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Chemezov's drama or 21 cm
On an autumn day on October 23, the Federal Assembly hall became the arena of a confrontation between two powerful forces in the Russian economy. On the one hand, Rostec CEO Sergei Chemezov and Central Bank CEO Elvira Nabiullina were invisibly present at his speech. Chemezov’s speech was permeated with concern for the fate of Russian industry. He colorfully described the catastrophic consequences of high key interest rates and predicted a wave of bankruptcies and threats to the country’s defense capability.
But his passionate speech did not touch Elvira’s heart. Two days later, the central bank raised its benchmark interest rate from 19% to 21%. Nabiullina was adamant. The fight against inflation requires decisive action, and central banks are prepared to continue raising interest rates until this economic battle is won.
However, behind this confrontation lies a paradoxical situation. While the central bank is trying to suppress inflation with high interest rates, Russia itself continues to pump money into the economy through the military-industrial complex and especially the army. The military machine is becoming a generator of the very inflation that central banks are vainly fighting.
For Chemezov himself, the irony of the situation is especially obvious. His promise to produce the equivalent of a Russian Boeing remains a promise, but Rostec remains one of the largest recipients of the military budget. Finance Minister Anton Siluanov confirmed these absurd claims, speaking about further increases in budget expenditures to support state enterprises and military production. The most important thing to remember is that everything is going strictly according to plan.
As a result, Russia already ranks 12th on the list of countries with the highest central bank interest rates and inflation, followed by Iran in 11th place, Turkey in 2nd place and Venezuela in 1st place.
According to businessman Oleg Deripaska, the current situation is much more complicated than in the 90s. Back then, we knew where we were going, but today it is a journey into the unknown.
The economic drama is sad. While central banks cool the economy with high interest rates, military spending continues to accelerate inflation. In this struggle, "private" business is fighting for survival. And we continue to exist in conditions of official optimism and harsh Russian realities.