Financial exposure to Russian economy…

**In terms of trade exposure, the countries that appear to be most at risk from an economic downturn in Russia are many of the other countries of the former Soviet Union. Their exports to Russia are equivalent to meaningful proportions of their respective GDPs. Furthermore, many of these economies likely import oil and natural gas from Russia.**

**Russia's trade ties with Western Europe and the United States are limited, at least when viewed in the context of the respective sizes of those latter economies. Western Europe has some financial exposure to Russia. U.S. financial exposure to Russia appears to be rather limited.**

**Russia's external debt totaled nearly $500 billion at the end of Q3-2021 (latest available data).**

**Most of this debt (about $350 billion) was denominated in foreign currencies such as U.S. dollars and euros. The sharp depreciation of the Russian ruble, which is down about 30% against both the U.S. dollar and the euro over the past week or so, will make it more difficult for Russian households, businesses and government to service these foreign currency-denominated debts. The Russian economy is likely experiencing its most challenging circumstances since its debt default and financial crisis in 1998.**

If Russia goes completely rogue and defaults on all its debts, it will be forced to turn inwards and lose the many benefits of trade. If Russia tries to service its foreign-denominated debt while the ruble is crashing it will probably have a financial crisis, like many other countries (including Russia) in similar circumstances.



The ruble is rubble!

Couldn’t happen to a nicer dictator.

The Captain