The most powerful monuments to failure are sometimes the most unremarkable. About two and a half miles from the Kremlin, a dusty windswept parcel of land lays untended.
It was here that the Russia Tower skyscraper was supposed to rise, soaring over the brash capital of the world’s largest energy exporter. Had it been built, it would have been the tallest building in Europe. But then the crisis bit. Moscow’s city fathers have since opted for a project more in keeping with the country’s austere times: a car park. It’s a painful comedown for the world’s largest country.
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Shortly before Lehman Brothers went under last year, Russia was riding high. The price of oil, its biggest export earner, had hit a high of almost $150 a barrel, it was sitting on the world’s third largest foreign currency reserves, its stock indices were roaring, and it was enjoying the most spectacular consumer boom of the post-Soviet era.
Backed by eight straight years of growth, its increasingly healthy economic and financial indicators had emboldened its ruling tandem of Prime Minister Vladimir Putin and President Dmitry Medvedev. The country’s finance minister spoke of Russia as “an island of stability,” Mr Putin cast caution to the wind and lambasted a leading businessman on state TV, and Russia fought and won a short war with its smaller neighbour Georgia. All that, it would later emerge, was the high watermark of what some Russian analysts were without irony calling the “golden age.”
It’s been a bumpy ride since. As the price of oil plunged like a stone and approached the $30 mark, talk of a repeat of Russia’s traumatic 1998 debt default crisis grew louder, billions of dollars of foreign capital fled the country, and its two leading stock indices plunged more sharply and more swiftly than anywhere else.
There were weeks when it seemed that the Russian stock market was closed more than it was open – a desperate and ultimately futile measure to stem its downward spiral. The cost of borrowing money - always steep here – doubled. The ruble slid, forcing the government to fritter away a third of its foreign currency reserves to slow the devaluation in order to avoid panic.
Moscow’s red hot property market ground to a halt, several oligarchs who had binged on cheap credit in the good years couldn’t afford to service their debts, and the consumer boom unwound like a broken yoyo. Car sales collapsed, unpaid back wages grew, joblessness hit a 9-year high, and property developers began to go bankrupt. When the smoke cleared, Russia’s oligarchs found themselves poorer if not humbler.
According to Forbes magazine, the number of dollar billionaires shrunk to 32 from 110 within a year while the value of their assets plunged by a dizzying 70pc. The biggest loser was industrialist Oleg Deripaska. In 2008 and with an estimated fortune of $28.6bn, Forbes said he was Russia’s richest man. A year later, it said he was now worth “only” $3.5bn. Government figures recently showed that the gap between rich and poor – yawning even before the crisis – was now even greater. But with oil trading around the $70 a barrel mark and with stock indices having staged a solid recovery, Kremlin officials say a cautious recovery is now underway.
It will, they concede, probably not be before 2012 when things return to how they were pre-Lehman.
It was here that the Russia Tower skyscraper was supposed to rise, soaring over the brash capital of the world’s largest energy exporter. Had it been built, it would have been the tallest building in Europe. But then the crisis bit. Moscow’s city fathers have since opted for a project more in keeping with the country’s austere times: a car park. It’s a painful comedown for the world’s largest country.
Related Articles
Has Russia got its groove back?
Oil surges to six-month high after OPEC sees the light
World Bank warns of social discontent in Russia
Russia targets UK interests with 'spy' arrests
Europe and America in the shadows as a new era dawns
Shortly before Lehman Brothers went under last year, Russia was riding high. The price of oil, its biggest export earner, had hit a high of almost $150 a barrel, it was sitting on the world’s third largest foreign currency reserves, its stock indices were roaring, and it was enjoying the most spectacular consumer boom of the post-Soviet era.
Backed by eight straight years of growth, its increasingly healthy economic and financial indicators had emboldened its ruling tandem of Prime Minister Vladimir Putin and President Dmitry Medvedev. The country’s finance minister spoke of Russia as “an island of stability,” Mr Putin cast caution to the wind and lambasted a leading businessman on state TV, and Russia fought and won a short war with its smaller neighbour Georgia. All that, it would later emerge, was the high watermark of what some Russian analysts were without irony calling the “golden age.”
It’s been a bumpy ride since. As the price of oil plunged like a stone and approached the $30 mark, talk of a repeat of Russia’s traumatic 1998 debt default crisis grew louder, billions of dollars of foreign capital fled the country, and its two leading stock indices plunged more sharply and more swiftly than anywhere else.
There were weeks when it seemed that the Russian stock market was closed more than it was open – a desperate and ultimately futile measure to stem its downward spiral. The cost of borrowing money - always steep here – doubled. The ruble slid, forcing the government to fritter away a third of its foreign currency reserves to slow the devaluation in order to avoid panic.
Moscow’s red hot property market ground to a halt, several oligarchs who had binged on cheap credit in the good years couldn’t afford to service their debts, and the consumer boom unwound like a broken yoyo. Car sales collapsed, unpaid back wages grew, joblessness hit a 9-year high, and property developers began to go bankrupt. When the smoke cleared, Russia’s oligarchs found themselves poorer if not humbler.
According to Forbes magazine, the number of dollar billionaires shrunk to 32 from 110 within a year while the value of their assets plunged by a dizzying 70pc. The biggest loser was industrialist Oleg Deripaska. In 2008 and with an estimated fortune of $28.6bn, Forbes said he was Russia’s richest man. A year later, it said he was now worth “only” $3.5bn. Government figures recently showed that the gap between rich and poor – yawning even before the crisis – was now even greater. But with oil trading around the $70 a barrel mark and with stock indices having staged a solid recovery, Kremlin officials say a cautious recovery is now underway.
It will, they concede, probably not be before 2012 when things return to how they were pre-Lehman.
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