| | The Financial Times
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Russian economy: The Putin defence
When a top economic adviser to Vladimir Putin approached his boss in September to argue that the rapid fall in the oil price meant he would have to devalue the rouble, the answer was a firm nyet. “He said he would not be the prime minister of devaluation,” one insider said.
Mr Putin had staked his political credibility for the past eight years – first as Russia’s president and then as an equally powerful prime minister – on breaking with the financial turmoil of the 1990s. Even though any likely devaluation this time around would be far less severe than the disastrous August 1998 collapse that wiped 70 per cent off the rouble and obliterated Russians’ savings overnight, the word had a political stigma and could sow panic. The currency – like everything else in Russia – was to be tightly controlled.
But even before the oil price failed to recover on output cuts by the Opec producers’ cartel earlier this month, Mr Putin’s room for manoeuvre was running out. As crude has fallen from $147 a barrel this summer to less than $40, Russia’s oil-fuelled economic boom has come abruptly to an end. A country that was growing at a rate of 7 per cent only six months ago now faces a looming recession – and Mr Putin, almost exactly nine years since Boris Yeltsin handed him the presidency on New Year’s Eve, is stalked by the same prospect of economic failure as his ill-fated predecessor.
He must also contend with growing unrest. This month has seen thousands of Russians protest against the government’s handling of the crisis in a series of demonstrations across the country. With some 400,000 losing their jobs in November alone and around 2 per cent of those in work facing wage arrears, tensions are likely to rise further.
As well as suffering from a marked drop in demand for commodities, Russia’s economy is also being choked by Mr Putin’s rouble policy. His decision to stave off a sharp devaluation is starting to look to some economists as ill-advised as Yeltsin’s similar attempt in 1998. The central bank has already lost more than a quarter of its foreign currency reserves as a result of its efforts to stem the rouble exodus that began in August, when foreign investors fled Russia in the wake of the war with neighbouring Georgia.
Russia’s reserves of some $451bn (?321bn, £309bn) may still be the third largest in the world, but the sharp drop in the oil price is limiting its ability to replenish them. Propping up the rouble is currently costing the government $6bn to $10bn a week; if this continues, Mr Putin may be unable to assuage popular unrest as he did in 2003, when he defused a row over social benefits by spending freely.
Also at risk is the country’s ability to refinance the foreign debt held by Russian companies. With international credit markets closed, the government has so far pledged $50bn for this purpose. But with up to $170bn due next year, analysts say, the reserves could be quickly exhausted.
The size of these commitments is one reason Mr Putin is wary of letting the rouble go. He has ordered the central bank to oversee a very slow slide – a twice-weekly reduction of 30 kopecks – against a euro-dollar basket. Altogether, the rouble has declined 15 per cent against the dollar and 12 per cent against the euro this year.
But many economists say the slow rate of decline is only fuelling expectations of further depreciation, accelerating the exodus from the currency. Russians withdrew 6 per cent of their rouble deposits in October, converting them into dollars. Banks are also shifting out of the rouble. Worse still, expectations of devaluation mean they have stopped lending in roubles, putting further stress on the economy.
“The situation is starting to look like 1998 when, in anticipation of devaluation, the credit market is frozen and there is an enormous contraction of the economy,” says Anton Strouchenevsky, an economist at Troika Dialog, the Moscow investment bank.
Industrial output in November fell 8.7 per cent year on year, the steepest drop since August 1998. But because of the lending freeze and the expectations of devaluation, “the whole payments system is suffering from indigestion,” says one western banker. “Businesses are not getting paid by customers and they are not paying suppliers.”
Mr Putin’s rouble strategy is beginning to look like one of the riskiest moves of his political career. A 20 per cent drop in the rouble – the amount many analysts think necessary to boost the economy and curb the rise in imports – would not wipe out consumer spending power as in 1998, when the economy was more dependent on imports. It could even boost revenues in Russia’s critical raw materials export sector, source of many recent layoffs.
For Mr Putin, however, the political consequences of a considerable devaluation are of a greater concern. Officials fear that a sharp fall could cause more depositors to panic and withdraw savings, potentially fuelling a run on Russia’s already fragile banking system. Instead, the prime minister is hoping that this month’s Opec production cuts will eventually push the oil price back towards $75, while the dollar is starting to weaken on President-elect Barack Obama’s massive spending plans, helping Russia boost reserves last week.
But any Opec cuts could take at least six months to catch up with plummeting demand, while economists warn the dollar weakening could be premature. One senior Moscow official warns that Russia’s reserves could fall to $300bn by February if the central bank continues to support the rouble and the oil price remains depressed, making a steeper devaluation unavoidable. “It is basic economics. They have to devalue,” the official says.
The problems with the economy appear to be denting the air of invincibility that Mr Putin has taken on since 2000. In a recent nationwide call-in show, the prime minister broke with tradition and did not make one joke. He looked tense as he insisted on his government’s ability to spend its way through the crisis. A week later, one of his officials caused embarrassment when he broke ranks to warn that Russia was indeed heading towards recession.
The turnround is a sharp reminder that wealth creation under Mr Putin has been largely fuelled by the rising oil price. “The growth we had for the past eight years was propelled by $1.3 trillion in oil and gas revenues but this was not matched by any changes in the institutional infrastructure. This is the reason why it has all collapsed so quickly. We didn’t have any foundations,” says Chris Weafer from Uralsib, an investment bank.
The Kremlin is steeling itself for a social backlash. Boris Dubin, an analyst at the independent Levada polling centre, says 15 to 20 per cent of the population have already been hit by the crisis – either through sackings, wage arrears or cuts and difficulties finding new jobs. The continuing exodus from the currency could make things worse. “A combination of a rouble devaluation and increasing job cuts is explosive material,” he says.
Already, cracks are starting to show. In an almost unprecedented incident, Dmitry Medvedev, who succeeded Mr Putin as president this year, was recently heckled as he gave a speech in the Kremlin. Meanwhile, in Vladivostok on the Pacific coast, thousands demonstrated this month over plans to increase import duties on used foreign cars, with some carrying placards calling on Mr Putin to resign. “It is like an epidemic,” says Olga Kryshtanovskaya, of the Academy of Sciences. “People start to feel the weakness of the regime. It’s only the bravest first. But then others join in.”
The Kremlin has so far kept a tight grip on media coverage of bad economic news and protests. Mr Putin is also trying to calm any discontent with promises of greater spending, including shipping Russian cars to the disaffected motorists of Vladivostok.
For now, opinion polls show support for the premier remains high. Mr Dubin says most Russians are still “half-passive”. But, he adds: “I can’t rule out that by spring they will take to the streets.”
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Для неанглоязычных форумчан :) очень краткий перевод, позволяющий понять суть статьи - ниже.
Газета говорит, что у Путина сокращаются просторы для маневра в том плане, что его популярность основана на громадном положительном скачке по сравнению с теми финансовыми катаклизами, которые были в 90-х. Однако, пишет газета, сейчас над Путиным нависла угроза столкновения с таким же экономическим крахом, с которым столкнулся его "злосчастный предшественник" (ill-fated predecessor) Ельцин. По мнению автора материала, экономика России страдает не только от падения цен на энергоносители, но и от политики Путина в отношении рубля, т.к. Путин боится отпустить рубль в свободное плавание. Делает он это потому, что у многих российских компаний огромная внешняя задолженность. По мнению западных экономистов Путин делает неверно, т.к. по мнению этих же экономистов медленное снижение курса как раз и способствует ускоренному выводу средств. Аналитики считают, что рубль нужно девальвирвать на 20%, т.к. это позволит укрепить экономику, в частности, путем сокращения притока импорта. Но Путина тревожат последствия такого шага и делает ставку на то, что нефть все-таки подорожает, благодаря тому что ОПЕК приняло решение о сокращении объемов добычи. Кроме того, Путин также надеется на ослабление доллара в силу планируемых Обамой масштабных программ с большими государственными расходами. Но некое высокпоставленное лицо из правительства РФ сообщило газете, что долларовые резервы могут сократиться до 300 млрд. долл, и тогда девальвация неизбежна.
...Дальше там Chris Weafer из УралСиба говорит, что все так быстро рухнуло, потому что экономический рост последних лет не сопровождался изменениями в "институциональной инфраструктуре", аналитик Левада-центра Дубин говорит о том, что кризис уже затронул 15-20% населения, что сочетание девальвации рубля с увольнениями это "гремучая смесь", ...в общем, кому интересно - читайте сами :) - текст очень простой. | |
