Before the Russian invasion of Ukraine, Elvira Nabiullina was more familiar with the inner circle of the financial world. There, however, the president of the Russian central bank was a star, highly respected in her field and receiving multiple international awards. Since the Ukraine war, Nabiullina has been just one of Vladimir Putin’s war accomplices, albeit a particularly important one. Nabiullina owes her rise to the top of the Russian central bank to Putin. She there she helped the president prepare Russia’s economy for war. But now Putin is destroying his life’s work with his war.
When Western sanctions hit Russia hard, Putin summoned representatives from the central bank and the Treasury Ministry. The photos show the group at an extra-long table. Putin is enthroned at the head. At the other end, among the officials, sits a woman in a black dress, looking at her notes with a serious expression: Elvira Nabiullina.
His expression is as serious as the state of the Russian economy. The ruble has collapsed, the stock market has closed, foreign companies are fleeing with their capital, and Nabiullina knows that this is only the beginning.
“The Russian economy is in an extreme situation that everyone hoped would not happen”: According to Reuters, Nabiullina is said to have said this phrase to central bank employees in the first days after the attack on Ukraine. The West had just begun to impose sanctions. But the central bank chief seemed to have an idea of what now threatened Russia.
Quick race for Putin
Who is this Elvira Nabiullina? First of all, she is one of the closest and most loyal employees of Vladimir Putin, to whom she owes her steep career. Nabiullina was born in Ufa in 1963 into a Tatar family. In the 1980s she studied economics at Lomonosov Moscow State University.
He entered politics through the Russian Federation of Industry and Entrepreneurs and made a career at the important Ministry of Trade and Development. In 1997 she became Vice Minister. After a stint at the top of Russia’s largest bank, Sbierbank, she returned to the ministry. Since 2012, Nabiullina has worked directly as an economic adviser in the Putin presidential administration. Thereafter, Putin appointed her central bank governor on March 12, 2013.
In the financial world, this was a surprise. Nabiullina was not on the list of candidates circulating in the media. But already at her appointment there were positive reactions from analysts.
“This candidacy can be seen as a compromise between advocates of tough monetary and credit policies and advocates of involving the central bank in the process of driving economic growth,” said Ewa Fischer of the Center for Oriental Studies.
The economic journalist Richard Partington of the “Guardian” points out that Nabiullina was highly regarded in the international financial world, even among the harshest critics of the Kremlin’s policies. Colleagues from all over the world paid tribute to the modernization and reforms that she has implemented in the Central Bank of Russia. She is considered to be a staunch opponent of cryptocurrencies.
“Niabullina is a very professional and experienced macroeconomist and central banker. There is no doubt about that,” says Valeria Gontaieva, who headed Ukraine’s central bank from 2014 to 2017, as quoted by the Financial Times: “But without values, her professionalism is nothing,” Gontaieva emphasized.
Mystery of Niabullina’s brooches and clothes
Niabullina has been nicknamed “The Brooch” by Russian tax policy observers and commentators, in reference to the jewelry she often wears in public. In May 2020, when the Russian authorities asked citizens to stay home after the outbreak of the coronavirus pandemic, she wore a brooch in the shape of a house. When the central bank lowered interest rates, she showed up with a dove pin. In the financial world, she is a symbol of soft monetary policy, that is, a greater willingness to lower interest rates.
When asked about this, Niabullina also admitted that she gives her outfit symbolic meaning. “But I won’t explain it,” Nabiullina said on Russian television.
That is why his black outfit in that meeting with Putin after the attack on Ukraine was seen as a sign of mourning.
“We know she hates war because she was dressed in black on Monday. She always wears something that reflects her views,” said Charlie Robertson, chief economist at investment bank Renaissance Capital. “She mourns the Russia that she helped build. I don’t think she hides her feelings from her. Putin will know, but he doesn’t care,” she added.
A decade defending the ruble
As Governor of the Central Bank, Nabiullina had a difficult task from the beginning. A few months after she took office, Vladimir Putin decided to annex Crimea and started the war in Donbass, in eastern Ukraine.
The “Financial Times” noted that in 2014 Niabullina faced the consequences of a sharp drop in oil prices, one of Russia’s main sources of income is the export of crude oil and sanctions for Putin’s first attack on Ukraine. The ruble also fell sharply in value. The central bank had to spend more than $70 billion to prop it up, raising interest rates to 17.5 percent to stop the currency from depreciating.
“Although Russia fell into recession, Nabiullina maintained her conservative monetary policy. Within a few years, the country grew again and inflation fell. This success of hers caused her to be mentioned as one of the best central bankers in the world by many media outlets, which helped her gain the trust of Putin,” commented the Financial Times.
In 2015, she was named Central Banker of the Year by Euromoney magazine. Two years later, the renowned British magazine The Banker chose her as the best central banker in Europe. In 2019, Forbes magazine ranked her 53rd on the list of the most influential women in the world.
Nabiullina prepares Russia for war
As governor of the central bank, Elvira Nabiullina spent almost a decade turning Russia into a financial fortress less dependent on global financial markets. Immediately before the Ukraine attack, in mid-February, the central bank had more than $640 billion in foreign exchange reserves. These were among the highest reserves in the world. In recent years, the central bank has also gradually reduced its assets in US dollars and has focused more on the euro, the yuan or gold.
However, the war and the wave of sanctions against Russia show that the scope of action of the central bank, and therefore also of Nabiullina, is limited. About half of the foreign exchange reserves were frozen and thus removed from Russian access. Major international players have banned transactions to the Central Bank of Russia.
In addition, many Russian commercial banks have been excluded from the Swift system, making it difficult for them to carry out financial transactions, imports and exports. Hundreds of foreign companies have stopped doing business in and with Russia. In addition, the withdrawal of foreign currency from Russian banks was limited and a sales ban was imposed. The ruble has collapsed by 35 percent, and even a sharp rise in interest rates to 20 percent hasn’t changed that.
The Moscow Stock Exchange has been closed for many days. In addition to a deep recession, Russia will also face very high inflation.
Is Nabiullina still in office?
There is even speculation in the media that Elvira Nabiullina has already resigned as central bank governor and the Kremlin is simply hiding it.
Three years ago, Nabiullina gave an interview to the Finance & Development magazine of the International Monetary Fund. The last question was: What leadership qualities are necessary to be successful as a central banker? His response was:
“First, find professionals you can trust and don’t be afraid to surround yourself with strong people. (…) It is important that the people who work in a central bank understand that they are working for the public good, for broader objectives. We must keep our promises to the public. This is an important principle for me and for our employees. In any policy, including monetary policy, compromises are inevitable. But it’s important to understand that there are limits to commitment.”
The article first appeared on Business Insider Poland and was translated by Romanus Otte. You can find the original here.