Russia Turns Into the Storm

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The 50 percent devaluation of the ruble may be a sign that post-communist Russia has hit rock bottom, says TIME correspondent Yuri Zarakhovich. "Now we're just waiting for the ship to break in half." The devaluation allows Moscow to pay some of its debts and unpaid wages, but such creative accounting is unlikely to impress either foreign investors or ordinary Russians: European markets tumbled on the news, and demands from Russian trade unions that unpaid wages be indexed to the ruble's previous value heralded a coming tide of social unrest. "If they pay you a year's back wages in today's ruble, you'll have been robbed of almost half of the money owed to you," says Zarakhovich. "With food prices expected to skyrocket, this devaluation could prove to be a very provocative development."

By shifting the burden of Russia's financial collapse to its long-suffering citizens, the Kremlin has raised the mutinous clamor aboard its sinking (or sunken) ship. "And it's not as if there are any lifeboats," Zarakhovich notes. "Those have all been sold."