Russian Forces Take Grozny as Chechnya’s Second War Grinds On, Putin Wins the Presidency and the NASDAQ Reaches Its All-Time Peak Before Turning

Jamaica Homes Global Conflict & Caribbean Impact Review | Published 3 April 2000 | Reporting Period: 3 January – 2 April 2000

Quarterly Briefing

• Russian forces complete the capture of Grozny on February 6, ending the siege of Chechnya’s capital that began in December 1999; the city is largely destroyed after two months of sustained artillery and air bombardment; an estimated 25,000 civilians remained inside the city during the siege; the Russian military’s conduct draws widespread international condemnation from human rights organisations that document systematic execution of Chechen combatants and civilian men of military age; the Russian government describes the operation as an anti-terrorist campaign and declines to acknowledge the civilian toll.
• Vladimir Putin, who became Russia’s acting president on January 1 when Boris Yeltsin resigned in a surprise New Year’s Eve announcement, wins the Russian presidential election on March 26 with 53.4 per cent of the vote, avoiding a second round; his campaign focuses on the restoration of Russian state authority and the successful prosecution of the Chechen campaign; the election is marked by significant state media advantage for Putin and limited genuine competition; Western governments congratulate him while expressing concern about the Chechnya conduct and signs of press freedom restriction.
• The NASDAQ Composite reaches an all-time intraday high of 5,132 on March 10, 2000, having risen 86 per cent in the preceding twelve months; by March 31 it has fallen to 4,572; the reversal has been sharp and is accelerating; hundreds of internet companies that have raised billions of dollars in capital on the basis of revenue projections rather than profits are seeing their valuations collapse; the dot-com bubble’s inflation had created enormous paper wealth for technology investors; its deflation is beginning to destroy it at comparable speed.
• East Timor’s UN Transitional Administration (UNTAET) is working to rebuild a territory comprehensively devastated by Indonesian military and paramilitary forces in September 1999 following the independence referendum; over 70 per cent of East Timor’s buildings were destroyed; an estimated 250,000 people were displaced; UNTAET faces the challenge of governing an entire territory from scratch while building the institutions of a new state; the process is expected to take several years before East Timor can hold its independence formally.
• Kosovo’s post-war reconstruction continues under the UN Mission in Kosovo (UNMIK) and the NATO Kosovo Force (KFOR); over one million displaced Albanians have returned to the province but Serbs and other minorities face continued harassment; the province’s final status — whether it will become independent from Serbia or remain part of Yugoslavia under UN administration — has not been determined; the Rambouillet framework left the question deliberately unresolved; it will be contested for years.
• Caribbean economies begin 2000 with broadly favourable conditions; tourism arrivals in 1999 were strong; the Y2K transition on January 1 produced none of the feared disruptions to computer systems and infrastructure that had generated a global preparedness industry; Jamaica’s macroeconomic situation remains difficult with high public debt, but the tourism sector’s performance provides some cushion; the NASDAQ’s correction, if it continues, will affect US consumer confidence and travel spending in ways that will matter for the Caribbean’s second half.

Prologue: Russia’s Resurgence and Its Cost

The election of Vladimir Putin as Russia’s president on March 26 marks the end of the Yeltsin era and the beginning of something whose character is not yet clear. Yeltsin’s decade had been characterised by the democratic institutions it created, the economic chaos it produced and the military humiliation it inflicted on a country that had been a superpower a decade before; the first Chechen War, lost by Russia in 1996, was that humiliation’s most visible expression. Putin had promised, and partly delivered, the reversal of that humiliation in the second Chechen War; the brutality with which that reversal was achieved — Grozny reduced to rubble, civilians killed systematically — suggested that the restoration of Russian strength would not be constrained by the norms that the 1990s had treated as universal.

The Dot-Com Peak and the Caribbean’s Technology Exposure

The NASDAQ’s March 10 peak was the high-water mark of a speculative wave that had reshaped the American economy and the global financial landscape through the late 1990s. The internet’s transformative potential was real; the valuations that the dot-com boom had placed on companies without revenue, let alone profits, were not. The reversal that began in mid-March was not, as this edition is published, recognised as a definitive collapse; many analysts expected a correction and recovery. What was already clear was that the technology sector, which had accounted for a disproportionate share of US GDP growth and employment in the preceding three years, was contracting.

For the Caribbean, the dot-com economy’s peak had been relevant primarily through its effect on US consumer wealth and travel spending; the boom years of 1997-2000 had been the Caribbean’s best period for tourist arrivals and revenues since the early 1990s. The question being asked in Caribbean planning offices in early April was whether the NASDAQ’s downturn was a correction in an otherwise healthy economy or the beginning of a broader US recession that would reduce discretionary travel spending. The answer would determine the Caribbean’s economic trajectory for the next two years.

Looking Ahead

Putin’s Russia will be shaped by the governing priorities his election mandate and early appointments reveal; the Chechnya campaign’s continuation, press freedom and relations with Western institutions are the early indicators. The NASDAQ’s correction is in its fourth week; whether it stabilises or continues into a deeper bear market will be determined by second-quarter earnings reports from major technology companies. East Timor’s path to independence will take years; UNTAET’s success will be the test of whether the UN can govern a territory as comprehensively as it has been asked to do. Kosovo’s status remains unresolved; the province is stable but the underlying political question will generate instability until it is answered.

Jamaica Homes Global Conflict & Caribbean Impact Review is published quarterly, examining how wars, geopolitical tensions and major international crises have shaped Jamaica, the Caribbean and their economies.

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