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Russian Central Bank cuts key rate to 9.75%, optimistic about Russian economy

As inflation plunges and economy strengthens Russian Central Bank signals further interest rate reductions are pending.

Alexander Mercouris

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A few weeks after the Russian Central Bank indicated that it was unlikely to cut its key rate before mid year, a cluster of good economic news have caused it to shave its key rate down today from 10% to 9.75%.

To be clear, this is a token cut that will not by itself make any difference to the state of economy.  Its importance is that it clearly signals that more cuts are on the way.  That may in itself act as a spur to growth, consolidating the recovery.

The state of Russia’s economic statistics is at the moment one of confusion, with Rosstat – Russia’s state statistical agency – admitting what many people – including myself – always suspected, that it had previously seriously overestimated the severity of the recent recession, which was significantly shorter and shallower than it had previously said.  Rosstat is now in the process of undertaking a comprehensive review both of its methodology and of its earlier calculations.  However this process is far from complete, so it is difficult at present to give a precise picture of the current state of the economy.

However one figure that does appear to be secure is that annualised inflation as of 20th March 2017 had fallen to 4.3% – far better than forecast – and with Russia now regularly recording weeks of zero inflation (as it has again just done) annualised inflation is expected to continue falling further and faster than anyone expected and is likely to hit the target figure of 4% before long.

This fall in inflation made it all but impossible for the Central Bank to resist calls to reduce its key rate, but the fact the Central Bank made only a token cut of 0.25% shows it is leaving nothing to chance and is keeping its powder dry.

News of the rate cut was accompanied by an unusually optimistic report on the economy from Elvira Nabiullina, whose position as Central Bank Chair has just been extended by President Putin.

On the question of the overall condition of the economy and of the course of the recent recession Nabiullina had this to say

The updated Rosstat data suggest that the downturn in the Russian economy was not so deep in 2015-2016 and the economy saw a recovery earlier than expected. If we compare this situation with the overall economic crunch of 2008-2009, we can see that GDP dropped over 10% at the time, while in 2015-2016 it contracted by slightly more than 3%, given that the oil price drops were similar. We will be able to revise our estimates in April, when Rosstat publishes its updated statistics for 2016. Preliminary estimates suggest that GDP started showing quarterly growth as soon as 2016 Q2 (Q3 according to previous estimates).  Annual industrial production growth entered positive territory in the first quarter of last year. Estimates of industrial production statistics for the beginning of this year need calendar adjustment. This February is two working days shorter than last year, which results in different volumes. If adjusted for this factor, industrial production continued to expand, adding more than 1% YoY in February. This calendar effect will also manifest itself in overall Q1 readings.

After a long period of instability, we can see clearer signs of investment recovery.  Production and imports of investment goods are growing. Surveys confirm that investment demand is on the rise. Businesses are building up stockpiles as they expect demand to recover. These expectations may soon prove right. We predict consumption to increase in annual terms as soon as the second quarter. It will come after expansion in production and will not create inflation risks.

A never stated fact about the Russian economy is that every contraction since 1991 has been shorter and shallower than its predecessor.  The contractions of 1991 and 1998 were existential crises that threatened the very existence of the Russian state, whilst the 2008 recession, though significantly less severe, was still (as Nabiullina’s figures show) a very steep recession indeed and something of a near death experience.  The latest 2014-2015 recession was by these standards not merely short and shallow, but qualifies as Russia’s first ‘normal’ recession.  As I have discussed many times, its overall effect has been to leave the Russian economy fitter and stronger than it was before.

Nabiullina however confirms that for the time being the Central Bank is taking nothing for granted and that it will continue with what she euphemistically calls its “moderately severe monetary policy” (actually by far the toughest monetary policy of any of the major economies) in order not just to bring down inflation to the annualised target figure of 4% but to hold it there.  Inevitably in the short term that will reduce the rate of economic growth

As I have mentioned on several occasions before, we are seeking more than a one-time reduction in price growth to 4%. It is important to anchor inflation near this level in future. For this reason we call this situation price stability, i.e. sustainably low inflation.

To maintain inflation close to its target level, moderately tight monetary policy may be needed over a two-three year horizon. This is necessitated by the still high sensitivity of inflation to one-off factors, as well as its inertia and elevated inflation expectations. As they stabilise close to the target level of inflation, prices are expected to be less responsive to various short-term factors. These new conditions would see no need for additional tightening in the monetary policy stance to ensure that inflation holds near 4%.

This conservative strategy in monetary policy may appear unattractive short-term; however it will enable us to deliver on a more sustainable result in the mid-term, that is, deliver on the objective to establish in Russia a low price and cost growth environment – such that favours both households and businesses, as well as the overall economy.

It seems that a steep and sustained reduction in Russia’s real interest rates (which are now much higher than they were during the inflation spike of 2015) is not to be expected before the end of the decade, with the plan being for accelerated investment led growth in a low inflation environment thereafter.

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The ‘Gilets Jaunes’ Are Unstoppable: “Now, The Elites Are Afraid”

Now the elites are afraid. For the first time, there is a movement which cannot be controlled through the normal political mechanisms.

The Duran

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Authored by Christophe Guilluy via Spiked-Online.com:


The gilets jaunes (yellow vest) movement has rattled the French establishment. For several months, crowds ranging from tens of thousands to hundreds of thousands have been taking to the streets every weekend across the whole of France. They have had enormous success, extracting major concessions from the government. They continue to march.

Back in 2014, geographer Christopher Guilluy’s study of la France périphérique (peripheral France) caused a media sensation. It drew attention to the economic, cultural and political exclusion of the working classes, most of whom now live outside the major cities. It highlighted the conditions that would later give rise to the yellow-vest phenomenon. Guilluy has developed on these themes in his recent books, No Society and The Twilight of the Elite: Prosperity, the Periphery and the Future of Francespiked caught up with Guilluy to get his view on the causes and consequences of the yellow-vest movement.

spiked: What exactly do you mean by ‘peripheral France’?

Christophe Guilluy: ‘Peripheral France’ is about the geographic distribution of the working classes across France. Fifteen years ago, I noticed that the majority of working-class people actually live very far away from the major globalised cities – far from Paris, Lyon and Toulouse, and also very far from London and New York.

Technically, our globalised economic model performs well. It produces a lot of wealth. But it doesn’t need the majority of the population to function. It has no real need for the manual workers, labourers and even small-business owners outside of the big cities. Paris creates enough wealth for the whole of France, and London does the same in Britain. But you cannot build a society around this. The gilets jaunes is a revolt of the working classes who live in these places.

They tend to be people in work, but who don’t earn very much, between 1000€ and 2000€ per month. Some of them are very poor if they are unemployed. Others were once middle-class. What they all have in common is that they live in areas where there is hardly any work left. They know that even if they have a job today, they could lose it tomorrow and they won’t find anything else.

spiked: What is the role of culture in the yellow-vest movement?

Guilluy: Not only does peripheral France fare badly in the modern economy, it is also culturally misunderstood by the elite. The yellow-vest movement is a truly 21st-century movement in that it is cultural as well as political. Cultural validation is extremely important in our era.

One illustration of this cultural divide is that most modern, progressive social movements and protests are quickly endorsed by celebrities, actors, the media and the intellectuals. But none of them approve of the gilets jaunes. Their emergence has caused a kind of psychological shock to the cultural establishment. It is exactly the same shock that the British elites experienced with the Brexit vote and that they are still experiencing now, three years later.

The Brexit vote had a lot to do with culture, too, I think. It was more than just the question of leaving the EU. Many voters wanted to remind the political class that they exist. That’s what French people are using the gilets jaunes for – to say we exist. We are seeing the same phenomenon in populist revolts across the world.

spiked: How have the working-classes come to be excluded?

Guilluy: All the growth and dynamism is in the major cities, but people cannot just move there. The cities are inaccessible, particularly thanks to mounting housing costs. The big cities today are like medieval citadels. It is like we are going back to the city-states of the Middle Ages. Funnily enough, Paris is going to start charging people for entry, just like the excise duties you used to have to pay to enter a town in the Middle Ages.

The cities themselves have become very unequal, too. The Parisian economy needs executives and qualified professionals. It also needs workers, predominantly immigrants, for the construction industry and catering et cetera. Business relies on this very specific demographic mix. The problem is that ‘the people’ outside of this still exist. In fact, ‘Peripheral France’ actually encompasses the majority of French people.

spiked: What role has the liberal metropolitan elite played in this?

Guilluy: We have a new bourgeoisie, but because they are very cool and progressive, it creates the impression that there is no class conflict anymore. It is really difficult to oppose the hipsters when they say they care about the poor and about minorities.

But actually, they are very much complicit in relegating the working classes to the sidelines. Not only do they benefit enormously from the globalised economy, but they have also produced a dominant cultural discourse which ostracises working-class people. Think of the ‘deplorables’ evoked by Hillary Clinton. There is a similar view of the working class in France and Britain. They are looked upon as if they are some kind of Amazonian tribe. The problem for the elites is that it is a very big tribe.

The middle-class reaction to the yellow vests has been telling. Immediately, the protesters were denounced as xenophobes, anti-Semites and homophobes. The elites present themselves as anti-fascist and anti-racist but this is merely a way of defending their class interests. It is the only argument they can muster to defend their status, but it is not working anymore.

Now the elites are afraid. For the first time, there is a movement which cannot be controlled through the normal political mechanisms. The gilets jaunes didn’t emerge from the trade unions or the political parties. It cannot be stopped. There is no ‘off’ button. Either the intelligentsia will be forced to properly acknowledge the existence of these people, or they will have to opt for a kind of soft totalitarianism.

A lot has been made of the fact that the yellow vests’ demands vary a great deal. But above all, it’s a demand for democracy. Fundamentally, they are democrats – they want to be taken seriously and they want to be integrated into the economic order.

spiked: How can we begin to address these demands?

Guilluy: First of all, the bourgeoisie needs a cultural revolution, particularly in universities and in the media. They need to stop insulting the working class, to stop thinking of all the gilets jaunes as imbeciles.

Cultural respect is fundamental: there will be no economic or political integration until there is cultural integration. Then, of course, we need to think differently about the economy. That means dispensing with neoliberal dogma. We need to think beyond Paris, London and New York.

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US Blunders Have Made Russia The Global Trade Pivot

Even if Europe is somehow taken out of the trade equation, greater synergy between the RIC (Russia, India and China) nations may be enough to pull their nations through anticipated global volatilities ahead

The Duran

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Authored by Mathew Maavak via ActivistPost.com:


The year 2019 had barely begun before news emerged that six Russian sailors were kidnapped by pirates off the coast of Benin. It was perhaps a foretaste of risks to come. As nations reel from deteriorating economic conditions, instances of piracy and other forms of supply chain disruptions are bound to increase.

According to the International Maritime Bureau (IMB), 107 cases of piracy were noted during the first half of 2018 vis-à-vis 87 throughout 2017.  The 2018 tally included 32 cases in Southeast Asian waters and 48 along African shores – representing 75% of the total. To put this figure into perspective, Asian behemoths India and China – despite their vast shorelines – recorded only 2 cases of piracy each during the study period. Russia had none. In terms of hostages taken, the IMB tally read 102 in H1 2018 vs 63 in H1 2017.

Piracy adds to shipping and retail costs worldwide as security, insurance and salaries are hiked to match associated risks in maritime transport. Merchant vessels will also take longer and costlier routes to avoid piracy hotspots.

United Nations Office on Drugs and Crime (UNODC) report in 2016 sums up the perils ahead:

As over 90% of global trade is carried out by sea, the economic effects of maritime crime can be crippling. Maritime crime includes not only criminal activity directed at vessels or maritime structures, but also the use of the high seas to perpetrate transnational organized crimes such as smuggling of persons or illicit substances.  These forms of maritime crime can have devastating human consequences.

Indeed, cases of human trafficking, organ harvesting, and the smuggling of illicit substances and counterfeit goods are proliferating worldwide in tandem with rising systemic debt and suspect international agendas.

Australia offers a case in point. While it fantasizes over a Quad of allies in the Indo-Pacific – to “save Asians from China” – criminal elements from Hong Kong, Malaysia to squeaky-clean Singapore have been routinely trafficking drugs, tobacco and people right into Sydney harbour for years,  swelling the local organised crime economy to as much as $47.4 billion (Australian dollars presumably) between 2016 and 2017.

With criminal elements expected to thrive during a severe recession, they will likely enjoy a degree of prosecutorial shielding from state actors and local politicians. But this is not a Southeast Asian problem alone; any superpower wishing to disrupt Asia-Europe trade arteries – the main engine of global growth – will have targets of opportunity across oceans and lands.  The US-led war against Syria had not only cratered one potential trans-Eurasia energy and trade node, it served as a boon for child traffickingorgan harvesting and slavery as well. Yet, it is President Bashar al-Assad who is repeatedly labelled a “butcher” by the Anglo-American media.

Ultimately, industries in Asia and Europe will seek safer transit routes for their products. The inference here is inevitable: the greatest logistical undertaking in history – China’s Belt and Road Initiative (BRI) – will be highly dependent on Russian security umbrella, particularly in Central Asia. Russia also offers an alternative transit option via the Northern Sea Route, thereby avoiding any potential pan-Turkic ructions in Central Asia in the future.

Russo- and Sinophobia explained?

In retrospect, Washington’s reckless policies post-Sept 11 2001 seem aimed at disrupting growing synergies between Asia and Europe. This hypothesis helps explain the relentless US-led agitprops against Russia, China and Iran.

When the gilet jaunes (yellow vest) protests rocked France weeks ago, it was only a matter of time before some pundits blamed it on Russia. US President Donald J. Trump cheered on; just as “billionaire activist” George Soros celebrated the refugee invasion of Europe and the Arab Spring earlier.  If the yellow vest contagion spreads to the Western half of Europe, its economies will flounder. Cui bono? A Russia that can reap benefits from the two-way BRI or Arctic trade routes or a moribund United States that can no longer rule roost in an increasingly multipolar world?

Trump’s diplomatic downgrade of the European Union and his opposition to the Nord Stream 2gas pipeline matches this trade-disruption hypothesis, as do pressures applied on India and China to drop energy and trade ties with Iran.  Washington’s trade war with Beijing and recent charges against Huawei – arguably Asia’s most valuable company – seem to fit this grand strategy.

If China concedes to importing more US products, Europe will bear the consequences. Asians love European products ranging from German cars to Italian shoes and Europe remains the favourite vacation destination for its growing middle class. Eastern European products and institutions are also beginning to gain traction in Asia. However, these emerging economies will suffer if their leaders cave in to Washington’s bogeyman fetish.

Even if Europe is somehow taken out of the trade equation, greater synergy between the RIC (Russia, India and China) nations may be enough – at least theoretically – to pull their nations through anticipated global volatilities ahead.

In the meantime, as the US-led world crumbles, it looks like Russia is patiently biding its time to become the security guarantor and kingmaker of Asia-Europe trade.  A possible state of affairs wrought more by American inanity rather than Russian ingenuity…

Dr Mathew Maavak is a regular commentator on risk-related geostrategic issues.

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Historic Eastern Christianity: An Uncertain Future

The survival of historic Eastern Christianity, particularly in Syria, is critical for several reasons.

Strategic Culture Foundation

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Authored by Elias Samo via The Strategic Culture Foundation:


The survival of historic Eastern Christianity has never been as urgent as it is today. Christianity saw its beginning in Greater Syria which was subdivided by France and Britain after WWI into modern day Syria, Lebanon, Palestian/Israel and Jordan. The land that housed, nurtured and spread the teachings of Jesus Christ for over two millenniums, now threatens children of that faith. The survival of historic Eastern Christianity, particularly in Syria, is critical for several reasons:

  1. Greater Syria is the homeland of Jesus and Christianity. Abraham was from modern day Iraq, Moses from Egypt, and Muhammad from Mecca; Jesus was from Syria.
  1. Paul converted to Christianity and saw the light while walking through ‘The Street Called Straight’ in Damascus.
  1. Jesus’ followers were called Christians for the first time in Antioch, formerly part of Syria.
  1. One of the earliest churches, perhaps the earliest, is in Syria.

The potential demise of historic Eastern Christianity is reflected in the key question Christians ask: should we stay or emigrate? The urgent question – in the face of the ongoing regional turmoil – precipitated with the American invasion of Iraq in 2003 and escalated since the Arab uprisings in 2011. Historic Eastern Christians’ fears were further magnified when Archbishop Yohanna Ibrahim of the Syriac Orthodox Church and Archbishop Paul Yazigi of the Greek Orthodox Church, both of metropolitan Aleppo, were kidnapped on April, 22, 2013; with no traces of their whereabouts, dead or alive, since. For many years, I was deputy, friend, and advisor to the Archbishop Ibrahim, which provided me an opportunity to meet many Christians. I have, over time, noticed the change in their sentiment, with more considering emigration after the uprising and the kidnapping of the two Archbishops. Historic Eastern Christians survived the Ottoman Genocide in 1915 and thereafter; they multiplied and thrived in the Fertile Crescent despite some atrocities until the start of the misnamed “Arab Spring” in early 2011. Prior to the “Arab Spring”, historic Eastern Christians were victims of violence on several occasions. In the mid-1930s, the historic Assyrian community in Iraq suffered violent onslaughts and were driven to Syria. In the 1970s and 1980s, during the Lebanese Civil War, Christians were victims of sectarian violence. During the American invasion of Iraq in 2003, Christians were victims of widespread sectarian violence which led to mass migration. The “Arab Spring” began with great hope for the right of the people to “Life, Liberty and the pursuit of Happiness”. However, it was swiftly hijacked by Islamists and Salafists and turned into an “Islamic Spring, an Arab Fall and a Christian Winter”; bringing along with it a new massacre of Christians. Presently, Eastern Christianity is at the mercy of clear and identifiable domestic, regional, and international, historic and contemporary conflicts in the Fertile Crescent, namely:

  1. Jihad vs. Ijtihad: A long standing conflict amongst Muslims between the sword vs. the pen.
  2. Sunni vs. Shiite: A conflict which began following the death of the Prophet Muhammad.
  3. Arabism vs. Islamism: The former has territorial limitations, the later has no territorial limitations.
  4. Syria vs. Israel: It is an essential component of the Palestinian problem, not the presumed Arab- Israeli conflict.
  5. West vs. East: A throwback to the Cold War, or its revival.
  6. Historic Persian, Ottoman and Arab Empires animosities: Each seeking regional hegemony.

One is reminded of the proverbial saying, “When the elephants fight, the grass suffers.” Certainly, Eastern Christianity is suffering and threatened with extinction.

Syria was a model of religious tolerance, common living and peaceful interaction amongst its religious, sectarian, cultural and ethnic components. Seven years of turmoil, in which various international and regional powers manipulated segments of Syrian society by supplying them with an abundance of weapons, money and sectarian ideologies, has heightened Eastern Christians’ fears. During the seven-year turmoil in Syria, the entire society has suffered; Sunnis, Shiites, Alawites, Yazidis, Kurds, Christians and others. Christians, being a weak and peaceful component of the society, have suffered immensely. Ma’aloula; a religious treasure for Christians globally, and the only city in the world where Aramaic – the language of Jesus Christ – is spoken, was attacked and besieged by ISIS. Numerous historic Churches were damaged, and many destroyed. Christians in Raqqa were forced by ISIS into one of three options: 1. Pay a penalty in pure gold – known as a ‘Jizya’ to keep their life and practice their faith – albeit in secret only; 2. Convert into Islam; or 3. Face immediate death. To top their pain, the kidnap of the two prominent Archbishops meant no Eastern Christian believer was safe.

Amidst all the doom and gloom, however, there remains hope. The survival of Christianity depends on the actions and reactions of three parties:

Eastern Christians: During the last hundred years, 1915-2015, since the Ottoman Genocide, Eastern Christians have been victims of a history of massacres, which meant that every Eastern Christian was a martyr, a potential martyr or a witness of martyrdom; if you fool me once, shame on you, if you fool me twice, shame on me. The ongoing regional turmoil has heightened their sense of insecurity. The answer to an age-old question Eastern Christians had on their mind: To flee Westwards or remain in their land, in the face of death, is increasingly becoming the former.

Eastern Muslims: There is a difference in perceptions between Eastern Christians and mainstream Muslims regarding the massacres committed against Christians. When certain violent groups or individuals kill Christians, while shouting a traditional Islamic profession: “No God but one God and Muhammad is God’s messenger”, it is reasonable for Christians to assume the killers are Muslims. However, for mainstream Muslims, the killers do not represent Islam; they are extremists, violating basic Islamic norms such as Muhammad’s sayings, “Whoever hurts a Thummy – Christian or Jew – has hurt me”, “no compulsion in religion” and other Islamic norms regarding just treatment of people of the Book; Christians and Jews. Therefore, it is the responsibility of the Muslim elites to impress upon their fellow Muslims that:

a. The three monotheistic religions believe in one God and all ‘faithfuls’ are equal in citizenship, rights and duties.

b. Christians participated in the rise of Arab Islamic civilization. They were pioneers in the modern Arab renaissance and they joined their Muslim brethren in resisting the Crusades, the Ottomans and Western colonialism.

c. Christians are natives of the land and they provide cultural, religious, educational, and economic, diversity.

d. Christians are a positive link between the Muslims and the Christian West, particularly in view of the rise of Islamophobia. Massacres of Christians and their migration provide a pretext for the further precipitation of Islamophobia.

e. Civilization is measured by the way it treats its minorities.

The Christian West: The Crusades, Western colonialism, creation and continued support of Israel, support of authoritarian Arab political systems, military interventions, regime change, and the destabilization of Arab states made Muslims view Eastern Christians ‘guilty by association’. The Christian West helped Jews come to Palestine to establish Israel. Shouldn’t the same Christian West also help Eastern Christians remain in their homeland, rather than facilitate their emigration? Western Christians, particularly Christian Zionists, believe that the existence of Israel is necessary for the return of Jesus to his homeland. However, it would be a great disappointment for Jesus to return to his homeland, Syria and not find any of his followers.

Prior to 2011, Eastern Christian religious leaders were encouraging Syrian Christians in the diaspora to return to Syria, their homeland, where life was safe and secure with great potential. Now, the same leaders are desperately trying to slow down Christian emigration. Eastern Christians’ loud cries for help to remain are blowing in the wind.

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