Showing posts with label putin. Show all posts
Showing posts with label putin. Show all posts
Saturday
Trump turns to Washington lawyer to navigate legal, ethics issues
President-elect Donald Trump on Friday chose Washington insider Donald McGahn to be his White House counsel, giving him the job of untangling potential conflicts of interest that the New York businessman's presidency may present.
McGahn, a former chairman of the Federal Election Commission, had been the chief counsel of the Trump campaign and was one of the few members of the Republican establishment to embrace the outsider candidate.
While Trump during his campaign frequently promised to "drain the swamp" of the political establishment in Washington, McGahn has an extensive history in the capital, especially in conservative politics.
McGahn served for years as counsel to the National Republican Congressional Committee, the arm of the Republican Party that oversees campaigns for the U.S. House of Representatives.
During his time at the FEC, McGahn was an advocate for loosening restrictions on campaign spending and was widely praised for opening up more of the commission’s internal processes to the public.
Along with providing guidance on ethics issues, the White House Counsel's office advises the president on the legality of proposed executive orders and legislation passed by Congress and vets potential administration appointees, including Supreme Court justices.
“Don has a brilliant legal mind, excellent character and a deep understanding of constitutional law,” Trump said in a statement.
Trump, a businessman who has never held public office, has real estate and leisure holdings all over the world, sparking concerns that his investments could color his decision-making in office. Trump has said that he will hand over day-to-day responsibilities of running his company to his children, but he has resisted calls to place his assets in a blind trust.
Trump also has expressed interest in finding a way to bypass a federal anti-nepotism law in order to give his son-in-law, Jared Kushner, a formal White House role.
When Trump met with President Barack Obama earlier this month, Obama advised Trump during their Oval Office chat that his White House counsel would be an important job.
Trump has vowed to reverse Obama’s executive orders in a number of areas, including immigration and gun control. He also must nominate someone to fill the vacancy on the Supreme Court left by the death of Justice Antonin Scalia. McGahn will be tasked with shepherding the nominee through confirmation hearings.
Trump, who is spending the Thanksgiving holiday weekend at his home in Palm Beach, Florida, also continued to round out his national security team on Friday, naming Kathleen Troia "K.T." McFarland, as his deputy national security adviser.
McFarland served in three Republican administrations and was an aide to Henry Kissinger in the 1970s. A strong backer of Trump during the election campaign, McFarland will work with Lieutenant General Michael Flynn, Trump’s pick as his national security adviser.
Neither position requires confirmation by the U.S Senate.
The appointments came amid reports that Trump’s aides are divided about his choice for secretary of state, with some preferring 2012 Republican presidential nominee Mitt Romney, who harshly criticized Trump during the campaign, and others backing Rudy Giuliani, the former New York City mayor.
Transition officials on Friday downplayed any internal tension, calling reports of discord “overblown.”
Officials said that after returning to New York, Trump will meet with several more potential cabinet picks on Monday, including John Allison, the former chief executive of BB&T Corp who has been mentioned as a possible choice for U.S. Treasury secretary, and Paul Atkins, a former commissioner of the Securities and Exchange Commission.
Tuesday
In the Democratic Echo Chamber, Inconvenient Truths Are Recast as Putin Plots
by at The Intercept
As you can see, more than 4,000 people have re-tweeted this “Official Warning.” That includes not only random Clinton fans but also high-profile Clinton-supporting journalists, who by spreading it around gave this claim their stamp of approval, intentionally leading huge numbers of people to assume the WikiLeaks archive must be full of fakes, and its contents should therefore simply be ignored. Clinton’s campaign officials spent the day fueling these insinuations, strongly implying that the documents were unreliable and should thus be ignored. Poof: just like that, unpleasant facts about Hillary Clinton just disappeared, like a fairy protecting frightened children by waving her magic wand and sprinkling fairy dust over a demon and causing it to scatter away.
Except the only fraud here was Nance’s claim, not any of the documents published by WikiLeaks. Those were all real. Indeed, at Sunday night’s debate, when asked directly about the excerpts of her Wall Street speeches found in the release, Clinton herself confirmed their authenticity. And news outlets such as the New York Times and AP reported – and continue to report – on their contents without any caveat that they may be frauds. No real print journalists or actual newsrooms (as opposed to campaign operatives masquerading as journalists) fell for this scam, so this tactic did not prevent reporting from being done.
But it did signal to Clinton’s most devoted followers to simply ignore their contents. Anyone writing articles about what these documents revealed was instantly barraged with claims from Democrats that they were fakes, by people often pointing to “articles” like this one.
That article was shared almost 22,000 times on Facebook alone. In Nance’s defense, it is true that some unknown, random person posted a doctored email on the internet and claimed it was real, but that did not come from the WikiLeaks archive and has nothing to do with assessing the reliability of the archive (any more than fake NYT stories on the internet impugn the reliability of articles in that paper). Not one person has identified even a single email or document released by WikiLeaks of questionable authenticity – that includes all of the Clinton officials whose names are listed as their authors and recipients – yet these journalists and “experts” deliberately convinced who knows how many people to believe a fairy tale: that WikiLeaks’ archive is pervaded with forgeries.
More insidious and subtle, but even worse, was what Newsweek and its Clinton-adoring writer Kurt Eichenwald did last night. What happened – in reality, in the world of facts – was extremely trivial. One of the emails in the second installment of the WikiLeaks/Podesta archive – posted yesterday – was from Sidney Blumenthal to Podesta. The sole purpose of Blumenthal’s email was to show Podesta one of Eichenwald’s endless series of Clinton-exonerating articles, this one about Benghazi. So in the body of the email to Podesta, Blumenthal simply pasted the link and the full contents of the article. Although the purpose of Eichenwald’s article (like everything he says and does) was to defend Clinton, one paragraph in the middle acknowledged that one minor criticism of Clinton on Benghazi is possibly rational.
Once WikiLeaks announced that this second email batch was online, many news organizations (including the Intercept, along with the NYT and AP) began combing through them to find relevant information and then published articles about them. One such story was published by Sputnik, the Russian government’s international outlet similar to RT, which highlighted that Blumenthal email. But the Sputnik story inaccurately attributed the text of the Newsweek article to Blumenthal, thus suggesting that one of Clinton’s closest advisors had expressed criticism of her on Benghazi. Sputnik quickly removed the article once Eichenwald pointed out that the words were his, not Blumethal’s. Then, in his campaign speech last night, Trump made reference to the Sputnik article (hours after it was published and spread on social media), claiming (obviously inaccurately) that even Blumenthal had criticized Clinton on Benghazi.
That’s all that happened. There is zero suggestion in the article, let alone evidence, that any WikiLeaks email was doctored: it wasn’t. It was just Sputnik misreporting the email. Once Sputnik realized that its article misattributed the text to Blumenthal, it took it down. It’s not hard to imagine how a rushed, careless Sputnik staffer could glance at that email and fail to realize that Blumethal was forwarding Eichenwald’s article rather than writing it himself. And while nobody knows how this erroneous Sputnik story made its way to Trump for him to reference in his speech, it’s very easy to imagine how a Trump staffer on a shoddy, inept campaign – which has previously cited InfoWars and white supremacist sites among others – would have stumbled into a widely-shared Sputnik story that had been published hours earlier on the internet and then passed it along to Trump for him to highlight, without realizing the reasons to be skeptical.
In any event, based on the available evidence, this a small embarrassment for Trump: he cited an erroneous story from a non-credible Russian outlet, so it’s worth noting. But that’s not what happened. Eichenwald, with increasing levels of hysteria, manically posted no fewer than 3 dozen tweets last night about his story, each time escalating his claims of what it proved. By the time he was done, he had misled large numbers of people into believing that he found proof that: a) the documents in the WikiLeaks archive were altered; b) Russia put forgeries into the WikiLeaks archive; 3) Sputnik knew about the WikiLeaks archive ahead of time, before it was posted online; 4) WikiLeaks coordinated the release of the documents with the Russian government; and 5) the Russian government and the Trump campaign coordinated to falsely attribute Eichenwald’s worst to Blumenthal.
In fact, Eichenwald literally has zero evidence for any of that. The point is not that his evidence for these propositions is inconclusive or unpersuasive; the point is that there is zero evidence for any of it. It’s all just conspiracy theorizing and speculation that he invented. Worse, the article, while hinting at these claims and encouraging readers to believe it, does not even expressly claim any of those things. Instead, Eichenwald’s increasingly unhinged tweets repeatedly inflated his insignificant story from what it was – a misattribution of an email by Sputnik that Trump repeated – into a five-alarm warning that an insidious Russian plot to subvert U.S. elections had been proven, with Trump and fake WikiLeaks documents at the center.
By itself, this is not so notable: all journalists are tempted to hype their stories. But Eichenwald went way, way beyond that, including – as demonstrated below – demonstrable lies. But what makes it so significant is how many reasoned, perfectly smart journalists – just as they did with Nance’s “Official Warning” – started falling prey to the dual hysteria of Twitter group dynamics and election blinders, to the point where CNN featured Eichenwald this morning to highlight his major scoop linking Putin, Trump and WikiLeaks in the plot to feed American Russian disinformation. Just watch how this warped narrative played out in a very short period of time, with nobody wanting to get in the way of the speeding train for fear of being castigated as a Trump supporter or Putin stooge (accusations that are – yet again – inevitably on their way as a result of this article):
To call all this over-wrought deceit is to understate the case. In particular, the repeated claim that his story has anything to do with, let alone demonstrates, that “wikileaks is working w/Putin” or “wikileaks is compromised” is an outright fraud. The first claim – that “only those two (Trump and Russia) knew” about the article – is an outright lie, since by the time Trump cited it, it had been published hours earlier on the internet and shared widely on social media. Moreover, none of the documents released by WikiLeaks have yet to be identified as anything but completely authentic. But look at his tweets: each has been re-tweeted by close to 1,000 people, and in the case of the most sensationalistic ones, many more. And it was quickly hyped by people who should know better because anyone supporting Hillary Clinton wants to believe that this is true:
Literally none of that happened. Or at least there is zero evidence that it did. These are smart, rational people falling for a scam. Why? It’s in part because Twitter fosters this group-think and lack of critical thought – you just click a button and, with little effort, you’ve spread whatever you want people to believe – but it’s also because they’re so convinced of the righteousness of their cause (electing Clinton/defeating Trump) that they have cast all limits and constraints to the side, believing that any narrative or accusation or smear, no matter how false or conspiratorial, is justified in pursuit of it.
But while Donald Trump’s candidacy poses grave dangers, so does group-think righteousness, particularly when it engulfs those with the greatest influence. The problem is that none of this is going to vanish after the election. This election-year machine that has been constructed based on elite unity in support of Clinton – casually dismissing inconvenient facts as fraudulent to make it disappear, branding critics and adversaries as tools or agents of an Enemy Power bent on destroying America – is a powerful one. As is seen here, it is capable of implanting any narrative, no matter how false; demonizing any critic, no matter how baseless; and riling up people to believe they’re under attack.
For a long time, liberals heralded themselves as part of the “reality-based community” and derided conservatives as faith-based victims of “epistemic closure.” The dynamics seen here are anything but by-products of reason.
Donald Trump, for reasons I’ve repeatedly pointed out,
is an extremist, despicable and dangerous candidate, and his
almost-certain humiliating defeat is less than a month away.
So I realize there is little appetite in certain circles for critiques of any of the tawdry and sometimes fraudulent journalistic claims and tactics being deployed to further that goal. In the face of an abusive, misogynistic, bigoted, scary, lawless authoritarian, what’s a little journalistic fraud or constant fear-mongering about subversive Kremlin agents between friends if it helps to stop him?
But come January, Democrats will continue to be the dominant political faction in the U.S. – more so than ever – and the tactics they are now embracing will endure past the election, making them worthy of scrutiny. Those tactics now most prominently include dismissing away any facts or documents that reflect negatively on their leaders as fake, and strongly insinuating that anyone who questions or opposes those leaders is a stooge or agent of the Kremlin, tasked with a subversive and dangerously un-American mission on behalf of hostile actors in Moscow.
To see how extreme and damaging this behavior has become, let’s just quickly examine two utterly false claims that Democrats over the past four days – led by party-loyal journalists – have disseminated and induced thousands of people, if not more, to believe. On Friday, WikiLeaks published its first installments of emails obtained from the account of Clinton campaign chair John Podesta. Despite WikiLeaks’ perfect, long-standing record of only publishing authentic documents, MSNBC’s favorite ex-CIA official Malcolm Nance, within hours of its release, posted a tweet claiming – with zero evidence and without citation to a single document in the WikiLeaks archive – that the archive was compromised with fakes:
So I realize there is little appetite in certain circles for critiques of any of the tawdry and sometimes fraudulent journalistic claims and tactics being deployed to further that goal. In the face of an abusive, misogynistic, bigoted, scary, lawless authoritarian, what’s a little journalistic fraud or constant fear-mongering about subversive Kremlin agents between friends if it helps to stop him?
But come January, Democrats will continue to be the dominant political faction in the U.S. – more so than ever – and the tactics they are now embracing will endure past the election, making them worthy of scrutiny. Those tactics now most prominently include dismissing away any facts or documents that reflect negatively on their leaders as fake, and strongly insinuating that anyone who questions or opposes those leaders is a stooge or agent of the Kremlin, tasked with a subversive and dangerously un-American mission on behalf of hostile actors in Moscow.
To see how extreme and damaging this behavior has become, let’s just quickly examine two utterly false claims that Democrats over the past four days – led by party-loyal journalists – have disseminated and induced thousands of people, if not more, to believe. On Friday, WikiLeaks published its first installments of emails obtained from the account of Clinton campaign chair John Podesta. Despite WikiLeaks’ perfect, long-standing record of only publishing authentic documents, MSNBC’s favorite ex-CIA official Malcolm Nance, within hours of its release, posted a tweet claiming – with zero evidence and without citation to a single document in the WikiLeaks archive – that the archive was compromised with fakes:
As you can see, more than 4,000 people have re-tweeted this “Official Warning.” That includes not only random Clinton fans but also high-profile Clinton-supporting journalists, who by spreading it around gave this claim their stamp of approval, intentionally leading huge numbers of people to assume the WikiLeaks archive must be full of fakes, and its contents should therefore simply be ignored. Clinton’s campaign officials spent the day fueling these insinuations, strongly implying that the documents were unreliable and should thus be ignored. Poof: just like that, unpleasant facts about Hillary Clinton just disappeared, like a fairy protecting frightened children by waving her magic wand and sprinkling fairy dust over a demon and causing it to scatter away.
Except the only fraud here was Nance’s claim, not any of the documents published by WikiLeaks. Those were all real. Indeed, at Sunday night’s debate, when asked directly about the excerpts of her Wall Street speeches found in the release, Clinton herself confirmed their authenticity. And news outlets such as the New York Times and AP reported – and continue to report – on their contents without any caveat that they may be frauds. No real print journalists or actual newsrooms (as opposed to campaign operatives masquerading as journalists) fell for this scam, so this tactic did not prevent reporting from being done.
But it did signal to Clinton’s most devoted followers to simply ignore their contents. Anyone writing articles about what these documents revealed was instantly barraged with claims from Democrats that they were fakes, by people often pointing to “articles” like this one.
That article was shared almost 22,000 times on Facebook alone. In Nance’s defense, it is true that some unknown, random person posted a doctored email on the internet and claimed it was real, but that did not come from the WikiLeaks archive and has nothing to do with assessing the reliability of the archive (any more than fake NYT stories on the internet impugn the reliability of articles in that paper). Not one person has identified even a single email or document released by WikiLeaks of questionable authenticity – that includes all of the Clinton officials whose names are listed as their authors and recipients – yet these journalists and “experts” deliberately convinced who knows how many people to believe a fairy tale: that WikiLeaks’ archive is pervaded with forgeries.
More insidious and subtle, but even worse, was what Newsweek and its Clinton-adoring writer Kurt Eichenwald did last night. What happened – in reality, in the world of facts – was extremely trivial. One of the emails in the second installment of the WikiLeaks/Podesta archive – posted yesterday – was from Sidney Blumenthal to Podesta. The sole purpose of Blumenthal’s email was to show Podesta one of Eichenwald’s endless series of Clinton-exonerating articles, this one about Benghazi. So in the body of the email to Podesta, Blumenthal simply pasted the link and the full contents of the article. Although the purpose of Eichenwald’s article (like everything he says and does) was to defend Clinton, one paragraph in the middle acknowledged that one minor criticism of Clinton on Benghazi is possibly rational.
Once WikiLeaks announced that this second email batch was online, many news organizations (including the Intercept, along with the NYT and AP) began combing through them to find relevant information and then published articles about them. One such story was published by Sputnik, the Russian government’s international outlet similar to RT, which highlighted that Blumenthal email. But the Sputnik story inaccurately attributed the text of the Newsweek article to Blumenthal, thus suggesting that one of Clinton’s closest advisors had expressed criticism of her on Benghazi. Sputnik quickly removed the article once Eichenwald pointed out that the words were his, not Blumethal’s. Then, in his campaign speech last night, Trump made reference to the Sputnik article (hours after it was published and spread on social media), claiming (obviously inaccurately) that even Blumenthal had criticized Clinton on Benghazi.
That’s all that happened. There is zero suggestion in the article, let alone evidence, that any WikiLeaks email was doctored: it wasn’t. It was just Sputnik misreporting the email. Once Sputnik realized that its article misattributed the text to Blumenthal, it took it down. It’s not hard to imagine how a rushed, careless Sputnik staffer could glance at that email and fail to realize that Blumethal was forwarding Eichenwald’s article rather than writing it himself. And while nobody knows how this erroneous Sputnik story made its way to Trump for him to reference in his speech, it’s very easy to imagine how a Trump staffer on a shoddy, inept campaign – which has previously cited InfoWars and white supremacist sites among others – would have stumbled into a widely-shared Sputnik story that had been published hours earlier on the internet and then passed it along to Trump for him to highlight, without realizing the reasons to be skeptical.
In any event, based on the available evidence, this a small embarrassment for Trump: he cited an erroneous story from a non-credible Russian outlet, so it’s worth noting. But that’s not what happened. Eichenwald, with increasing levels of hysteria, manically posted no fewer than 3 dozen tweets last night about his story, each time escalating his claims of what it proved. By the time he was done, he had misled large numbers of people into believing that he found proof that: a) the documents in the WikiLeaks archive were altered; b) Russia put forgeries into the WikiLeaks archive; 3) Sputnik knew about the WikiLeaks archive ahead of time, before it was posted online; 4) WikiLeaks coordinated the release of the documents with the Russian government; and 5) the Russian government and the Trump campaign coordinated to falsely attribute Eichenwald’s worst to Blumenthal.
In fact, Eichenwald literally has zero evidence for any of that. The point is not that his evidence for these propositions is inconclusive or unpersuasive; the point is that there is zero evidence for any of it. It’s all just conspiracy theorizing and speculation that he invented. Worse, the article, while hinting at these claims and encouraging readers to believe it, does not even expressly claim any of those things. Instead, Eichenwald’s increasingly unhinged tweets repeatedly inflated his insignificant story from what it was – a misattribution of an email by Sputnik that Trump repeated – into a five-alarm warning that an insidious Russian plot to subvert U.S. elections had been proven, with Trump and fake WikiLeaks documents at the center.
By itself, this is not so notable: all journalists are tempted to hype their stories. But Eichenwald went way, way beyond that, including – as demonstrated below – demonstrable lies. But what makes it so significant is how many reasoned, perfectly smart journalists – just as they did with Nance’s “Official Warning” – started falling prey to the dual hysteria of Twitter group dynamics and election blinders, to the point where CNN featured Eichenwald this morning to highlight his major scoop linking Putin, Trump and WikiLeaks in the plot to feed American Russian disinformation. Just watch how this warped narrative played out in a very short period of time, with nobody wanting to get in the way of the speeding train for fear of being castigated as a Trump supporter or Putin stooge (accusations that are – yet again – inevitably on their way as a result of this article):
To call all this over-wrought deceit is to understate the case. In particular, the repeated claim that his story has anything to do with, let alone demonstrates, that “wikileaks is working w/Putin” or “wikileaks is compromised” is an outright fraud. The first claim – that “only those two (Trump and Russia) knew” about the article – is an outright lie, since by the time Trump cited it, it had been published hours earlier on the internet and shared widely on social media. Moreover, none of the documents released by WikiLeaks have yet to be identified as anything but completely authentic. But look at his tweets: each has been re-tweeted by close to 1,000 people, and in the case of the most sensationalistic ones, many more. And it was quickly hyped by people who should know better because anyone supporting Hillary Clinton wants to believe that this is true:
Literally none of that happened. Or at least there is zero evidence that it did. These are smart, rational people falling for a scam. Why? It’s in part because Twitter fosters this group-think and lack of critical thought – you just click a button and, with little effort, you’ve spread whatever you want people to believe – but it’s also because they’re so convinced of the righteousness of their cause (electing Clinton/defeating Trump) that they have cast all limits and constraints to the side, believing that any narrative or accusation or smear, no matter how false or conspiratorial, is justified in pursuit of it.
But while Donald Trump’s candidacy poses grave dangers, so does group-think righteousness, particularly when it engulfs those with the greatest influence. The problem is that none of this is going to vanish after the election. This election-year machine that has been constructed based on elite unity in support of Clinton – casually dismissing inconvenient facts as fraudulent to make it disappear, branding critics and adversaries as tools or agents of an Enemy Power bent on destroying America – is a powerful one. As is seen here, it is capable of implanting any narrative, no matter how false; demonizing any critic, no matter how baseless; and riling up people to believe they’re under attack.
For a long time, liberals heralded themselves as part of the “reality-based community” and derided conservatives as faith-based victims of “epistemic closure.” The dynamics seen here are anything but by-products of reason.
What’s Been the Effect of Western Sanctions on Russia?
When Russia annexed Crimea from Ukraine last March, the United
States and European Union responded with an economic weapon — sanctions.
The first few rounds, applied in March and April of 2014, targeted Russian and Crimean officials, as well as businessmen seen to have close ties to President Vladimir Putin — his “inner circle” — with travel bans and asset freezes.
Since then, the West has steadily expanded its sanctions against Russian entities, targeting major businesses and parts of Russia’s financial, energy and military industries.
FRONTLINE talked to Anders Åslund, senior fellow at the Peterson Institute for International Economics, on Jan. 8, 2015 about the effects and consequences of Western sanctions on the Russian economy. Åslund served as an economic adviser to the Russian and Ukrainian governments in the 1990s.
Then, the important sanctions were imposed on July 16, which are called sectoral sanctions.
We can see that no money has been going into Russia after July. No financial institutions dared to provide Russia with any financing more than a month after that. And that we know from talking to banks. …
The point is that the [July] financial sanctions have worked out as far more severe in their effect than anyone seems to have believed.
The second element is the falling oil prices. The oil prices have now fallen so much that Russia’s total export revenues this year will be two-thirds of what they have been before. That means that Russia will have to cut its imports by half. This is a big blow.
This is then reinforced by the financial sanctions, so that Russia cannot mitigate this blow by borrowing money. By ordinary standards, Russia is perfectly credit-worthy with a public debt that is only 10 percent of GDP. But if you don’t have access to financial markets, then it doesn’t matter how credit-worthy you are, because you’re not credit-worthy so-to-say.
[Editor's Note: On Jan. 9, Fitch Ratings cut Russia's credit rating to BBB-, one step above junk.]
There’s fundamental financial instability in Russia now, and this will have a big impact on the banking system. We’ve so far seen one medium-sized bank going under and two of the big state banks have needed recapitalization. We will see more of that.
And this of course will hit the GDP. My guess is we’ll see a decline in the order of 10 percent this year.
It’s particularly [the fact] that they’re not allowed to go to Europe that hurts them.
[Gennedy Timchenko] lives in Geneva. What I hear is that he moved back to Moscow because it became so impossible. Another of them — Boris Rotenberg — lives in Finland. Both Timchenko and Rotenberg are actually Finnish citizens.
The question is what will happen in the big industrial cities outside the most wealthy cities — Moscow and St. Petersburg. It would be surprising if we don’t see some social unrest down the road, because these are big blows to ordinary people.
The first few rounds, applied in March and April of 2014, targeted Russian and Crimean officials, as well as businessmen seen to have close ties to President Vladimir Putin — his “inner circle” — with travel bans and asset freezes.
Since then, the West has steadily expanded its sanctions against Russian entities, targeting major businesses and parts of Russia’s financial, energy and military industries.
FRONTLINE talked to Anders Åslund, senior fellow at the Peterson Institute for International Economics, on Jan. 8, 2015 about the effects and consequences of Western sanctions on the Russian economy. Åslund served as an economic adviser to the Russian and Ukrainian governments in the 1990s.
Which round of sanctions do you think really had an effect on the Russian economy? How would you measure that?
The sanctions the U.S. imposed came in two big chunks. The first concerned Crimea, and they were only personal sanctions for Crimean and Russian leaders involved in the Crimean drama.Then, the important sanctions were imposed on July 16, which are called sectoral sanctions.
We can see that no money has been going into Russia after July. No financial institutions dared to provide Russia with any financing more than a month after that. And that we know from talking to banks. …
The point is that the [July] financial sanctions have worked out as far more severe in their effect than anyone seems to have believed.
Would sanctions alone have damaged Russia’s economy without the current plunging oil prices?
There are three major causes for Russia’s economic troubles. The first cause is the corruption and bad economic policies that Putin pursues, which on their own would lead to stagnation, or at most 1 percent growth.The second element is the falling oil prices. The oil prices have now fallen so much that Russia’s total export revenues this year will be two-thirds of what they have been before. That means that Russia will have to cut its imports by half. This is a big blow.
This is then reinforced by the financial sanctions, so that Russia cannot mitigate this blow by borrowing money. By ordinary standards, Russia is perfectly credit-worthy with a public debt that is only 10 percent of GDP. But if you don’t have access to financial markets, then it doesn’t matter how credit-worthy you are, because you’re not credit-worthy so-to-say.
[Editor's Note: On Jan. 9, Fitch Ratings cut Russia's credit rating to BBB-, one step above junk.]
What has been the impact on the Russian public so far?
The big impact is that the prices of buckwheat have increased as much as 70 percent. Basic food stuff has increased sharply. We’re seeing consumer panic in Russia because of the falling exchange rate. And the falling exchange rate is mainly because of the oil prices, but it’s also the financial sanctions. People are fearful of the situation and we’re seeing that the exchange rate is jumping up and down. It’s moving either way every so often by 5 percent in a day. The worst we’ve seen is it has gone down by 10 percent in a day.There’s fundamental financial instability in Russia now, and this will have a big impact on the banking system. We’ve so far seen one medium-sized bank going under and two of the big state banks have needed recapitalization. We will see more of that.
And this of course will hit the GDP. My guess is we’ll see a decline in the order of 10 percent this year.
One of the initial rounds of sanctions targeted members of Putin’s so-called inner circle, including Gennady Timchenko [founder of commodity trading company Gunvor], Igor Sechin [chairman of Rosneft, Russia's leading petroleum company], Arkady and Boris Rotenberg [magnates with majority stakes in construction firm Stroygazmontazh, and banks SMP and Investcapitalbank] and others. Were these sanctions largely symbolic, or did they do some real damage?
I think they’ve done real damage. These people… many of them are billionaires. They’re used to living in grand style, and now they are not allowed to travel to Europe and the U.S.
It’s particularly [the fact] that they’re not allowed to go to Europe that hurts them.
[Gennedy Timchenko] lives in Geneva. What I hear is that he moved back to Moscow because it became so impossible. Another of them — Boris Rotenberg — lives in Finland. Both Timchenko and Rotenberg are actually Finnish citizens.
A recent Bloomberg investigation found that companies linked to Timchenko and Arkady Rotenberg actually received more state contracts after being sanctioned. Does that mean the strategy of targeting Putin’s “inner circle” has in some way backfired?
Putin indeed has given Timchenko and Rotenberg more contracts through Gazprom. It now looks as if Putin is making the same mistake as [deposed President] Viktor Yanukovych did in Ukraine, giving ever more to his friends and very little to the others. Putin has been very good previously at distributing widely, but now he has tightened it so that it only goes to his close friends, and that is not likely to be popular.
And what do you think that could lead to, in terms of sentiment?
The elite [who aren't part of his inner circle] are utterly alienated from Putin now. I don’t think they will rise in any way against Putin, but they will take money out of the country as fast as they can, so it will further destabilize the country.The question is what will happen in the big industrial cities outside the most wealthy cities — Moscow and St. Petersburg. It would be surprising if we don’t see some social unrest down the road, because these are big blows to ordinary people.
Are further sanctions possible? What would next steps look like?
My view is that the sanctions are so severe that it’s simply not necessary to reinforce them further. It’s also easier to keep the Western front together. The U.S. has, in this case, been very careful to keep a united front with the whole of the European Union. The administration has thought that it’s more important to keep unity with the E.U. than impose even more severe sanctions. I think that policy has borne fruit now.Have sanctions been seen as a success from the U.S. government’s perspective?
I would think that one could strongly argue that, because what’s happened is that Russia cannot get international financing from any source. Russian international reserves declined last year by $135 billion. We haven’t gotten the final number, but that’s the order. There has been a huge outflow of reserves from Russia. And of course, the Russian economy is now in a serious financial crisis, which is, to a considerable extent, caused by the financial sanctions.Are Russians trying to get around the sanctions? Is that even possible?
They clearly are trying to get around it. They’ve been trying to get money from China. But it’s very striking that the Chinese are not providing financing for Russia, because like everyone else they’re afraid of the American financial regulators. …
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