Crisis, what crisis? ask Russia policymakers

By Michael Stott

MOSCOW (Reuters) - The stock market has plunged more than 40 percent, some foreign investors have fled and the rouble is under pressure, but Russia's policymakers aren't too bothered.

Despite a summer of bad news from Moscow to test the nerves of the hardiest investor, capped by a military campaign in neighboring Georgia, top officials from the Kremlin, the Finance Ministry and the Central Bank took a relaxed view in interviews this week at the Reuters Russia Investment Summit.

Finance Minister Alexei Kudrin suggested that political risk in Russia had actually fallen as a result of Moscow's brief war with Georgia.

He argued that previously there was the threat of a conflict but since it had now happened, it would not reoccur.

"The situation has now been resolved and political risks have disappeared. The situation is now clear," Kudrin said at the summit, held at the Reuters office in Moscow.

The remarks are significant because some Western politicians had suggested that the heavy price being paid by Russian companies and markets for the country's military intervention in Georgia might cause the Kremlin to think again.

That view gained strength as Russia's RTS index of stocks nosedived after the conflict, closing on Tuesday at 1,395 points, more than 40 pct below its May high of 2,498.

The rouble had been strengthening but since early August it turned tail and slipped more than 3.5 percent. Analysts estimate more than $20 billion of foreign money left Russia after its troops, tanks and warplanes entered Georgia.

But, sitting on some of the world's biggest reserves of oil, gas, metals and foreign currency, Moscow can afford to shrug off global unease about its decision to use its military might against another state for the first time since the end of the Soviet Union in 1991.

Russian Central Bank Deputy Chairman Alexei Ulyukayev told Reuters there was "no limit" on how much of the country's $582 billion reserves it could spend to defend the rouble.

"With such a volume of reserves as we have at the moment, you can say that there are no risks to the currency," he said.

Thanks to record oil prices, Russia has added over $100 billion to its reserves since the start of this year -- making the few billion spent by the central bank to prop up the currency in the wake of the Georgia war look like small change.

The Kremlin's top economic adviser, Arkady Dvorkovich, said he was not concerned about investor reaction to what he described as the "unpleasant events" of the summer.

He said: "The resolution of this conflict, the resolution of the consequences of Georgian aggression against Russian citizens in South Ossetia, will have a positive impact in the coming months on economic trends, on our markets."

Georgia was not the only piece of unpleasant news for investors in Russia this summer.