Russia's Business Elites Dumping Rouble, Bracing For War
MOSCOW - Russian business elites are dumping the rouble and bracing for war as fears of an invasion on Ukraine grow. Many are 'bracing for heavy losses' but are unable to speak out or influence events.
On Monday the rouble fell to its lowest point in over a year against the dollar at 78 rubles. Russian stocks also did a free fall by 8 percent to a 14 month low after two weeks of steady decline.
US stocks also plunged with the DOW falling 1,000 points by 3.15% in a single day. The S&P fell by 3.8% and the Nasdaq Composite fell by 4.48%.
According to the Russian independent newspaper The Moscow Times, the current financial market has seen 'billions in lost value' as well as the negative effects of 'new rounds of hard hitting Western sanctions'.
The Moscow Times has reported that business owners and representatives told the paper that they bracing for possible military conflict in 'silent despair', unable to influence the course of events and 'unwilling to speak out publicly' about their losses.
One official at a Moscow government department spoke to the Moscow Times in anonymity saying, "After a couple of conversations with the guys directly involved in the Donbass, I transferred all my assets to dollars and sold my Russian stocks. This was back in December when nobody expected anything".
A senior veteran banker at a private firm spoke to The Moscow Times in anonymity saying "This topic has suddenly become the main point of conversation among business people like me — not the oligarchs but the successful Russians just below them".
"We are wealthy and have a lot to lose. A lot of us have second homes in Europe, we have residency permits in the West, so we are heavily invested in this" they added.
The Moscow Times said that none of the senior business figures or high-net-worth individuals that they contacted were wanting to talk publicly about their views on the 'economic consequences' of the 'diplomatic crisis' and the possible 'slide to war'.
The paper stated that Russians have been hit hard with the rouble falling sharply in the last few weeks along with a stock market crash that wiped out $150 billion in value of Russia's top companies.
The paper said that despite of the fact that U.S. sanctions that are currently being threatened could 'devastate' the economy in Russia, coupled with travel bans, asset freezes for those at the top of the corporate ladder, there has been 'almost no public outcry, concern, pushback, or even discussion' about the economic damage that a military conflict would bring.
"While nobody wants war, don’t expect big business to stand up and voice their opposition. We have become passengers. The business community will only discuss war in their kitchens. Everybody will stay quiet in public" the investment banker stated.
The Moscow Times said that 'business comes second' and that Russia's business elite, oligarchs and heads of Russia's state-owned enterprises are known for their 'loyalty to the Kremlin'.
The paper stated that one of the first things that Putin did when he first held presidential power nearly two decades ago was tame the political power of Russia's 'leading oligarchs'.
"Many of those in business today understand they hold their positions only as long as President Vladimir Putin and his inner circle allow it" the paper stated.
While they might bicker 'gently' in public about tax rates, investment schemes or government support, foreign policy is off limits.
This approach, the Moscow Times said, has brought many people even beyond Putin's chosen inner business circle 'wealth and status' but in a time of crisis it said, "that comes second to patriotism and loyalty'.
After the annexation of Crimea for instance, Russia went into a state of economic crisis. During this time Putin ally Gennady Timchenko stated "Personal inconveniences and costs to one’s business can and should be neglected when it comes to the interests of the state".
The paper said that some of Russia's business elites are resigned to what could happen due to the fact that it is out of their hands.
One businessman from the Russian Forbes 200 list of the country's richest people told the paper "We can’t do much when bigger political powers are at play. Our hands are tied".
"I expect a further deterioration in relations which will impact Russia’s economy negatively, of course. But big business will just have to ride it out like we have before — we’re no stranger to this".
"It’s impossible to plan ahead or somehow try to protect our interests, because we don’t know what will happen and how the West will react" the paper quoted him as saying.
Business insiders and advisers have also said that there isn't much people can do at this point to protect their investments.
One investment banker said "Things have moved incredibly fast over the last month. There isn’t much that people with wealth can do at this moment to protect themselves against a possible invasion — it is a bit too late for that".
"Russian assets are not in high demand, the ruble is crashing and any liquid assets are already being transferred abroad" they added.
A former U.S. Ambassador to Russia Michael McFaul wrote a tweet on Tuesday responding to the current market crash in Russia saying "I used to know well several CEOs of these companies".
"I am pretty sure I can predict their private views of these senseless war preparations, let alone war. Their views expressed in public, of course, will be different" he added.