The subsequent U.S. administration could make an effort to ease tensions with Moscow however Western sanctions are unlikely to be lifted any time quickly, in accordance with Andrei Kostin, the CEO of Russia’s second-largest financial institution, VTB.
Kostin, certainly one of Russia’s most influential bankers and a former diplomat who served in Australia and Britain, mentioned he believed U.S. President-elect Donald Trump would make a real effort to finish the battle in Ukraine, which will probably be near coming into its fourth yr when he takes workplace for a second time in January.
“Considering the statements Trump made during his election campaign, I believe that he will certainly try to make efforts to resolve the Ukrainian war. But will an agreement be reached?” Kostin instructed Reuters from his workplace in one of many Moscow City business quarter’s towers, stressing that any peace settlement must be for the long run.
Trump has pledged to finish the battle in Ukraine rapidly, partially as a result of he doesn’t need the United States to pay to defend the nation.
However, Kostin, who was positioned underneath U.S. sanctions himself throughout Trump’s first time period as president, mentioned he didn’t consider sanctions towards Moscow can be lifted rapidly as there was a strong anti-Russian “vector” within the U.S. institution.
“A good example is the Jackson-Vanik amendment. It was enacted against the USSR, and it was only repealed in 2012,” Kostin mentioned, referring to a Cold War-era legislation linking commerce relations with the Soviet Union to the rights of non secular minorities to to migrate.
A robust insider who recurrently meets with President Vladimir Putin, Kostin mentioned that his personal views on the battle in Ukraine have modified since February 2022 and he now believed that Moscow “did not have much of a choice.”
Anywhere however U.S. Treasuries
Kostin, whose financial institution as soon as had a considerable presence in Ukraine, mentioned he believed that Russia’s reserves that have been frozen within the West after the beginning of the battle wouldn’t be returned.
Western international locations blocked round $300 billion price of sovereign Russian belongings, with the G-7 group and the European Union agreeing earlier this yr to make use of the curiosity they generated to assist Ukraine’s protection. Russia has vowed authorized motion.
“In the West, they say, let’s pay for the reconstruction of Ukraine from the reserves. And they will draw up such a bill that even the reserves will not be enough,” Kostin predicted.
“Russia will never again keep its money in U.S. Treasuries. I’m sure of it. Anywhere, but not there.”
Speaking forward of the beginning of VTB’s annual funding discussion board this week, the place most members will come from China, the Middle East and India, Kostin mentioned the “dozens” of nations keen to work with Moscow confirmed that Western sanctions weren’t working, additionally pointing to the BRICS group summit which was held in Russia in October.
Sanctions-hit economic system to sluggish in 2025
Russia’s sanctions-hit, militarized economic system is anticipated to sluggish subsequent yr and banks’ earnings will fall, whereas the benchmark rate of interest could climb to 23% by the top of this yr, Kostin mentioned.
Kostin predicted that GDP progress will sluggish to 1.9% in 2025, above the International Monetary Fund’s (IMF) forecast of 1.3%. The authorities expects the economic system will develop by 3.9% this yr. He mentioned inflation will sluggish to six.4% from the present 8.5%.
“The war has been going on for almost three years, and a huge number of sanctions have been imposed. We are living in an absolutely unusual situation,” Kostin mentioned. One-third of the state price range was going to the navy, he added.
“It is impossible for the economy to go through such events without consequences. But the country has been living for three years, there is economic growth, and overall a healthy economy,” he mentioned.
Kostin cautiously criticized the central financial institution’s hawkish financial stance, saying the present inflation price didn’t require a benchmark rate of interest “three times this level.”
Kostin likened Russia’s central financial institution governor, Elvira Nabiullina, to British Twentieth-century Prime Minister Margaret Thatcher, who was dubbed the “Iron Lady.”
“I am, of course, not as much of a monetarist and believe that an inflation rate of 8.5% is not so critical for Russia, it could be tolerated,” he mentioned.
Key price not totally efficient
Kostin mentioned that Western sanctions, excessive spending on the navy, state subsidies on many loans and elevated excessive inflationary expectations made the benchmark rate of interest, which is on the highest stage since 2003, much less efficient.
“In the context of high military expenditures and sanctions, an instrument like the key interest rate may not be fully effective in managing inflation,” Kostin mentioned.
He mentioned the Russian rouble would stabilize at round 100 to the greenback after a interval of volatility. The rouble misplaced 15% towards the U.S. greenback after the most recent spherical of U.S. sanctions final month hit the third-largest lender, Gazprombank, which dealt with Russia’s power commerce with Europe.
Kostin mentioned that with present rates of interest, total lending progress will sluggish to 10% subsequent yr from 20% in 2024, whereas Russian banks will be unable to earn as a lot subsequent yr as they did in 2024. He mentioned that VTB’s revenue will fall by 27% in 2025.
VTB, which runs many industrial belongings, together with a shipbuilding conglomerate, doesn’t foresee any mass bankruptcies as a result of rates of interest, even in susceptible sectors resembling coal mining and actual property.
“We do not see the situation of 2008, when major companies collapsed. I do not see any companies that are currently feeling completely bad,” Kostin mentioned.
Source: www.dailysabah.com