MOSCOW, 18 August 2007 — Exactly nine years ago, Russia’s boyish-looking Prime Minister Sergei Kiriyenko appeared on television to announce a de-facto default and a ruble devaluation, sending stocks plummeting and bankers packing.

Yesterday Russian stocks stood 14 percent down from July highs and ruble bond yields were rising as risk-averse investors fled emerging markets for safer assets amid a global credit crunch caused by worries over risky US mortgages.

“That is where the similarity ends. Apart from the temporal coincidence, the current sell-off could not be more different,” said Roland Nash, head of research at Renaissance Capital. “Russian assets are being sold to raise financing for losses in developed markets. Contagion has reversed.”

Nine years ago Russia had a meager $10 billion in gold and foreign exchange reserves, a budget deficit and a large foreign debt, while oil, the country’s main export commodity, cost around $11 per barrel.

Today Russia, the world’s 10th biggest economy and the second largest oil exporter, has $420 billion in reserves, an appreciating currency and a budget surplus. A barrel of Urals, its main export blend, trades at around $67.

President Vladimir Putin, unlike his predecessor Boris Yeltsin, appears in firm control of political and economic life and looks set to hand over powers to a hand-picked successor after an election in March 2008.

His government has also been prudently stashing away its windfall oil revenues in a $127 billion rainy day stabilization fund or has used the money to pay off foreign debt, a policy praised by Western economists and rating agencies. The only cloud on the horizon, analysts say, is the heavily indebted banking sector, which remains a weak link.

On Thursday Fitch Ratings confirmed its BBB+ investment grade rating for Russia saying high oil prices and investment would help Russia through the turbulence and forecasting economic growth of 7.7 percent in 2007.

Russia’s most serious economic malaise in recent years has been inflation, a consequence of high oil prices and record capital inflows. High inflation starved the economy of ‘long’ money and forced Russian firms to borrow internationally.

A moderate liquidity shortage may to a certain degree be a blessing for the government because it will weaken net private capital inflows and curb money supply growth, helping the government to fight inflation.