The 38-year-old Russian Gleb Prostakov is in a position that we could classify as balanced to comment on the current conflict, having spent most of his life in neighboring Ukraine. “We don’t usually talk about nationality here in Russia, especially in the present situation,” the former editor-in-chief of the Ukrainian edition of the Vesti news channel and current political and economic analyst for the Russian newspaper Vzglyad told DINHEIRO. Prostakov is not just a passer-by between the two countries currently at war: he was an adviser to Ukraine’s former presidential candidate in 2010 and 2014 and deputy prime minister at the time, Serhiy Tihipko, a leading figure in the country’s politics. In his articles a year ago, Prostakov believed that sanity and tolerance would serve as Ukraine’s future—a picture that, sadly, is gone. Now he understands how Russia and Ukraine got into this almost inevitable situation and partly blames the West for a campaign against Russia. But even so, he believes the country’s economy can evade Western sanctions. At least in the short term…
How did the Russian market react once it became clear that the two countries escalated to a war?
The Russian market is in the midst of accepting a new reality. The ruble’s fall, suspended on February 24 and 25 due to an intervention by the Central Bank, resumed on the 28th, but ended up being fueled by declarations of sanctions by the US, the European Union and several other countries against the Central Bank’s reserves. But note that only a part of the regulatory reserves is placed in instruments in the West. Between half and three quarters are more likely to be in currency and gold within the Russian Federation, which is likely to sustain the financial system in the short term.
In the short term, but…
The main sanctions affect the financial sector — several large state-owned banks. Sanctions are heterogeneous, they can be drastic, from being on the SDN list (companies, individuals or countries subject to sanctions created by the US Agency for Foreign Asset Control, OFAC) to something less severe. Big banks are more likely to disconnect from Swift (seven banks have already been, as of Wednesday, March 2, leaving Sberbank and Gazprombank, Russian oil and gas payment channels for Europeans). Russia, however, has its own payment processing system, likely linked to Asian partners who use the same system. Swift’s restrictions won’t affect energy exports, which are essential to the economy. On Monday (28), a package of anti-crisis measures was approved, including the sale of 80% of the resources of exporters, and the ban on capital withdrawal through bank loans to non-residents of Russia. The BC base rate was considerably increased in the second – from 9.5% to 20%.
In Brazil, there is talk of problems with exports to Russia, such as meat, and import of fertilizers.
There are currently no restrictions on food imports from Russia. Restrictions may be of a technical nature related to restrictions on Swift’s operation here in the country. As you know, Brazil does not support sanctions against Russia (although at the UN, Brazil voted against the invasion), which means that there is no reason to impose any restrictions on Brazilian imports.
Does Russian commerce and business have a plan after the West cuts off access to Swift?
Disabling Swift will have a short-term effect. But in that case Russia will switch to its own SPFS system, or Financial Messaging System, as well as using China and other analogues.
Western companies doing business in Russia are distressed. The motto “it’s just business” will be put aside, won’t it?
Several suppliers, in particular Boeing, are already refusing to supply Russia with their products. Lessors demanded the return of their aircraft on our soil. Some are abandoning joint projects, such as the oil company Rosneft, in which the Russian government is its biggest shareholder, and other state-owned companies. At the same time, Western companies with production and marketing in Russia are interested in keeping their business. The government does not want to prevent this, particularly in the consumer segment, and actually wants to support them. The problem is the need for Russian subsidiaries of these companies to comply with sanctions from their own governments. In that case, there may be counter-sanctions from Russia, which may even nationalize them — if the West starts taking Russian property in its jurisdictions.
The Moscow Stock Exchange fell: it was at 3,500 points on February 17th and was at 2,400 on February 25th. Bad sign?
It is now difficult to say how collapsed the Russian stock market is. On February 24th and 25th, the market plunged from 30% to 40%, recovering with the news of the recognition of the DPR and LPR (separatist regions in Ukraine not recognized by the European Union, but by Russia). But it is not clear what losses the exchange suffered from the start of shares in Ukraine because trading on Russian stock markets was suspended by regulatory decision.
It is very difficult for the West who is not an expert on Eurasia to know how the Russian population is reacting to this conflict, despite protests.
Now there are no reliable estimates from Russian society to events. According to a survey by the All-Russian Public Opinion Research Center (a state-owned company), 68% support stocks in Ukraine. It remains unclear how representative this measurement is. The reaction of Russian society can be measured by second nature — not so much in relation to the events in Ukraine, but in how much it affects the lives of citizens, such as the devaluation of the ruble, the increase in the price of products…
Here in Brazil we have a neighbor that we like to get on our feet, Argentina. But it’s almost a folkloric thing, something like Pele versus Maradona. How is the relationship between Russian and Ukrainian?
Russia and Ukraine had similar relations until 2014, with the violent overthrow of power without any legitimate procedure (fall of President-elect Viktor Yanukovych, who was approaching Russia). After that, Ukraine became a platform for confrontation between the West and Russia. Large-scale propaganda on both sides contributed to the deterioration of relations not only between countries but also between people. The war in Donbass (a region in Ukraine where a dispute between separatists and the Ukrainian government has been going on since 2014), which in my view is essentially a civil conflict with the involvement of external forces such as the USA, UK, European Union and Russia, has further aggravated more the situation. A major irritant for Russia was a Russophobic policy by the Ukrainian government, as well as tolerance for the rise of neo-Nazi movements in the country. Overall, there is a great human tragedy, destroying families and innocent victims by the confrontation of two fraternal populations, who have become hostages to destructive Western politics.
On the streets, does everything seem like a normal day or is there some discomfort with the country being in the middle of a conflict?
Tudo is calm on the streets these days. The biggest battle is on the internet. There are spontaneous and organized protests against the war in Russian cities, which are repressed by the authorities in order to give no chance for the situation to get out of control. However, most citizens are experiencing clear and strong tension with regard to ongoing events. We had Covid-19 and soon after that. Society didn’t even have a break.
You, who were born in Russia and lived most of your life in Ukraine, how do you feel about what happens?
With a feeling of great tragedy before my eyes. With a wish that everything ends as soon as possible. But even feeling this, at the same time I clearly understand the logic that made this conflict inevitable.
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