CENTRAL EUROPE SEES BACKLASH.Byline: Tom Cohen Tom Cohen, also known as Gnuth, is an Israeli Musician who is the founding member of the electro-industrial music band Observe & Control. In addition to his work with Observe & Control, Tom has had several side projects, including Zero Knowledge, SuperMarche, Vaadat Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. Lingering investor perceptions about Central Europe's economic dependence on Russia have contributed to volatile swings in currencies and share prices in the region this week, as Moscow wrestles with its economic crisis. But few analysts expect long-term problems for the emerging market economies of Central Europe Central Europe is the region lying between the variously and vaguely defined areas of Eastern and Western Europe. In addition, Northern, Southern and Southeastern Europe may variously delimit or overlap into Central Europe. because most have successfully shifted their trade away from Russia. ``We are looking at continued weakness and volatility,'' said Anthony Thomas, an economist at the investment firm Dresdner Kleinwort Dresdner Kleinwort (DKIB) is the investment bank of Dresdner Bank AG, part of Allianz since July 2001. Headquartered in London and Frankfurt and with an international network including offices in the financial centres of New York and Tokyo, Dresdner Kleinwort provides a wide range Benson in London. ``But to turn Central Europe into a full-blown crisis, we would have to see not just Russia but China and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. go as well.'' The biggest problem for Central Europe has been nervous investors pulling out their money to cover losses from Russia's plunging ruble and debt rescheduling, analysts say. Such hedging has little impact in large Western markets, but it causes percentage drops in countries with smaller markets like Poland, Romania, Hungary and the Czech Republic. More selling is expected in coming weeks as further details of Russia's restructuring plan are released. Under the deal announced Tuesday night, Russian treasury securities maturing before the end of 1999 must be traded in for a variety of new ones that mature later and yield less. ``The fact that the Russia deal is somewhat worse than expected from investors' point of view may mean they will sell more of their Central European holdings,'' said Wike Groenenberg, currency analyst at Salomon Smith Barney in London. Some of the investor reaction comes from perceptions that Central European economies remain heavily linked to Russia. But Poland, Hungary and the Czech Republic - the three former Soviet satellites that will join NATO NATO: see North Atlantic Treaty Organization. NATO in full North Atlantic Treaty Organization International military alliance created to defend western Europe against a possible Soviet invasion. next year and are negotiating to join the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community - now export less than 10 percent of their goods to Russia. ``Stereotypes persist that the former Soviet economies are still dependent on each other,'' said Cezary Jozefiak of Poland's Monetary Policy Council. Analysts have said the fallout of the Russian crisis will cause some volatility. |
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