EIvira Nabiullina could barely hide her discomfort. Russia’s central bank governor – famous for sending coded messages with her attire – chose to dress in funeral black as she warned of the devastating blow to the Russian economy from sweeping sanctions imposed by Western governments in retaliation for the invasion of Ukraine. .
As the ruble plunges by more than a quarter and queues form for foreign currencies, Nabiullina announced last Monday that the central bank’s key rate would more than double to a record 20%, to curb the surge in inflation. To cushion the blow to ordinary Russians, capital controls would be put in place, while the stock market would temporarily close.
Her choice of clothes, as well as an awkward TV appearance with Vladimir Putin at an emergency meeting on Monday, have raised questions about how she really feels about her decision to go to war. Ashen-faced and distant, did she really support the war?
“We know she hates war because she wore black on Monday. She always wears something to give her point of view,” said Charlie Robertson, chief global economist at Renaissance Capital. that she helped build. I don’t think his feelings will be hidden, and Putin will be aware of that. But he doesn’t care.”
Highly respected in the international community, including among some of Putin’s most vocal critics, Nabiullina is seen as a modernizer who reformed the central bank and saved Russia’s economy from getting worse despite difficult conditions since her took office in 2013.
As a former trusted adviser to the President, she is credited with helping to build a “Russian fortress” economy, less dependent on the US dollar and better equipped to deal with Western sanctions than during the annexation of Crimea by Putin in 2014.
Soft-spoken, she communicates not only through words, but also through her clothes – especially brooches – to give clues to her political thinking. In May 2020, as the government urged people to stay at home, she wore a pin in the shape of a house. A month later, after reducing her prices, she chooses a pigeon – in Russian, the word also means “dove”.
“I put something in each symbol but I’m not going to explain,” she told Russian television two years ago.
For Sergei Guriev, professor of economics at Sciences Po in Paris and authority on Russia, the coded message of this week aimed to demonstrate the severity of the blow dealt by Western sanctions.
“This time she was in black and had no brooch. It should not be read as she disagreed with Putin’s policies, but as a sign that it is time to bury normal monetary policy,” he said.
Guriev, a liberal-minded former Kremlin adviser who abruptly left Russia in 2013 amid a political crackdown by Putin, has known Nabiullina for 15 years. “[She is] much appreciated and respected. Considered competent, modest and honest.
“She has Putin’s confidence. She built many elements of the Russian fortress – not just foreign exchange reserves, but also a national payment system and the “Mir” payment card – but I’m sure she was not part of the narrow circle that decided to go to war. ”
Analysts expect the Russian economy to be threatened this year by a deeper recession than that caused by Covid-19. Sanctions freezing central bank assets have severely limited Nabiullina’s room for manoeuvre. Of $630bn (£475bn) in foreign exchange reserves built up by the central bank – which could have been used to protect the ruble – experts say much of the sum has been rendered useless.
Analysts estimate that $300 billion in assets could be tied up in foreign banks, while much of the remaining sum would be in Chinese yuan and gold bars stored in Moscow, which cannot be sold quickly or easily. With the central bank’s sanction, any potential buyers from the Middle East or China could also face retaliation from the United States.
For Nabiullina, the developments undo nearly a decade of working against Putin’s growing global isolation by opening up the economy. When Western sanctions came in 2014 after its invasion of Crimea, it opposed capital controls and continued to float the ruble in currency markets, while adopting inflation targeting, in line with the major central banks in the world.
In recent years, she has taken public stances urging the government to speed up reforms to encourage private investment. “She’s a brilliant governor. The war isn’t her fault,” said a London-based Russian economist. the pieces and settle the mess.”
A member of the Tatar ethnic group – Russia’s largest minority group – she was born in the Russian republic of Bashkortostan, between the Volga and the Ural Mountains, a year after the Cuban Missile Crisis. Her mother was a manager in a factory, while her father was a driver. An opera fan who recites French poetry from memory, she was the first woman to head the central bank of a G8 country, before Russia was suspended from the group of rich nations in 2014.
Last week, in an internal video, Nabiullina told staff that the economy was facing an extreme situation that they all hoped would not happen. “You can just feel that something really bad has just happened. She’s pleading with her staff not to start arguing about politics. It’s quite unusual,” said John Lough, associate member of the Russia and Eurasia program at Chatham House, who received a copy of the video.
“There are signs of panic. This is extraordinarily serious and will bring the Russian economy to its knees. »
Now Russian economists are debating whether she will stay on when her five-year term expires in June, although they say her priority may be to help protect ordinary Russians from the consequences of Putin’s actions by staying in job.