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Bank analyst forecast Georgian crisis 2 days early
August 14, 2008 / 5:29 PM / in 9 years

Bank analyst forecast Georgian crisis 2 days early

By Guy Faulconbridge

MOSCOW, Aug 14 (Reuters) - The outbreak of war between Georgia and Russia shocked most of the world last week, but an investment bank analyst predicted it two days in advance.

Georgian President Mikheil Saakashvili sent troops into the breakaway, pro-Russian region of South Ossetia on Aug. 7, on the eve of the Beijing Olympic Games, and Russia responded with overwhelming military force.

Geoff Smith, a Kiev-based analyst for Renaissance Capital investment bank, had anticipated the Georgian move with uncanny prescience in an e-mail two days earlier to a fellow strategist.

"So whaddaya think? I say Saakashvili is going to ‘restore the territorial integrity of Georgia’ five minutes before the opening ceremony starts in Beijing and dare the Russians to invade while the games are on?" the note said.

Reuters has seen a copy of the e-mail and confirmed its validity with both the sender and recipient of the message.

The Kremlin swiftly asserted its vastly superior military might and thousands of Russian troops pushed out Georgian troops from the rebel region. Russian units are still operating inside Georgia proper.

Russian sovereign Eurobond spreads, a measure of investment risk, widened on the hostilities, and shares tumbled.

"It was just intuition," Smith said by telephone. "I said nothing about the possible Russian response, but if you had asked me I would say that Moscow could not have taken it lying down," Smith said.

Explaining his reasoning, the former journalist said the upcoming presidential election in the United States could have played a role in Saakashvili’s decision to send troops into South Ossetia.

"Certainly the next White House will not be as supportive of Saakashvili as this one and so if Saakashvili wanted to reunite Georgia he really had to do it this year and he was probably hoping the Olympic Games gave him the right cover," he said.

He refused to forecast how the crisis would end.

(Editing by Mark Trevelyan)

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