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Russia Introduces Measures to Calm Economic Jitters
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Russia's leading business paper Vedemosti summed up the situation on Dec. 17, 2014, in its editorial- "This is a very dangerous situation; we are separated from a fully fledged run on the banks by just a few days..If the currency market is not reassured right now, the banking system will require large external support." Warning signs were evident at a banking conference in Moscow in October 2014 when the Economy minister, the central bank head Nabiullina, and the head of the largest bank Sberbank, German Gref, expressed skepticism about the economic policies and the risks involved. Not until Dec. 17, was a decisive response evident and the risks of a collapsing ruble openly addressed with economic actions by the Putin administration. A collapsing ruble would have repercussions on the global financial markets and slowing global economy, increasing potential geopolitical risk, and adding to risk of contagion for other emerging markets, which was reflected in the nervousness of global financial markets on Dec 15-16, 2014.
Actions taken by Medvedev and Putin to improve business and public confidence on Dec. 17, 2014, as the ruble hits 80 to the dollar
12/17/2014
As one Russian economic expert put it we are just days from needing external help if no serious action is taken to restore public and business confidence in the ruble. On Dec. 17, 2014, Russian leaders took action to improve confidence and the ruble recovered by 11%. The role of Kudrin, Medvedev, and other advisers from the first and second terms of Putin is increasing as Russia faces increasing economic risks and deep recession.
Grouped Articles
Russia Introduces Measures to Calm Economic Jitters
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Memories of the 1998 collapse of the ruble as Russia uses a third of its foreign exchange reserves in 2009 to support the ruble
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Reserves drop from $600 billion to $385 billion as Russia uses its reserves to support the ruble in 2009. Memories of the poverty and humiliation suffered as the ruble collapsed in 1997 remained uppermost in the minds of Russians.
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Russia Faces Tough Fight on Ruble
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Russian Ruble Hits Fresh Record Low Against Dollar
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Russian Companies Clamor for Dollars to Repay Debt
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The 2014 St. Petersburg International Economic Forum
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After the Russian takeover of Crimea and increase in tensions on the border with Ukraine the mood at the 2014 St. Petersburg Economic Forum is different. Many western companies stayed away. Of German companies Metro, a German retailer, was the prominent one present and that too because of its 22,000 Russian employees, said its CEO. Former British cabinet minister Mandelson, described the situation as Putin's "self-inflicted wound." The Russian economy now faces three choices, each difficult and risky- to move closer to Asia, to depend on its own state banks and finances for development, or to continue attracting foreign investment even with western sanctions. Growth is slowing to 0.2% for 2014. At the same time Indian elections have led to a absolute majority for a foreign investment friendly government with experience in attracting foreign investment in western India. Foreign investment could shift in coming years from China, Russia, Turkey to India, Indonesia, Vietnam, Africa, and other investment friendly countries. In that situation China's tensions with Japan and Russia's tensions with U.S. and Europe may become counterproductive policies. Some foreign investment may even return to home regions with the yen's new level in Japan and lower energy/labor/transport costs in North America, and lower labor costs in Southern Europe.
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Russia Introduces Measures to Calm Economic Jitters
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Putin Pledges Stimulus for Russian Economy
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Russia Looks to Borrow to Plug Funding Gap
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Russia Prepared to Let Ruble Slide
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Competing Visions for Russia’s Economic Future
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Russian ruble volatility in Dec 2014 and Jan. 2015
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Capital controls are ruled out as this could lead to more capital flight. Russian central bank reduces intervention to preserve foreign currency reserves.
Grouped Articles
Ruble Strengthens After Central Bank Acts
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Russia Introduces Measures to Calm Economic Jitters
New York Times 12/17/2014
Ruble Crisis Is Testing Russia's Resources
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As Ruble Falters, Russia Forces Exporters to Reduce Foreign Currency
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As the Ruble Swoons, Russians Desperately Shop
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Russia's effort to prevent the ruble from collapsing in December 2014
12/15/2014
Russia raises interest rates by 6.5% to 17% on December 15, 2014, as the price of Brent crude drops below $60. Emerging markets see money outflows in anticipation of the the U.S. Federal Reserve raising rates in 2015, adding to pressure on the ruble. Western sanctions imposed after Russian intervention in Ukraine has reduced access to financial markets for Russian businesses that borrowed in U.S. dollars and have large payments due in 2015. The large increase in interest rates pushes Russia into a recession in 2015.
Grouped Articles
Russia Moves to Help Lift Sinking Ruble
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Oil Prices Plunge With Brent Crude Below $60
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Ruble Strengthens After Central Bank Acts
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Russia Introduces Measures to Calm Economic Jitters
New York Times 12/17/2014
New York Times 12/18/2014
Interest Rate Raised to 17% in Russia
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Russia's finance minister, Alexei Kudrin, and Russia's finances
01/25/2008
Kudrin on higher military spending of 3% of Russia's GDP, exceeding the amount spent on education. He sees this as endangering Russia's finances. Kudrin's focus on building the Russian Stabilization Fund helped Russia weather the 2008 global financial crisis. He is one of the St Petersburg officials who helped bring Putin to the Presidency. A slowing economy and a decline in oil prices would have an impact on the Russian economy. Analysts say Russia needs an oil price of $120 to support the current level of spending.
Grouped Articles
Putin Pledges Stimulus for Russian Economy
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Russia Looks to Borrow to Plug Funding Gap
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Russia Prepared to Let Ruble Slide
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Red Alert on Russia Is Premature
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Russia's Power Play Hits Economic Weak Spot
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Russia Economy Worsens Even Before Sanctions Hit
New York Times 04/16/2014
Alexei Kudrin and other experts see the potential for a deep political and economic crisis in Russia 2011-2015
01/25/2008
Fears expressed by Kudrin and other experts at a Moscow conference about the impact of a recession in the eurozone and Greece's exit from the euro. Kudrin was a key figure in Russia anticipating and setting aside reserves in the sovereign fund to meet the adverse effects of the 2008 global financial crisis. The views expressed were that Russia's economy is shaky and could be seriously affected if European banks reduce their loans. Earlier he strongly opposed increases in military spending in a disagreement with prime minister Medvedev because of concerns about financial stability.
Grouped Articles
Ex-Aide to Medvedev and Putin Out at Kremlin
New York Times 05/08/2013
Putin Pledges Stimulus for Russian Economy
Wall Street Journal 06/21/2013
Russia's Growth Pace Continues to Weaken
Wall Street Journal 08/11/2013
Russia Looks to Borrow to Plug Funding Gap
Wall Street Journal 09/19/2013
Russia Is Facing Stagflation, Central Banker Says
Wall Street Journal 01/17/2014
Russia Prepared to Let Ruble Slide
Wall Street Journal 01/30/2014
Warnings at a banking conference in Moscow in October 2014, and the ruble on the brink of collapse on Dec. 17, 2014
10/02/2014
The central bank head, Nabiullina, the Economy minister, Ulyukayev, and the head of Russia's largest bank Sberbank, German Gref, all expressed skepticism about president Putin's confidence in economic policy at a banking conference in Moscow in Oct. 2014. The architect of Russia's finances in the first and second terms of Putin, Alexei Kudrin, expressed alarm in Nov.-Dec. 2014 about lack of confidence in economic measures as the ruble took a hit from lower oil prices. The Putin administration made errors in handling economic policy leading to the ruble going to the brink of collapse by Dec. 17, 2014. This was preceded by miscalculations in policy towards the European Union and Germany leading to a loss of international confidence, and deteriorating relations with OPEC's leading member Saudi Arabia leading to OPEC's production decisions hurting Russia.
Linked Articles
Russia Introduces Measures to Calm Economic Jitters
New York Times 12/17/2014
Putin Trumpets Economic Strength, but Advisers Seem Less Certain
New York Times 10/02/2014
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