Russia's deputy prime minister, speaking at the World Economic Forum, says that his country's dispute with the US and Europe goes far beyond issues over Ukraine
By Ambrose Evans-Pritchard, in Davos
2:21PM GMT 23 Jan 2015
Prime Minister Vladimir Putin speaks during a United Russia party congress in Moscow Photo: AP
The Russian people will endure any hardship to defend President Vladimir Putin against aggression by the West even if they don't have enough to eat, the country's deputy leader vowed in Davos.
"Read our history: the Russians will never give up their leader. We will tighten our belt, eat less food, suffer any privations, but if outsiders want to force changes on us, we will be united as never before," said Igor Shuvalov, the deputy prime minister.
Mr Shuvalov said Russia's dispute with Europe and America goes far beyond Ukraine: "It erupted there but it could have been anywhere. This is about the West trying to show us our place and refusing to treat us an equal. They are telling us to sit in a corner quietly."
"If this doesn't change, it will be a bleeding wound for decades. People don't blame Putin because they know this is an attack against Russia," he said.
Despite the hot rhetoric, he revealed that Russia is to seek urgent support from China to boost its vanishing foreign exchange reserves as the combination of sanctions and the crash in oil prices cripple the Russian economy.
"I don't want to beat about the bush. The sanctions are very destructive and the longer they last, the worse it is going to be," he said.
"The Russian economy is in a very serious situation. It may not look as bad as it was in 2008 but this crisis is going to be a longer, deeper, and more protracted."
"We are all having to study Henry Kissinger's book thoroughly on how to cope with sanctions," he said, referring to World Order, the latest oeuvre by the former doyen of US diplomacy. It is considered the definitive manual of global statecraft.
Mr Shuvalov said the Kremlin is reaching out to China to ensure sufficient credit lines and to help develop an alternative payments system to the US-dominated SWIFT nexus. This comes amid fears that sanctions could escalate further, potentially cutting off the lifeblood of the Russian economy.
"We are starting a dialogue with China on all possible channels. We have no illusions but we will develop this agenda very quickly," he said, speaking at the World Economic Forum in Davos. "The finance minister is to go the China very soon."
The Kremlin was stunned by the hostile tone of President Barack Obama's State of the Union Address this week, in which he which he derided Russian "bluster" and seemed to relish claiming that country was "isolated with its economy in tatters".
Officials are worried that the West will resort to exluding Russia from the SWIFT system unless there is a break-through in Ukraine. The move is clearly being discussed behind closed doors in Washington and EU capitals as a possible lever of escalation.
"If that happens it will be a huge worsening relations between East and West," said Andrey Kostin, chairman of the Russian state bank VTB.
"Ambassadors in Moscow in Washington might as well go home the next day. We would be on the verge of war and it would be a very dangerous sitiuation, going far beyond the banking sector."
Russian banks and corporations have been shut out of Western capital markets since the invasion of Crimea. They are unable to roll over foreign debts worth $650bn and have to repay roughly €10bn a month in hard currency, an increasingly difficult task after a 50pc collapse in the rouble exchange rate.
Igor Shuvalov (r), with Sepp Blatter, president of Fifa, and the Emir of the State of Qatar Sheikh Hamad bin Khalifa Al-Thani
Mr Kostin said VTB has $30bn of foreign debts and must repay $4.3bn in 2015. He added: "We cannot approach the international debt markets, so we are borrowing from the central bank. There is absolutely no problem for Russian companies repaying their debt this year and next, so investors will get their money back."
State support for Russian companies is bleeding the central bank's foreign reserves. While these look high at $379bn, part of this money is already committed for other purposes. Reserves exceeded foreign debt in the 2008 crisis. Now they are barely more than half.
It is an open question how far China is willing to go to help Mr Putin, though the country is eager to negotiate energy deals on bargain terms. While much was made of a $25bn foreign currency swap agreement between the Chinese and Russian central banks, a similar facility for $2.4bn has since been negotiated with Ukraine, suggesting that Beijing is seeking to steer a neutral course.
Alexei Kudrin, the former finance minister and the man tipped to take over as premier in a Kremlin reshuffle, told the forum that Russian companies will manage to pay off $120bn this year. But the damage is serious.
"Sanctions are a huge blow to the Russian economy. Of course the plummeting rouble is linked to the sanctions. We shouldn't fool ourselves about the price we are paying," he said.
Mr Kudrin argued that Russia's growth model - based on commodity exports - was already obsolete before the crisis hit. "We didn't have any growth two years ago even when oil was still high. We're doing twenty times less reform than we need to," he said.
He warned that it would be "dangerous" if the government turns to the central bank for liquidity injections to keep the economy afloat.
Mr Shuvalov said a utopian quest for freedom is the curse that brought down the Soviet Union.
In a bizarre digression, he then launched into tirade against former Soviet leader Mikhail Gorbachev, accusing him of leading the country to destitution and collapse by opening up to western ideas.
"This freedom they are trying to impose on us, it is freedom from common sense, it is freedom of the media to insult anybody, to throw dirt in his face. That's not freedom," he said.
Mr Shuvalov said his country needs the smack of firm government, and reminded the audience of what happened to the German-born empress Catherine the Great when she tried to foist freedoms on Russia in the 18th Century: "She was told clearly that if she meddled in these matters, she would be murdered."
This silenced the room.
"I don't want to beat about the bush. The sanctions are very destructive and the longer they last, the worse it is going to be," he said.
"The Russian economy is in a very serious situation. It may not look as bad as it was in 2008 but this crisis is going to be a longer, deeper, and more protracted."
"We are all having to study Henry Kissinger's book thoroughly on how to cope with sanctions," he said, referring to World Order, the latest oeuvre by the former doyen of US diplomacy. It is considered the definitive manual of global statecraft.
Mr Shuvalov said the Kremlin is reaching out to China to ensure sufficient credit lines and to help develop an alternative payments system to the US-dominated SWIFT nexus. This comes amid fears that sanctions could escalate further, potentially cutting off the lifeblood of the Russian economy.
"We are starting a dialogue with China on all possible channels. We have no illusions but we will develop this agenda very quickly," he said, speaking at the World Economic Forum in Davos. "The finance minister is to go the China very soon."
The Kremlin was stunned by the hostile tone of President Barack Obama's State of the Union Address this week, in which he which he derided Russian "bluster" and seemed to relish claiming that country was "isolated with its economy in tatters".
Officials are worried that the West will resort to exluding Russia from the SWIFT system unless there is a break-through in Ukraine. The move is clearly being discussed behind closed doors in Washington and EU capitals as a possible lever of escalation.
"If that happens it will be a huge worsening relations between East and West," said Andrey Kostin, chairman of the Russian state bank VTB.
"Ambassadors in Moscow in Washington might as well go home the next day. We would be on the verge of war and it would be a very dangerous sitiuation, going far beyond the banking sector."
Russian banks and corporations have been shut out of Western capital markets since the invasion of Crimea. They are unable to roll over foreign debts worth $650bn and have to repay roughly €10bn a month in hard currency, an increasingly difficult task after a 50pc collapse in the rouble exchange rate.
Igor Shuvalov (r), with Sepp Blatter, president of Fifa, and the Emir of the State of Qatar Sheikh Hamad bin Khalifa Al-Thani
Mr Kostin said VTB has $30bn of foreign debts and must repay $4.3bn in 2015. He added: "We cannot approach the international debt markets, so we are borrowing from the central bank. There is absolutely no problem for Russian companies repaying their debt this year and next, so investors will get their money back."
State support for Russian companies is bleeding the central bank's foreign reserves. While these look high at $379bn, part of this money is already committed for other purposes. Reserves exceeded foreign debt in the 2008 crisis. Now they are barely more than half.
It is an open question how far China is willing to go to help Mr Putin, though the country is eager to negotiate energy deals on bargain terms. While much was made of a $25bn foreign currency swap agreement between the Chinese and Russian central banks, a similar facility for $2.4bn has since been negotiated with Ukraine, suggesting that Beijing is seeking to steer a neutral course.
Alexei Kudrin, the former finance minister and the man tipped to take over as premier in a Kremlin reshuffle, told the forum that Russian companies will manage to pay off $120bn this year. But the damage is serious.
"Sanctions are a huge blow to the Russian economy. Of course the plummeting rouble is linked to the sanctions. We shouldn't fool ourselves about the price we are paying," he said.
Mr Kudrin argued that Russia's growth model - based on commodity exports - was already obsolete before the crisis hit. "We didn't have any growth two years ago even when oil was still high. We're doing twenty times less reform than we need to," he said.
He warned that it would be "dangerous" if the government turns to the central bank for liquidity injections to keep the economy afloat.
Mr Shuvalov said a utopian quest for freedom is the curse that brought down the Soviet Union.
In a bizarre digression, he then launched into tirade against former Soviet leader Mikhail Gorbachev, accusing him of leading the country to destitution and collapse by opening up to western ideas.
"This freedom they are trying to impose on us, it is freedom from common sense, it is freedom of the media to insult anybody, to throw dirt in his face. That's not freedom," he said.
Mr Shuvalov said his country needs the smack of firm government, and reminded the audience of what happened to the German-born empress Catherine the Great when she tried to foist freedoms on Russia in the 18th Century: "She was told clearly that if she meddled in these matters, she would be murdered."
This silenced the room.
0 comments:
Publicar un comentario