The Georgian Cease Fire and the Markets

Reuters reports that the Russians have halted operations ahead of their meeting with Sarkozy, and have softened their stance on the President of Georgia’s resgination. Link

The article tries to draw a connection between the collapse of the rouble and the Russian stock market and Russia’s cease fire. It’s an interesting point, since the tumble began when Russia launched its offensive into Georgia, and a rally’s begun with the end of fighting, not to mention oil’s continued drop despite the region’s importance.

One thing that Putin, short sighted as he his, may have been concerned about was long term investment. Russia playing the heavy with it’s neighbors might-probably will- make foreign investors skittish about their long term prospects in Russia’s economy. And, of course, Russia always needs foreign investment to grow, and has since Witte. The flurry of conference calls between the G-7, which conspiciously avoided talking to the Russians, and McCain’s call to punish Russia by tossing them out of the G-8 certainly can’t have helped investors feel about future Russian prospects.

Of course, this is what seems to have happened on the surface. We don’t know what Bush said to Putin at the Olympics. Or what may have transpired in other meetings we know nothing about. International diplomacy is, of course, a strange game.

There are people who know more about this aspect of things than I do- anyone have any thoughts?