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RA’s Daily Russia News Blast – January 25, 2022

Today in Russia/CIS: EU diplomats to stay in Ukraine; EU maintains unity vis-a-vis Russia, but barely; Russia’s business elite ‘suffers in silence’; Ruble and markets in freefall; US promises even more painful sanctions; Ministry of Finance opposes ban on cryptocurrency proposed by Central Bank; Russian media reports Croatia would “recall all troops” from NATO in case of conflict with Ukraine; Kadyrov, big spender

Not going anywhere. After the US and the UK announced that they were pulling the families of diplomats from Ukraine as – in their view – the drumbeat for imminent war was growing louder, the EU took a decidedly different approach by announcing it would be keeping diplomats in Kyiv. Josep Borrell, the EU’s top diplomat said “We are not going to do the same thing, because we don’t know any specific reasons,” adding that “negotiations are going on.”

Barely united. The EU is holding together vis-a-vis Russia and its threats against Ukraine, but just barely. Politico wrote, “the EU’s foreign policy chief, Josep Borrell, insisted that the 27 member states and their allies were completely in lockstep on the need for a package of high-impact sanctions to be imposed on Russia in the event of an attack on Ukraine. But that cohesion was largely made possible by not discussing any specific details about the draft measures — delaying potentially fierce disagreements.”

Suffering in silence. Russia’s business elite is suffering the effects of Russia’s current foreign policy adventures in silence. The Moscow Times wrote,

“Russia’s business elite is bracing for possible military conflict, billions in lost value and new rounds of hard-hitting Western sanctions in silent despair — unable to influence the course of events and unwilling to speak out publicly, business owners and representatives told The Moscow Times.

Russia’s stock market has been in steep decline in recent weeks and the value of the ruble has cratered to an almost all-time low as the standoff between Russia and the West over Ukraine shows no sign of abating. 

“This topic has suddenly become the main point of conversation among business people like me — not the oligarchs but the successful Russians just below them,” said a senior veteran banker at a private firm, speaking on condition of anonymity.”

Markets not doing well. Global markets are not having a good month, and are having an especially bad week as expecations for a rate increase by the US Federal Reserve has rattled markets. But Russian markets – and the ruble – have the added burden of fears that any action in Ukraine could result in crippling sanctions and further curbs on Russia’s economy. The struggling ruble – it is down to its lowest point in more than a year at 79.2 to the US dollar – forced the Russian Central Bank to curb hard currency purchases, which was putting further pressure on the currency. Stocks have not fared much better as investors continue to dump Russian assets this month, falling more than 8 percent in a single day on Monday.

Painful measures. Kommersant headlined their website with the blaring headline, “The United States promised Russia sanctions heavier than in 2014. They will affect the defense industry, space, financial and technology sectors.” Kommersant quoted a White House spokesperson who said that the sanctions imposed in the event of an “invasion” of Ukraine would cover key strategic industries and would be far more severe than those put in place in 2014. It led to a further fall in the ruble.

Internal discord. After Russia’s Central Bank proposed a ban on cryptocurrency in Russia, the Finance Ministry has now come out in opposition to such a move. “We have a prepared concept of regulation, which we are discussing within the Ministry of Finance and now it has been sent to the government apparatus. But so far … there has been no official position of the government, ”said Ivan Chebeskov, head of the financial policy department of the Ministry of Finance. The Ministry has adopted the position that regulation, not an outright ban is a more sensible way forward. Chebeskov added that “Regulation will just ensure the transparency that will ensure the protection of citizens.”

Recall! Russia’s official outlet TASS reported that Croatia would remove all its forces from NATO in the event that the alliance became involved in a Russia-Ukraine conflict. TASS quoted Croatia’s President Zoran Milanovic as saying, “As the commander-in-chief I have been closely following statements indicating that NATO – not one country, not the United States – is building up its presence and sending some reconnaissance ships. We do not have any bearing on this and we will not have anything to do with this. I guarantee this…Croatia will not send any troops in case of an escalation. On the contrary, it will recall all troops, to the last Croatian soldier,”

Where did all the Chechen rubles go? Chechen strongman Ramzan Kadyrov was forced to explain himself after declaring on Monday that “the total figure for the entire budget system of the Russian Federation on the territory of the Chechen Republic” is 375 billion rubles. This figure is more than three times the entire official figure of the Chechen Republic’s budget. Kadyrov declared in response to criticism and questions, “Pay attention, this is the full figure of the entire budget system of the Russian Federation in the territory of the Chechen Republic and we are talking about the federal content of the republic, and not just about the consolidated budget of the region.

Kadyrov, who Kommersant noted holds an honorary title of Academician of the Russian Academy of Natural Sciences, also pleaded ignorance while lambasting the media, declaring “Let me remind you that I am not fluent in professional and in-depth Russian. And I am not an academician, as you well know, so much remains unspecified. But you, gentlemen journalists, still be more objective, professional and even … patriotic.”

PHOTO: The EU’s top diplomat, Josep Borrell (John Thys/AFP via Getty Images)