putin’s Associates Are Putting Pressure on the Central Bank over Declining Profits

Despite the recent cut in the policy rate from 21 % to 20 %, representatives of large state-owned businesses, including those close to putin, are increasingly vocal about financial losses caused by the tight monetary policy.

CEO of Rostec Corporation Sergey Chemezov has accused the Central Bank of reducing the profitability of enterprises, particularly in the high-tech sector. According to him, the Corporation was forced to curtail the construction of three out of the five planned “green” power plants, while exports of dual-use products are threatened. It is noteworthy that the Central Bank of the rf raised the rate to record levels in October 2024, while the plants in question were supposed to start operating in 2022. Earlier, Chemezov also threatened to suspend the supply of air defense systems, aircrafts and ships to foreign countries because of the risk of bankruptcy of a number of defense companies.

Similar demands were made by minister of finance Anton Siluanov and CEO of Severstal Aleksei Mordashov. Rumors are being actively spread in the media and business community about the possible resignation of Governor of the Central Bank Elvira Nabiullina. Among the potential successors is said to be Pyotr Fradkov – Head of Promsvyazbank and son of the former Director of the rf’s foreign intelligence.

Head of Sberbank German Gref and Chairman of VEB.RF Igor Shuvalov, who have long been loyal to the Central Bank’s policies, have now also joined the criticism.

The emphasis on the high policy rate as a brake on economic development indicates attempts by putin’s inner circle to shift responsibility for the failure of import substitution and declining profitability solely to the Central Bank. The conflict between the financial regulator and the business elite demonstrates a systemic crisis in russia’s economy, exacerbated by the pressure of sanctions and internal structural imbalances.