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RUSSIAN COLLAPSE WOULD SPREAD

Despite relatively little U.S. trade with Russia or investment there, Moscow's about-face and effective devaluation of the ruble could have impacts that should make Americans take notice.

For one thing, what economists dub the "contagion" effect means that Russia's move to let the ruble float to new lows against the dollar could eventually prompt other troubled "emerging market" economies to follow suit.

That's because when a country devalues its currency, it gets a trade advantage because its exports become cheaper while imports become more expensive. That can prompt trading partners into a competitive devaluation of their own.

If that psychology were to spread, it could send troubled Asian economies into a further downward spiral.

And that would have economic consequences here because it would dry up part of the export market for U.S. goods and cost some Americans their jobs. That's one reason Washington backed a $22.6 billion International Monetary Fund bailout for Russia last month.

But perhaps even more important is the impact Russia's economic crisis could have on what has been a painfully slow, but nevertheless steady, move toward democracy.

The currency devaluation means that Russian consumers are suddenly poorer because it takes more rubles to buy the same amount of goods. With about half of the country's food coming from elsewhere, that will fuel inflation and consumer misery. That could cause unrest and more virulent dissatisfaction with President Boris Yeltsin's regime.

That, in turn, could boost the prospects of communists -- already the largest faction in Russia's legislature -- or the ultranationalists, who may be even more frightening.

If Russian voters turn to either of them when Yeltsin's term expires in 2000, or if chaos forces him to step down before then, U.S. efforts to carefully nurture democracy there will unravel. It could put Russia's still-formidable nuclear arsenal in the hands of factions less friendly to the West, heighten tensions between Moscow and Washington and force U.S. taxpayers to pay the military-readiness costs associated with those increased tensions.

All of that makes Russia's decision to devalue the ruble and put a 90-day moratorium on repaying foreign debt of more than passing interest to anyone interested in international stability and continued U.S. prosperity.

Russia will use the time-out to restructure its loan repayments. But equally important will be its efforts to increase tax collections, stabilize its own banking system and implement other IMF reforms. How well it does that will matter not only to Russians, but ultimately to everyone.

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