Wednesday, December 30, 2009

Putin's a Damn Mercantilist

Heaven forbid that Russian citizens will actually have a valuable currency in their hands and that international investors supply capital to the country.

Vladimir Putin, now operating under the cover of Russia’s prime minister, said on Tuesday that Moscow would try to restrain the capital inflows that have caused the rouble to strengthen in recent months, reports FT.

His comments had an immediate impact on markets, with the Russian ruble falling 1.4 per cent and the RTS stock market index down 0.75 per cent.

However, Putin suggested that such efforts would stop short of full capital controls, which have been under discussion in policy circles. “There will be no revolutions,” he said.


  1. Google "Russia," "import ban," and "protectionism" to view the extent of Russian protectionism. They've halted Georgian wine, mineral water, vegatables, fruit, American poultry and Australian kangaroo meat. Its all over the internet.

  2. Such simplistic logic does not apply to Russia. Roughly half of Russian GDP comes from oil and gas exports. These are traded in USD, contracts are written in USD. If USD rate goes down against RUB, it's money lost. Russian govt has A LOT of social commitments, especially due to the crisis. So the money lost from exports is the money lost by the people. On the other hand, Russian people do not have much savings in RUB - it's one of the lessons learned from the '90s. Until recently, savings were in USD, now moving to EUR, and gold/silver.

    As for the Georgian stuff mentioned above, it's very simple: thise imports were cut because of war. Aussie roo meat was imported until problems with quality were found, which was producers' fault and Queensland govt's fault too (Qld. PM Anna Bligh failed miserably in negotiations with Russians). As for US meat, it's an on and off thing, a part of a political game that just would not end, and involes everything from this: to the US meat imports and everything in between. It's not worth mentioning here at all. With that said, Russia is very much open for business, but on its terms and not "Africa style".