Russia's reversal of fortune is striking. Just before the global financial crisis hit the country with full force in late 2008, Russia looked invincible. Nearly 10 years of impressive economic performance, prudent macroeconomic management, fiscal and current account surpluses, the third-largest foreign exchange reserves in the world, and a growing middle class were just some of its achievements.

But now the picture has changed dramatically. A sharp reduction in output in the fourth quarter of 2008 and the first quarter of 2009, the near-failure of a few sizable banks, and struggling major industrial groups coupled with an alarming rise in unemployment, have put things in an entirely new light. And then there is the fact that nearly one-third of the country's reserves—used mainly to prop up the ruble during its gradual slide—have evaporated.