Stagnation in Russia despite massive reserves: EM Strategist

“Russia has 600 bn in FX Reserves but its economy has grown 0.2 Percent over the five years since the Crimea Invasion, Emerging Markets Strategist at BlueBay Asset Management told PolandIN’s Business Arena”

“Putin will not be flying off in a helicopter like Yanukovich,” Tim Ash said on Business Arena, discussing the loudest protests against the Russian President, who took power over two decades ago and comparing the plight of the former KGB man with Victor Yanukovich, who fled to exile from Ukraine in 2014.

The protests are fuelled by the arrest of Alexei Navalny, the opposition activist on his return to his country after treatment in Germany for Novichok poisoning at the hands of FSB henchmen in Siberia at the end of last year. The charges, which have been hanging over Navalny for some time and which he denies, relate to alleged fraud.

However, in the Bluebay analyst’s opinion, Vladimir Putin has not delivered on health care, infrastructure and other public services which may otherwise have encouraged more people to support him should the superpower decide to cash in some of the financial “defences” they have been building over the past five years in order to equip the country to deal with European sanctions.

Asked what he would expect the West to do in order to step up pressure on the Russian government in light of the arrest of opposition activist Alexei Navalny, Mr Ash said that he would expect the EU to up its sanctions, should Navalny not be released on bail on Monday.

The kind of sanctions the strategist would like to see are greater curbs on the movement of capital, such as were put in place in the US under the Magnitsky Act, which puts limits on the business dealings of individuals involved in human rights violation. The auditor Sergei Magnitsky uncovered widespread Russian corruption by a group of Russian tax and police officials were tortured and murdered.

The existing sanctions allow exceptions, which still allow “Oligarch and basically KGB money” to circulate. Secondary trading in Russian sovereign bonds is also still permitted, and many US funds including teachers pension funds can still buy Russian papers.

Demonstrations calling for Alexei Navalny’s release were held in more than 100 cities throughout Russia last Saturday, with nearly 4,000 people arrested at those protests according to opposition sources.

Poland and Lithuania called this week for sanctions to be imposed on Russia, but the bloc is still playing a waiting game to see how.

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