Two weeks ago Michel Camdessus, Managing Director of the International Monetary Fund, looked on Russia’s economic performance and found it good. Disbursal of additional credit to Russia, he said, was a matter of time, not of principle.

Russia’s performance in the first two quarters of 1999 did seem good. The State Statistical Committee reported higher industrial production and predicted economic growth. The trade account was in surplus by over $2 billion a month, the ruble-dollar exchange rate improved, and Russia’s foreign official creditors (governments and government agencies in the “Paris Club”) agreed to roll $8 billion in debt service forward into late 2000.

But two quarters do not make a trend. In recent weeks, the ruble again has weakened, despite Central Bank intervention that has lowered cash reserves to $6.6 billion at the end of September. One reason is the acceleration of capital flight, from $3.3 billion in the second quarter to an estimated $10.9 billion in the third quarter. That is flight on the scale of late 1998, when almost $12 billion net left the country after the devaluation of the ruble.

Political uncertainty feeds the flight into dollars and offshore accounts. The Fund withheld a $640 million credit tranche in September for fear that revelations about misuse of previous loans were imminent. Now the smart money figures that new scandals, or the war in Chechnya, or political turmoil, or what have you, may force another delay in IMF disbursements. That could topple talks with the “London Club” of private creditors and force another default. Best to head for the exits now, says the smart money, before the chumps get as wise as us.