Moscow: life under a collapsing sovereign
It has a population of only 2.71 million, ailing communist-era industries, and 21% unemployment. German reunification has exposed the former East German state to chillier winds than neighbouring Saxony with its two urban assets - Leipzig and Dresden. Yet little Saxony-Anhalt has worked hard to turn its fortunes around. It is investing in infrastructure and industrial redevelopment, in attracting foreign direct investment, and in exploiting its cultural heritage for tourism. So far, that is true of several poorer Länder. But what has impressed international financial circles is the state's innovative funding strategy. The Magdeburg-based finance ministry has broken from Länder tradition by concentrating on foreign bonds, rather than the domestic Schuldschein market.
Saxony-Anhalt was not the first Land to target international investors - Baden-Württemberg, Hesse, and others preceded it. But it is unique in using public bonds for more than half its borrowing. Its outstanding bond debt now totals Dm22.4 billion ($13.4 billion). It began to target foreign purchasers in earnest in 1997, conducting roadshows in London and Paris ahead of domestic bond issues, and launched its first Eurobond, a Dm2 billion, 10.5-year