Frigid Financial Markets and Ice Caps


A recent TIME article reports that Russia has pledged $5.4 billion to bail out Iceland. Yes. Russia, which is itself under large amounts of economic strain, is bailing out Iceland. There is speculation that this bail out is intended to help “Russia secure a bridgehead for an advance into the Artic regions to claim the vast hydrocarbon and other mineral deposits there” and bolster any Russian claims to territory there. See the article at,8599,1849705,00.html?xid=rss-world


My last post raised the question of whether side agreements/payments relating to financial aid would arise in the wake of the continuing financial crisis. This instance may just be the start of a series of “aid for …” deals being cut.


It would seem that the financial crisis may have changed the incentives for states to cooperate in sublime ways. An interesting exercise in rationalist theory would be to examine how the international and domestic preferences of states and their constituents have changed as a result of the crisis. One example I can think of, is perhaps how domestic “hawks” who oppose foreign state sponsored foreign investment into key domestic industries may soften their positions relative to the need for capital in domestic markets. Another example, perhaps is Pascal Lamy’s (once again) call for the urgent conclusion of the Doha Round so as to “reassure the financial markets”. See  


Thoughts? Comments?


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