Russian Government Holds Off on Reinstating Capital Controls

Aug. 20, 2023, 2022 (EIRNS)—No public announcement appears to have been made after President Vladimir Putin met with Finance Minister Anton Siluanov, Central Bank Governor Elvira Nabiullina, and other economic advisors on Aug. 17. As reported by various media, Russian and Western, the upshot of the discussion on whether or not to reimpose capital controls, and if so, by what percentage, was to settle instead for jawboning foreign exporters into increasing their exchange of foreign currencies into rubles “voluntarily”—for now.

RT, citing Vedomosti’s report from its unnamed sources, reported Aug. 17 that “Russian authorities will refrain from introducing stricter capital controls to stem the depreciation of the ruble in exchange for concessions from exporters ... [under] an informal deal with the country’s leading exporters whereby the latter pledged to increase the sale of their forex earnings.” Vedomosti added that “the sources warned, however, that mandatory sales of export proceeds will become inevitable if exporters don’t fulfill their promises.”

This past week, the Russian Central Bank under Nabiullina responded to the sharp devaluation of the ruble over recent weeks—caused by financial warfare against the country, including capital flight making use of the export loophole—with the classical monetarist response of jacking up interest rates from 7.5% to 12%. Bloomberg on Aug. 18 made sure to weigh in forcefully behind Nabiullina, describing the Russian Central Bank as “one of the sole remaining credible institutions of present day Russia,” adding hopefully that the “widening policy divide in Russian officialdom” on economic priorities could constitute “a vulnerability” during a time of war.

Russia’s leading economist Sergey Glazyev (in Russian) continued his campaign all week against the central bank’s policies, which he charged play into the hands of the IMF-NATO enemies of the country by driving inflation up, Russian production and incomes down, and blocking investment in both the real economy and implementation of the President’s National Development Goals, all “under the guise of ‘inflation targeting.’ ” The central bank’s “inflation targeting” is a deception, a mechanism to steal material values, run by economists who believe that money is the measure of all things, rather than physical production, he argued in an Aug. 19 Telegram (“Glazyev for Thinking People”) posting.

He reminded in a posting today, that “this huge outflow of capital from the country (in Russian) with the help and support of Russian authorities ... could be solved by an indirect ... state monopoly on foreign trade (at least in hydrocarbons). For example, through Rosneft.” Although some might think that under current conditions this looks like a fantasy, Glazyev added, “who knows, it might be introduced.”