Friday, September 18, 1998 Published at 22:49 GMT 23:49 UK
When Russia sneezes ...
By Nadira Artyk of the BBC's Central Asian Service
Since the end of the USSR, the former Soviet republics have been attempting to reduce their economic dependence on Russia.
Some have been more effective in doing this than others, but all of them are still big trading partners with Russia.
The most vulnerable countries are those that have restructured the least: Ukraine, Belarus, Moldova and Tajikistan.
Ukraine nears default
Over the last three weeks the Ukrainina hryvnia has fallen by about 30 per cent, as wary investors dumped Ukrainian government bonds and moved their money out of the country.
The future of the hryvnia depends now on the government's continued success in meeting requirements for IMF loans. The Belarusian rouble has also plunged against the US dollar.
Moldova last week received an IMF special mission advising the government on how to cope with the effects of the Russian crisis.
Russia buys 85% of Moldova's wine and brandy and most of its canned goods and tobacco. After the rouble crashed, most Russian importers put deals with Moldova on hold.
The Moldovan president Petru Luchinski was quoted as saying that the Russian crisis had cost Moldova as much as five per cent of its GDP.
The country's parliament is discussing a programme aimed at reducing imports and searching for new markets outside Russia.
'Leave the rouble alone'
Tajikistan's case is particularly acute - Russian roubles still circulate there and even the country's national currency is called the Tajik rouble.
Last week, the National bank of Tajikistan urged people to refrain from making business transactions in Russian roubles.
It said it feared that currency dealers might import large amounts of Russian roubles in order to exchange them for dollars and then take the hard currency out of Tajikistan which already has a significant budget deficit.
Estonia, the former Soviet Union's most westernised economy, will suffer least from the crisis. The other two Baltic states, Latvia and Lithuania, although much wealthier than Russia, are in a more difficult position as some of their banks operate in Russia.
Turkmenistan has been the most successful of all the Central Asian states in reducing its dependence to Russia.
According to President Saparmurat Niyazov, Turkemistan is well protected because Russia's share in the country's foreign economic turnover is less than 5%.
Measures to prevent panic
Azerbaijan and Uzbekistan have been taking measures to minimise damage to their economies. In Azerbaijan, trading in the Russian rouble was suspended last week due to the instability of the Russian currency.
In Uzbekistan, the government has banned the free unlicensed sales of food, most of which is imported from Russia, as a preventative measure against price rises and panic.
Russia has suspended the import of oil products from Azerbaijan because of the financial crisis, but Azeri officials say that it will not have a significant effect on the economy and lower oil prices would affect it more seriously.
Both countries have told the West that they have large enough currency reserves to control the situation.
Kazakhstan already in trouble
Russia's biggest Central Asian neighbour, Kazakhstan, has been keen lately to prove its commitment to market reforms. It is still however closely connected with Russia - 30% - 40% of its trade is with its northern neighbour.
The Kazakh government is already suffering from low world prices for oil and metals, its main exports. Its foreign debts amount to nine per cent of its budget.
A fall on the stock market in August made the authorities postpone the issue of Eurobonds and the privatisation of some industrial enterprises, with a consequent loss of revenue.
The government has announced that it might cut budget spending this year by 30%, not 25% as it announced in August.
It has promised to continue reforms - unlike Russia - and pay its foreign debts.
Some CIS countries, including Kazakhstan, Kyrgyzstan, Georgia and Armenia, have tried to cut trade with Russia but remain economically fragile because they need to borrow overseas to finance their budget deficits.
Western economists say that all depends now on how much the IMF and foreign investors decide to trust Russia's neighbours.
Economists predict that growth in Russia will fall this year and continue to do so next year. This means Russia will import less from other CIS states and their economies could contract as a result.