Russian central bank chief’s absence stirs succession talk

{"text":[[{"start":10,"text":"Russia’s central bank governor Elvira Nabiullina is expected to cut its key interest rate by half a percentage point to 14 per cent on Friday as she returns to public view after a lengthy absence that has highlighted splits over how to manage the strains in Vladimir Putin’s wartime economy."}],[{"start":28.5,"text":"Since early June, Nabiullina, 62, has missed a series of high-profile events, including Russia’s flagship economic conference in St Petersburg, as well as a cabinet meeting with Putin and other senior economic officials."}],[{"start":43.35,"text":"The central bank has said Nabiullina is on sick leave. Three people familiar with the matter told the FT that Nabiullina has been suffering from a severe respiratory infection. Nevertheless, her absence has fuelled rumours that she is falling out of President Putin’s favour. "}],[{"start":58.7,"text":"The attention her absence has drawn highlights Nabiullina’s unusually powerful role in managing Russia’s wartime economy, as well as the uncertainty over who might eventually succeed her when her third term running the central bank expires in June next year."}],[{"start":null,"text":"

"}],[{"start":73.9,"text":"Officials have discussed a potential shake-up at the central bank if Nabiullina departs, including breaking up its sweeping regulatory powers among several institutions and rolling back its tight focus on returning inflation to target, according to two people familiar with the matter. "}],[{"start":90.45,"text":"“A player such as the central bank looks too powerful in the system of Putin’s Russia anyway. The desire to break it up is quite natural,” said Alexandra Prokopenko, a former official at the Central Bank of Russia, now a fellow at the Carnegie Russia Eurasia Center think-tank in Berlin."}],[{"start":107.4,"text":"Maxim Oreshkin, Putin’s economic adviser, and Pyotr Fradkov, chief executive of Russia’s main bank for the defence sector, are considered frontrunners to replace Nabiullina if she goes, the people said. However, neither she nor the Kremlin has commented on her future, while Putin could still find a way to keep her in the job, people who know them said. "}],[{"start":128.45000000000002,"text":"Putin often keeps major personnel decisions a secret until the last minute, leaving his own top officials in the dark about whether he favours a change at the central bank, two senior Russian bankers said. "}],[{"start":140.50000000000003,"text":"“The decision will be Putin’s alone, and, as far as I know, he is yet to make one,” said Carnegie’s Prokopenko.  "}],[{"start":146.85000000000002,"text":"Putin’s obsessive focus on the frontline in his war against Ukraine has also led him to downplay Russia’s economic problems, clouding any potential decision over the central bank, according to the bankers and western intelligence officials."}],[{"start":null,"text":""}],[{"start":162.3,"text":"“He wants to think about taking Kupiansk” again, said one of the bankers, referring to a Ukrainian frontline town that has changed hands several times during the war. “He doesn’t want to think about this [the central bank]. He may not be thinking about it at all,” the banker added."}],[{"start":177.25,"text":"“Nobody knows except for him and her, and even she doesn’t really know. It’s possible he doesn’t know either.”"}],[{"start":184.45,"text":"The central bank did not immediately respond to a request for comment."}],[{"start":188.7,"text":"If she does leave next year, Nabiullina’s departure would be a seismic change after she led efforts to steer the economy through the unprecedented shocks of Moscow’s war spending and western sanctions after Putin ordered the full-scale invasion of Ukraine in 2022."}],[{"start":205,"text":"Putin has repeatedly backed Nabiullina despite vocal discontent from a powerful industrial lobby and economic hardliners, and there are no concrete signs yet of her falling out of favour. But the economy has come under greater strain this year, the war’s fifth, giving fresh ammunition to her critics. "}],[{"start":null,"text":""}],[{"start":223.2,"text":"The rouble’s strength has been eating into Russian exporters’ profits, while many businesses are struggling to service loans taken out at double-digit interest rates. Critics have blamed both problems on Nabiullina’s insistence on maintaining a free-floating rouble and fighting inflation, which at 5.3 per cent in May, remains well above the central bank’s 4 per cent target."}],[{"start":245.39999999999998,"text":"The key interest rate has remained in double digits for most of the period since the full-scale invasion of Ukraine, peaking at 21 per cent in October 2024. It has been cut steadily, reaching 14.5 per cent in April, as Russia’s overheated economy has moved closer to recession. "}],[{"start":263.59999999999997,"text":"“The rouble is the main problem for the economy. Everything else, even the [key interest] rate, is secondary,” a senior Russian businessman said. Cheap imports have left many Russian manufacturers — from tyremakers to machinery producers — struggling to compete in their home market, let alone abroad, he argued."}],[{"start":284.29999999999995,"text":"Industrialists have urged the central bank to simply “set the exchange rate at such-and-such roubles to the dollar and see how we get on”, but Nabiullina finds this a “fundamentally wrong” approach which would also fuel imported inflation, the businessman said. "}],[{"start":299.19999999999993,"text":"Without criticising Nabiullina, Putin described the excessively strong rouble earlier this month as a “sad” economic issue. Last week, speaking to his cabinet in a televised meeting, he said there were “grounds to expect a reduction in the key interest rate” — a remark that drew more attention than it otherwise might have done in light of Nabiullina’s public absence."}],[{"start":320.3999999999999,"text":"Nabiullina, who won plaudits globally early in her tenure, steered Russia through western sanctions in 2014, cleaned up its notoriously corrupt banking sector and brought inflation down from a peak of 18 per cent in early 2022."}],[{"start":null,"text":""}],[{"start":337.1499999999999,"text":"She was among the top technocrats who warned Putin about the economic fallout of a full-scale invasion a month before it started. "}],[{"start":344.5999999999999,"text":"Alongside Sberbank chief executive Herman Gref and former finance minister Alexei Kudrin, Nabiullina is one of the few top technocrats Putin regularly meets to get an unvarnished picture of Russia’s economic troubles, according to people who know them."}],[{"start":359.8499999999999,"text":"Although they are all privately horrified by the war, they have not directly pushed Putin to end it or cut back on the ruinous military spending, western intelligence officials and a former senior Kremlin official said. "}],[{"start":372.5499999999999,"text":"“The economy is doing badly and the war is warping everything [...] but none of the guys who are against the war are actually telling him to stop it,” the former senior official said."}],[{"start":382.6499999999999,"text":"Instead, top-level discussions focus on how to manage the war’s strain on the budget and economy without a broader change in policy. “Gref just says, look, the percentage of non-performing loans is going up [in the banking sector]. Nabiullina shows him structural [changes],” the former official added."}],[{"start":401.0999999999999,"text":"But the economy still continues to outperform worst-case scenarios, giving Putin reassurance that Russia can persist with its current course and allowing him to focus on micromanaging the battlefield."}],[{"start":412.4999999999999,"text":"“The issue is that Putin doesn’t really care,” a western intelligence official said. “He is thinking about a different legacy. When he is in the banya [Russian steam bath] with [his hawkish confidants] they are not talking about interest rates and defence spending. They are talking about great matters of history.”"}],[{"start":434.1999999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781850294_2469.mp3"}