Dollar victory crucial for the Russian economy

Yana Yurova, RIA Novosti, Moscow

In the longer economic perspective, the name of the American president does not matter much. After all, the American economy is a huge machine that will maintain its momentum for a long time yet in the direction set in recent years. It is not the president's responsibility to try and change something in the economy.

His job is to deal with challenges. Bill Clinton, for example, was lucky because the American economy was buoyant throughout his tenure in the White House. George W. Bush, however, did not inherit such an encouraging legacy. The U.S. economy had run out of steam by that time and began slowing down.

Bush in fact had to take the onus for the previous administrations mistakes, although all the steps he took were undoubtedly healthy for the economy and beneficial for the citizenry. In Bushs first term domestic interest rates dropped to 1 percent and only recently edged up to 1.5 percent. Considering that Americans live, as a rule, on credit, cheaper borrowing was a great help. Industrialists and manufacturers also got the chance to expand their businesses using loans.

However, this will clearly not always be the case. The new president is doomed to see interest rates rising as he is sworn in, because America's authorities will inevitably have to address the problem of the massive budget deficit. Huge sums are being spent on the war on terrorism and normalizing the situations in Iraq and Afghanistan. To cover the deficit, the country will have to borrow from the rest of the world.

But to get a loan, the creditor needs to offer good terms, which means American company securities should command high yields. So the most likely development in the wake of the election will be a rise in credit interest rates. And that means the dollar will start to make gains.

The strengthening dollar will be a boon for Russia, whose economy is considerably orientated toward the American currency. As oil prices are only getting higher on external markets, the dollar's appreciation is particularly important for Russia with its large sales volumes. By getting the strong currency for its oil, the Russian economy gains room for maneuver.

This makes the Bush victory all the same more agreeable to the Russian leadership. Russia is used to his team. It would be enough to point out that there was no Bush team member who signed the notorious letter to leaders of the European Union and the U.S. in which a number of prominent politicians voiced their disgruntlement with allegedly negative processes in Russia.

But there were signatories from the Kerry side. Making friends after such excesses is far more difficult than maintaining established friendly relations between the Russian and U.S. presidents.