The Russian financial crisis (also called the ruble crisis or the Russian flu) began in Russia on 17 August 1998. It resulted in the Russian government and the Russian Central Bank devaluing the ruble and defaulting on its debt. The crisis had severe impacts on the economies of many neighboring countries. Background and course of events The Russian economy had set up a path for improvement after the Soviet Union had split into different countries. Russia was supposed to provide assistance to the former Soviet states and, as a result, imported heavily from them. In Russia, foreign loans financed domestic investments. When it was unable to pay back those foreign borrowings, the ruble devalued. In mid-1997 Russia had finally found a way out of inflation. The economic supervisors were happy about inflation coming to a standstill. Then the crisis hit and supervisors had to implement a new policy. Both Russia and the countries that exported to it experienced fiscal deficits. The countries that exported to it used their resources for production but did not get paid for all their production. In essence, their national income could not cover their national expenses (for Kazakhstan and Kyrgyzstan). Russia’s unemployment rate was not sharply impacted since it was only 13 percent. The employment policy in Kazakhstan was checked on November 9, 1998 to give freely chosen employment. The employment in Tajikistan has not improved much since the 1990s, so exactly how the crisis effected employment in 1998 remains a question. The GDP per capita was one of the lowest after 1996 for Tajikistan. Russia's vast amount of mineral and natural resources allowed it to export those, pay back its debt, and then increase foreign reserves to revalue its currency. Reasons for the crisis The crisis happened because Russia was not able to pay back its debt. If one ruble could value in more units of foreign currency of the countries to which it owes, then paying back would be easier. Since Russia had to provide assistance to other countries it had parted with after the dissolution of the USSR, it did so by importing heavily from these countries. It continued to import without any check on whether it had enough revenues to pay back. In 1995, the IMF tried to help Russia stabilize unsuccessfully. Organization of thought for the crisis and organizational structure of Russia There are two major schools of thought that