Archives For: Russia

Putin’s Pugnacious Presser

Dec 19 2014 @ 2:59pm
by Dish Staff

Dish alum Katie Zavadski graciously watched Putin’s annual three-hour press conference (yes, the above video is a trailer for a press conference) so the rest of us don’t have to:

Putin denied accusations that he is inciting a major international conflict in Ukraine, accusing the West — particularly the U.S. — of being in a pot-calling-the-kettle-black situation. “Our budget is $50 billion — the Pentagon budget is 10 times higher. Does anyone listen to us at all? Does anyone have a dialogue with us? No,” he said. “All we hear is ‘mind your own business.’ In the Ukrainian crisis I believe we are right and our Western partners are wrong.” …

But weighing most heavily on the minds of everyone in attendance was the ruble’s recent downward spiral. At the Wednesday low, one U.S. dollar was buying 79 rubles, though the free-fall appears to have stabilized. For some, Tuesday’s value drop called to mind a similar incident 20 years ago, now known as Black Tuesday. He attributed a significant portion of these ongoing economic woes to Western sanctions, introduced in part because of his annexation of Crimea. But the president also told Russians not to worry, assuring them that the economy would rebound. (Indeed, the ruble was up to 61 to a dollar during his address.) “Our economy will overcome the current situation. How much time will be needed for that? Under the most unfavorable circumstances I think it will take about two years,” he said.

Cassidy sizes up that forecast:

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Ruble Trouble, Ctd

Dec 17 2014 @ 2:39pm

The beleaguered currency bounced back a bit today from its epic freefall, as the Russian government took further steps to try and stabilize it:

The Finance Ministry said it was selling foreign exchange currency from its leftover stocks, of which it has around $7 billion, according to Reuters. The ministry did add in a statement that it considered the ruble “extremely undervalued,” however. … The announcement of the intervention immediately sent the ruble higher against the dollar, and after a volatile trading day was up 10 percent versus the greenback. Head of emerging markets research at Standard Bank, Timothy Ash, called the move “totally weird.

Cassidy doubts that any of Moscow’s recent hail-Mary passes will do the trick:

Once the markets lose confidence in a currency, interest rates are no longer an effective policy tool, and foreign-exchange reserves can be depleted at an alarming rate. The reason is found in simple arithmetic. Even if the Russian Central Bank were to raise rates to a hundred per cent, which is obviously out of the question, the weekly return on ruble-denominated assets would be less than two per cent.

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Ruble Trouble, Ctd

Dec 16 2014 @ 1:40pm
by Dish Staff

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Matt O’Brien highlights the latest piece of bad news for the Russian currency:

Russia’s central bank raised interest rates from 10.5 to 17 percent at an emergency 1 a.m. meeting in an attempt to stop the ruble, which is down 50 percent on the year against the dollar, from falling any further. It’s a desperate move to save Russia’s currency that comes at the cost of sacrificing Russia’s economy.

But even that wasn’t enough. After a brief rally, the ruble resumed its cliff-diving ways on Tuesday, falling another 14 percent to a low of 80 rubles per dollar. It was 60 rubles per dollar just the day before. The problem is simple. Oil is still falling, and ordinary Russians don’t want to hold their money in rubles even if they get paid 17 percent interest to do so. In other words, there’s a well-justified panic. So now Russia is left with the double whammy of a collapsing currency and exorbitant interest rates. Checkmate.

Neil Irwin elaborates, pointing out that even the central bank’s attempt to stanch the bleeding is a big risk:

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Ruble Trouble, Ctd

Dec 2 2014 @ 3:02pm

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With oil prices on the downslope, Russia’s currency has been losing value for weeks. But yesterday, it suffered its steepest one-day drop in value since the country’s 1998 financial crisis. In most countries, such a precipitous decline would set off alarm bells, but Jason Karaian doubts Putin will do anything about the falling ruble unless or until it starts to cut into his favorables:

Despite the steady economic deterioration—as reflected by the tumbling ruble—Putin’s popularity at home has soared. Granted, the president’s approval rating slipped from 88% in October to 85% last month, but that will hardly ring alarm bells around the Kremlin. Putin says he wants to stay in power for another 10 years, and the recent polls show the he will probably experience little resistance in doing so. A survey yesterday (link in Russian) suggested that he would win more than 80% of the vote if he faced re-election today.

Bershidsky argues that Putin is taking a bigger risk than he thinks:

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UKRAINE-RUSSIA-CRISIS

On Saturday, Ukrainian President Poroshenko ordered his government to withdraw all state services, including funding for hospitals and schools, from rebel-held provinces in the country’s east:

Poroshenko told his cabinet to take steps within a week “to terminate the activities of state enterprises, institutions and organisations in the various territories where anti-terrorist operations are being conducted,” a statement on his website said. “This is a decisive step, the games have stopped,” the security official added. “All the structures that the state finances will be withdrawn from there. Ukraine will no longer finance them.” The decree also proposed that Ukraine’s central bank take steps over the next month to withdraw all banking services for businesses and individuals in the regions.

But “if anyone thought this was an abdication and a letting go of the unruly region,” Jamie Dettmer underlines, “they need to think again”:

In the decree, he asked the country’s new parliament to revoke a law granting self-rule to the Donetsk and Luhansk regions—in effect rescinding September’s “special status” law granted under a ceasefire allowing the two mainly Russian speaking eastern region some autonomy.

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UKRAINE-RUSSIA-CRISIS

Last week, Ukraine’s military claimed that Russian tanks, artillery, and soldiers were pouring across the border between the two countries yet again. Today, NATO and the OSCE confirmed that they had seen the same thing:

Speaking in Sofia on November 12, the alliance’s top commander, U.S. General Philip Breedlove, said the columns included Russian tanks, artillery, air-defense systems, and combat troops. “We do not have a good picture at this time of how many. We agree that there are multiple columns that we have seen,” Breedlove said. Breedlove made the comments after a report from the Organization for Security and Cooperation in Europe (OSCE) said its monitors had seen a convoy of unmarked military trucks — some towing howitzer artillery pieces and multilaunch rocket systems — travelling into the rebel stronghold of Donetsk on November 11.

Shane Harris passes along an assessment from another analyst, who believes “there are as many as 7,000 Russian troops inside Ukraine now, and between 40,000 and 50,000 amassing on the country’s eastern border”:

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Ruble Trouble

Nov 11 2014 @ 6:25pm

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The Russian economy looks like it’s on the verge of a full-fledged meltdown. The central bank projects zero growth next year and barely more than that in 2016, while the ruble’s value has plummeted. Amanda Taub voxplains what the heck is going on:

The fall in the ruble appears to be mainly the result of two factors: a sharp decline in global oil prices and sanctions that Western countries put on Russia in retaliation for invading Ukraine. Those two things might not appear connected, but in a sense one led to the other. Many Russia-watchers believe that, when Russia’s economy began weakening, and, thus, so did Putin’s approval ratings, Putin responded in part by trying to increase his popular support by stirring up nationalism. That is likely one of the reasons why he invaded Ukraine, which also distracted from the poor economy. If that’s right, then that would mean that the sanctions meant to weaken Russia’s economy are also a result of Russia’s weak economy. And that, in turn, should prompt questions about what Putin might do to shore up his support in the face of this new bad economic news.

The Bank of Russia’s usual response to such a slump is to dig into its massive reserves to shore up the currency, but yesterday, the bank announced that it would allow the ruble to float freely:

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Ukraine’s military claims that a column of “32 tanks, 16 howitzer artillery systems and trucks carrying ammunition and fighters” crossed into the country from Russia yesterday:

“The deployment continues of military equipment and Russian mercenaries to the frontlines,” spokesman Andriy Lysenko said in a televised briefing referring to Thursday’s cross-border incursion.

Nato said it has seen an increase in Russian troops and equipment along the Ukraine border was looking into the reports. “We are aware of the reports of Russian troops and tanks crossing the border between Ukraine and Russia,” a Nato military officer told Reuters. “If this crossing into Ukraine is confirmed it would be further evidence of Russia’s aggression and direct involvement in destabilising Ukraine.” The report of a new Russian movement of armour across the border follows a charge on Thursday by pro-Russian rebels in eastern Ukraine that Kiev government forces had launched a new offensive – which Kiev immediately denied.

Morrissey calls this a move “directly out of the Crimea playbook”:

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The Other Ukraine Votes

Nov 3 2014 @ 6:22pm

Close on the heels of a parliamentary election that handed a decisive victory to pro-Europe parties, separatist rebels held elections of their own this weekend in the “people’s republics” of Donetsk and Luhansk:

Election organizers declared that rebel leaders Alexander Zakharchenko and Igor Plotnitsky won sizable majorities in Donetsk and Luhansk respectively, reports Radio Free Europe. Both men have led rebel groups in the fight against the Ukrainian government in Kiev. But the elections have been controversial from the start, with Kiev and Western powers calling them a violation of a peace agreement drawn up in Minsk, Belarus, in early September. Under the Minsk agreement, Kiev would enact legislation that would grant Donetsk and Luhansk considerable autonomy, but under the auspices of Ukrainian law. Sunday’s elections do not comply with Ukrainian law, Kiev argues, and are therefore illegal.

Russia, predictably, endorsed the elections as legitimate today. Bershidsky notes just what a farce they were:

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Operation Strategic Trolling

Oct 31 2014 @ 2:24pm

NATO reported an “unusual burst of activity” by Russia’s nuclear-capable strategic bombers on its borders this week. While none of the flights violated NATO airspace, they are emblematic of the increasing tensions in Europe over the conflict in Ukraine:

In all, Nato said, its jets intercepted four groups of Russian aircraft in about 24 hours since Tuesday and some were still on manoeuvres late on Wednesday afternoon. “These sizeable Russian flights represent an unusual level of air activity over European air space,” the alliance said. A spokesman stressed there had been no violation of Nato air space, unlike a week earlier when a Russian spy plane briefly crossed Estonia’s border. But so many sorties in one day was unusual compared with recent years. … Nato said it had conducted more than 100 such intercepts of Russian aircraft this year so far, about three times as many as in 2013 before the confrontation with Moscow over separatist revolts in Ukraine soured relations.

Elias Groll adds:

Last month, Estonia accused Russia of kidnapping an Estonian intelligence agent. Swedish defense officials now speak of a fundamentally altered security paradigm in the Baltic after Russian planes carried out a mock bombing of Stockholm and violated Swedish airspace in the region.

Groll says such actions “bring relations between Moscow and the West to their lowest point since the end of the Cold War.” Marc Champion also finds that “a version of the Cold War is returning, but its rules and parameters aren’t clear”:

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