Symptoms of exacerbating tensions within Russia's elite

In fresh months, signs of increased tension in the Russian elite can be observed. The most fresh manifestation of this was the polemic between representatives of the alleged government's economical block during the Petersburg global economical Forum (18-20 June), to which Vladimir Putin referred at the end of this event. The course of the gathering illustrated a number of disagreements among decision-makers regarding the assessment of the economical situation of the Russian Federation. This happened despite a strictly controlled media transmission in the FR.

The differences revealed mainly afraid 3 issues: the prospects for further economical growth, the optimal value of the ruble and the return of western, primarily American, companies to the Russian market. The background to these divergences is simply a conflict within the FR elite, reported by abroad and independent Russian media. According to them, there is simply a deep economical dispute among Russian decision-makers – its main axis is monetary policy led by Elvira Nabiullina, head of the Central Bank of Russia (CBR). It is to be accused of choking the activities of Russian companies by giving precedence to the fight against inflation and maintaining advanced interest rates. Its criticism is primarily directed by Sergey Czemezov, president of the state-owned Rostech corporation, which deals with arms production, as well as Anton Siwanov, Minister of Finance, FR.

From the very beginning of Russian aggression against Ukraine and the ensuing crisis in relations with the West, disputes within Russia on economical policy are becoming increasingly public. They point out that the rising costs of war and the persistent sanctioning government contribute, in addition to the instability in energy markets, to deepening economical problems. They are besides increasingly generating intrapolitical tensions, although it is not expected that in the close future they will endanger the Putinian strategy of power.

Comment

• Economic slowdown in Russia exacerbates competition for state resources and creates disputes over policy priorities. They are confirmed by the controversy over the state of the economy that occurred during the Petersburg Forum. During the public panel, Maksim Rieszetnikov, Minister of economical Development, stated, among others, that the country is located on a "scratched recession". The other sentences were presented by the another panelists – the head of the CBR and the finance minister talked about the current period of “cooling” the economy and “out of overheating”. Nabiullina reiterated her thesis, first formulated in July 2024 that Russia had already exhausted existing resources to enable economical development. The optimistic diagnosis of the economical situation and its further improvement presented by Putin during the closing session of the Forum, which mentioned different opinions on the occasion, contrasting the situation with a joke.
• These discrepancies uncover the conflicting interests pursued by the government's management of the various parts of the alleged economical block. For CBR, maintaining sufficiently advanced interest rates is crucial in the fight against inflation, including by strengthening currency and reducing demand. A strong ruble is, on the another hand, an obstacle to the request to balance the budget in terms of evidence spending, which is simply a precedence for the Minister of Finance. The advanced cost of credit limits the activity of companies – thus the harsh message by Rieszetników.
• It can be assumed that the conflict over the form of Russia's economical policy will increase due to the slowdown of the economy (CBR predicts GDP growth of 1–2% in this year, while in 2024 it amounted to 4.1%) and a decrease in resources at the ever-increasing expenditures caused by the war. In addition, external force in the form of low oil prices is simply a negative factor, which makes it hard to balance the budget. Russian budget under force from low oil prices).
• Despite Russian announcements, the limited and private participation of US companies at the Forum indicates a deficiency of wider interest from their return to FR at this stage. According to Kirill Dmitriev, the head of the Russian Direct Investment Fund and 1 of the Kremlovian envoys for talks with the US, the event was to be attended by “more than 70” representatives of American companies, although “many of them” did not inform the public about it (the session with their participation was closed to the media). Dmitryev announced the return of business from the US to Russia in February as early as the second 4th of this year, which has not yet happened. As stated by the head of the U.S. Chamber of Commerce in the FR in an interview with the Russian media, there is presently no "large queue" of actors looking forward to returning to the marketplace there, and real interest is manifested by "one-two companies". This suggests a deficiency of crucial advancement in restoring economical cooperation between Russia and the US, as well as a deep reserve for renewed investments in FR by American business.