generalspeaking

He That Giveth

"He has given and he has taken away."
"They depend on him, and he depends on them."
Mikhail M. Kasyanov, former Putin first-term prime minister

Moscow has big plans, and most of those plans require huge ruble investments. Like, for example, the stated $400-billion investment Russia plans for the Arctic Circle, to enable it to exploit the tremendous gas and oil reserves believed to be there for the plucking by any of the five Arctic countries, like Russia, prepared to expend state treasury to eventually expand that same state treasury by the boundless natural resources there for their taking.

And it is tremendously costly to upgrade by far measures Russia's creaking military, which it has made great strides in doing to date, presenting admiring Russians and the world at large with the prospect of a newer, even more assertive Russia, militarily capable, bold and extremely well provisioned with the latest that funding and technology can produce. The cost of the Socchi Games to prove to the world that Russia has finally arrived has been absorbed, and the annexation of the Crimean Peninsula another costly adventure.

Speaking of Ukraine, and Vladimir Putin's regenerated profile as an intransigent leader of a growing world super-power hearking back to the glory days of the Soviet Union, which is leading its Baltic neighbours to quake in their boots, the Western-imposed sanctions the country has latterly been groaning under as grim penalty for its nasty and violent interference in the affairs of neighbouring Ukraine has created a backlash of defiance.

One of the financial institutions that the West has made a target of sanctions is Bank Rossiya, selected because it is well known in international circles that it is, in fact, President Putin's bank, so to speak. So, when a member of a family comes under attack, the entire family gathers in strength to push back and give support. Precisely what the Market Council in Moscow did, in lifting Bank Rossiya above the sanctions by doting on it state business, gifting it with stupendous annual commissions.

State corporations, local governments, even the Black Sea Fleet in Crimea moved accounts to the bank, after the Market Council board shifted state business to Bank Rossiya. The tremendous windfall resulting from various branches of the Russian state delivering their business to the Western-sanctioned bank, lifted it into the profit stratosphere, sanctions be damned. Ostracized from the global financial system, it is doing very well indeed now despite that, thank you very much.

The bank went from threat of bankruptcy to supreme privilege as the "personal bank" of Vladimir Putin's inner circle. President Putin's closest friends and colleagues depend on the bank, it is theirs, and Putin's, all of them cronies and billionaires with huge influence over the economy, aiding him and them to maintain a tight grip on power. Since the idea of the targeted sanctions was to squeeze the Russian tycoons who dominate the bank, nothing of the kind has now resulted.

Bank Rossiya now boasts close to $11-billion in assets, controlling an immense financial empire stretching across the economy, including private media conglomerates friendly to the Kremlin in shaping public opinion. When Vladimir Putin reached the pinnacle of power his vow was the elimination of oligarchs who had emerged under Boris Yeltsin when he held a fire-sale of public assets in the 1990s.

"These guys emerged from scratch and became billionaires under Putin", stated Sergei Aleksashenko, formerly a deputy finance minister and central banker. Putin has rewarded his friends, giving them unopposed control of state-owned corporations, gifting them with lucrative government contracts. Corruption, cronyism and graft never had it so good.

Labels: Corruption, Russia, Sanctions, Vladimir Putin

posted by Pieface @ Friday, October 03, 2014