For the decades of the cold war, the US used the spectre of a "domino effect" to try to contain the Soviet Union and its satellites. By an irony of history, Russia's flirtation with capitalism has brought its most dramatic manifestation.

Moscow's effective default on its treasury bills and the devaluation of the rouble has sent investors scampering from all emerging markets in a helter-skelter "flight to quality".

This was a watershed week for emerging markets - smaller and newer markets in Asia, Central and Eastern Europe and Latin America - far more so than the Mexican crisis of 1994-95 or Asia's rolling wave of troubles since the middle of last year.

"Russia broke the mould," said Mr Lawrence Goodman, chief economist in New York for Spain's Santander Investment. "Russia is unquestionably a redefinition of the international financial market landscape."

"The shock is just so great that emerging markets will be virtually dead for a prolonged period," perhaps up to two years, according to Mr Glenn Davies, chief economist in London for France's Credit Lyonnais Securities Europe.

"Contagion", the word of the moment, was an appropriate metaphor, according to Ms Tara Healy-Singh, head of Latin American equities for West Merchant Bank, emerging markets subsidiary of Germany's Westdeutsche Landesbank.

As with a medical epidemic, fear of disease could be as potent as actually succumbing to the ailment. Ms Healy-Singh said: "People sell indiscriminately, fundamentals are ignored. Indiscriminate fear - that's how contagion works."

Mr Anthony Thomas, emerging European research director at Dresdner Kleinwort Benson, noted that exports to Russia accounted for only 2.5 per cent of the gross domestic product of Poland, Hungary and the Czech Republic. But these countries had been tarred with the emerging markets brush and were also suffering from sales by investors trying to cover losses in Russia.

Mr Goodman argued the central problem was the increase in the cost of capital in emerging markets. Countries which ran large current account deficits and were over-reliant on inflows of capital were vulnerable to sudden shifts in sentiment. Disenchantment with some countries such as Venezuela was justifiable, but not with others.

"Don't blame Russia," was the succinct message from Mr Trevor Greetham, global strategist in London for Merrill Lynch, the US investment bank. If there was contagion, he said, it had started in developed markets and spread to emerging markets. Asia's problems, for instance, were attributable to Japan's economic woes.

The key role of weak commodity prices was underlined by the currency travails of two developed countries, Canada and Norway, said Mr Michael Hughes, product manager for global emerging markets at Fleming Asset Management.

Mr Hughes said several factors were needed to contain the contagion: extended stability in developed markets and the yen-dollar exchange rate, and a successful re-financing by Brazil. As for the catalyst for this week's carnage, he said: "I believe the investment world has written off Russia."

In other emerging markets, buyers may emerge when the dust settles. Few expect that soon.