The “Iron Lady” warns Russia not to underestimate US and EU sanctions

As the crisis continues to rage across the globe, Central Bank of Russia (CBR) Governor Elvira Nabiullina has issued a sobering warning for the Russian economy .

Nabiullina – who has helped the Kremlin soften the blow from international sanctions following Moscow’s military campaign in Ukraine – said Russia needed to prepare for tougher sanctions and a potentially more challenging economic environment.

Not a “10-foot tall” giant

In an interview with RBC News published on December 25, the female governor known as the “right-hand woman” of Russian President Vladimir Putin emphasized the ability of Russian businesses to quickly adapt to new circumstances, while warning against the tendency to underestimate the severity of the situation.

“I believe that the Central Bank of Russia has pursued, is pursuing and will continue to pursue a policy aimed at ensuring that financial revenues are not lost due to high inflation, ensuring the stability of the financial sector, creating conditions for consumers and businesses to protect their savings, and ensuring the provision of the necessary financial resources for restructuring the economy. We see that the restructuring of the economy is taking place quite rapidly, first of all due to the market nature of the economy, especially the business sector has adjusted very quickly,” said Ms. Nabiullina.

World - — Ms. Elvira Nabiullina was an economic advisor to Mr. Putin before becoming Governor of the Central Bank of Russia (CBR) since 2013. Photo: WSJ

She warned against thinking that Russia is a “10-foot-tall” giant with nothing to worry about after weathering the storm of the past year. “Of course, it’s tempting to think that we did well in 2022 and now we have no worries in the world,” she said. “But we need to be prepared for the increased pressure from sanctions.”

The “Iron Lady,” who has headed Russia’s banking regulator since 2013, also acknowledged that there are issues in the country’s financial sector that have yet to be fully resolved, including cross-border payments and deteriorating investor sentiment towards financial markets due to sanctions. Moreover, problems are emerging related to the increasing pace of innovation and technological development, she stressed.

Prepare for the possibility of escalating sanctions

In a world where economic sanctions have become a powerful tool of political pressure, Russia is no stranger. The Eurasian giant has faced a series of sanctions since the start of the conflict in Ukraine.

Ms. Nabiullina's comments and warnings came as the US and the European Union (EU) announced additional measures targeting Moscow's wartime revenue sources.

US President Joe Biden on December 22 signed a new executive order aimed at strengthening Washington's sanctions against Moscow and targeting financial institutions that, intentionally or unintentionally, facilitate the procurement of Russian military equipment.

The EU on December 18 adopted a 12th round of sanctions, including a ban on Russian diamonds, a crackdown on Russia's acquisition of goods for military use and tighter controls on the $60-a-barrel oil price ceiling, among other measures.

These developments highlight the potential for an escalation of sanctions that Russia faces and the need to prepare for. However, despite the difficulties and the threat of stronger sanctions, Governor Nabiullina expressed optimism about the resilience and sustainability of the Russian financial sector.

In the lengthy interview, Ms. Nabiullina, 60, did not directly address the conflict in Ukraine or its impact. She declined to comment on a Politico EU article that named her “Disrupter of the Year” for her efforts to steer the Russian economy through the sanctions storm, saying she found it “difficult to comment” on it.

On November 29, Politico EU published its annual list of 28 people it considers to be influencing the future of European politics. With three separate categories – Doers, Dreamers and Disrupters, Politico EU ranked Ms. Nabiullina at the top of the Disrupters category .

Minh Duc (According to Bloomberg, BNN Breaking, TASS)

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