cessation of functioning can
easily be mis-interpreted as a first strike. So maybe it's only a 1 in
10 million chance that a Russian ICBM will detonate, a 1 in 50 million
that it will launch and a 1 in 200 million chance that it will hit
a US target, but then again, there's 200 million people in the US.