Russia’s monetary authorities continue to help the West

Vladimir Putin began to restore order in the financial sector, putting him at the service of Russia’s interests. But the export lobby is silently canceling the president’s orders and creating conditions for the export of funds from Russia, including the financing of the Ukrainian army.

timely action

One of Moscow’s first reactions to the Collective West ‘s sanctions against Russia, which began in February, was to impose severe restrictions and bans on foreign exchange transactions. On February 28, 2022, the decree of the President of Russia no.On the implementation of specific economic measures in relation to the hostile actions of the United States of America and foreign states and international organizations that have acceded to them“.

The first paragraph of the decree directly concerned monetary restrictions:

For residents engaged in foreign economic activity to make a mandatory sale of foreign currency in the amount of 80 percent of the amount of foreign currency credited from 1 January 2022 to their accounts in authorized banks under foreign trade agreements concluded with non-residents and provision for the transfer of goods to non-residents, the provision of services to non-residents, the performance of work for non-residents, the transfer to non-residents of the results of the intellectual activity, including their exclusive rights, no later than three working days from the date of commencement force of this decree.

We once had a rule for the compulsory sale of foreign exchange earnings (ranging in value from 50 to 90%), but in the mid-2000s amendments were made to the Federal Law on Foreign Exchange Rules and Foreign Exchange Control, which was repealed. such an obligation. For many years, some MPs tried to restore the rule of compulsory foreign currency sales, but the export lobby in the Duma proved to be very strong. And now the collective West has helped us to restore at least some order in the monetary sphere. Many patriots were convinced that a 100% sale of foreign exchange export earnings was not far off.

two steps back

Alas, the export lobby raised its head again. And he achieved the opposite of what the patriots dreamed of. On May 23, 2022, it was decided to reduce the level of mandatory sale of export earnings to 50%. And this was recorded in the presidential decree of 23 May, which amended the aforementioned presidential decree no. 79 of 28 February 2022. The same decree of 23 May gave the Board of Directors of the Bank of Russia the power to set a different deadline for residents engaged in foreign economic activity to fulfill the obligation to sell foreign currency than that provided for in the decree of 28 February. Initially it was only 3 days. The Bank of Russia immediately took advantage of the right it received and on May 26 extended the period to 120 days! For four whole months, the coin can be hanging no one knows where!

In the mentioned presidential decree no. 79 of 28 February 2022, point 3b is very important:

From March 1, residents are prohibited from crediting foreign currency into their accounts (deposits) opened in banks and other financial institutions outside Russia, as well as from making money transfers without opening a bank account using electronic means of payment. provided by foreign payment service providers.

We very much welcome this step, for which patriots and politicians have been striving for many years. Many expected that this provision would remain in force even if the war of sanctions against Russia was over.

But unfortunately – and here everything turned out exactly the opposite. As reported by the Ministry of Finance on June 7, the subcommittee of the government commission for monitoring foreign investment in Russia, which operates under the department, decided to allow exporters to credit the currency received from non-residents under foreign trade agreements in the accounts abroad from June 6. “This is possible under the conditions for the subsequent repatriation of funds to the Russian Federation and the subsequent sale of export profits in the amount determined by the decree of the President of Russia,” reads the message on the website of the Ministry of Finance. .

Toxic currency to help Ukraine

To be honest, this news shocked me. Although I’m not a lawyer, I see obvious illegality: some kind of subcommittee shamelessly repeals the provision of the presidential decree. If the lobbyists of the aforementioned subcommittee decision wanted to promote it, then they would have to ask for a new presidential decree. And the repeal or immediate disregard of the current decree is a direct path to chaos. It is not hard to guess that if the news was published on the website of the Ministry of Finance, then only Minister Anton Siluanov could be the lobby of this illegal decision.

And now on to the subject. This decision is needed not so much by domestic entrepreneurs driving natural gas, oil, ore, timber and other raw materials to the West, but to the collective West. After all, the currency that the oligarchs, who carry out our exports of raw materials, intend to deposit in foreign bank accounts, will probably freeze and, most likely, will be confiscated. The issue of confiscation of foreign assets, especially financial and monetary assets, is extremely relevant in the West today. They do not really want to help Ukraine out of their own pocket – it is much more pleasant to do so at the expense of seized foreign exchange reserves and assets of natural and legal persons from Russia.

From March 1 to June 6 this year, foreign exchange earnings from exports went to Russia to the accounts of domestic banks. Toxic currency has accumulated in our banking system. What kind of banks, we can not say for sure. But not Sberbank, VTB, Otkritie, Promsvyazbank and other figures in the top ten – most of them under the full sanctions of the collective West, some (such as Gazprombank) – below a few. But this is well known in the Western intelligence service, especially in the US financial services. At the right moment, at the push of a button, Washington and its closest allies can reset all these savings in Russian banks. I have been saying for three months now that the continued use of toxic currency by Russian exporters is complete madness for Russia and for certain exporters.

Forgiveness papers for the oligarchs

The question is what is the fundamental difference between the zero-sum option in domestic bank accounts and the zero-sum option in foreign bank accounts? Obviously, the second option is more comfortable for both the oligarchs and the collective West. The second option gives the parties a chance to negotiate.

And here I want to remind you that last month at a meeting of G7 finance ministers in Germany, the idea was born to lure oligarchs and just rich people to the side of the collective West, to force them voluntarily (remember how ironic the wording is). “Voluntary-compulsory” was in the USSR;) give money to the West for the noble purpose of fighting barbaric Russia.

In the beginning, the idea in the West was precisely the expropriation (or seizure) of their assets. But when the passions cooled down a bit, it turned out that the laws in force in the West did not allow it. We need to make a bunch of laws (and maybe make adjustments to the constitution) to put into practice the well-known slogan “I rob the loot” (or “expropriation of the expropriators”). And time does not wait. The meeting was also addressed by Deputy Prime Minister and Minister of Finance of Canada Chrystia Freeland and announced a brilliant idea that can be called “selling pardons” to the oligarchs from Russia. The latter voluntarily donate part of their capital to the noble cause of the struggle against the “empire of evil” (ie Russia), and in return receive remission of their “sins”. Currency transfers for the purchase of forgiveness will not work from bank accounts registered in Russia, but from foreign bank accounts – to a large extent.

Chrystia Freeland has previously headed the Financial Times office in Moscow for several years and knows some of the oligarchs well. She talked about her idea with some of them and she seemed to have a positive reaction – that’s why she decided to express the idea in such a high assembly. At a meeting in Germany, the idea was welcomed and it was agreed that the issue would be settled further. Indeed, with the help of such a business, the West can kill many birds with one stone: 1) get money. 2) win the oligarchs completely on their side. 3) stop changing their laws.

Thus, the actions of the Minister of Finance Anton Siluanov are very much in line with the idea of ​​his colleagues from the “Financial Seven” regarding the trade of “leniency”.

Take care of the little things

Above I touched on exchange rate easing for export kings. But the monetary authorities do not forget another elite, with a lower rank – the one that acts abroad not as legal, but natural persons. At the beginning of the war of sanctions, such “naturalists” were placed in extreme conditions. In early March, the Central Bank reduced the amount of natural person transfers abroad to $ 5,000 per month. But here too the liberation began. From April, the limit has been raised to $ 10,000 and from mid-May to $ 50,000. At the beginning of the summer, the Bank of Russia became generous in general: from June 8, it allowed individuals to transfer abroad up to 150 thousand dollars a month or the corresponding amount in another currency. Not weak! In one year, a wealthy “physicist” can exceed $ 1.8 million. I would just like to know where he can find a safe haven for dollars, euros, pounds and other “toxic” currencies.

So what?

I want to end my sad remarks with a constructive note. I will repeat some basic truths that should be the basis of a radical restructuring of the domestic economy.

  1. Stop the reckless increase in natural and value-added exports. The export value must be linked to the import plan.
  2. The import plan, in turn, should stem from the country’s economic development plan. At this historic juncture, this should be a re-industrialization plan. Therefore, in terms of imports, the means of production (machinery and equipment) should prevail.
  3. Foreign exchange receipts from exports must be synchronized with foreign exchange payments for imports. Foreign currency should not be accumulated in bank accounts (and even more so in government foreign exchange reserves). With such a system, it is possible to work even with a “toxic” currency (the risks of frost and seizures will be minimal).

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