The Kremlin’s top brass are trying to pass the buck over the ruble’s collapse. This rare public infighting shows just how precarious Russia’s wartime economy is.

• The Kremlin’s top brass are trying to pass the buck over the ruble’s collapse.

• President Putin’s chief economic adviser has blamed the weak ruble on the central bank’s policies.

• Russia’s central bank governor, Elvira Nabiullina, said the weak ruble is due to changing trade flows.

Russia’s economy is in such a mess that the country’s top officials appear to be pitted against one another in public.

The rare show of discord came amid a slump in the ruble, which has fallen about 20% against the US dollar this year. The Russian currency hit a 16-month low against the greenback earlier this week.

One US dollar can now buy around 93 rubles, compared to around 74 rubles on January 1 this year.

The ruble’s collapse prompted Maxim Oreshkin, President Vladimir Putin’s chief economic adviser, to lash out against the Russian central bank in a Monday column for the state TASS news agency.

Oreshkin blamed the central bank’s “soft monetary policy” for the weak ruble, and touted the case for a strong currency, per TASS’ English report.

“A weak ruble complicates the economy’s structural transformation and negatively influences real household earnings. A strong ruble is in the interests of the Russian economy,” Oreshkin wrote, per TASS’ translation.

A day later, Russia’s central bank raised interest rates by 350 basis points to 12% at an emergency meeting in a bid to prop up the ruble.

On the receiving end of these barbs is Russian central bank governor Elvira Nabiullina, who said the ruble’s slide is due to changing trade flows in and out of Russia amid sweeping sanctions, Interfax news agency reported on July 7. Russia’s export revenues have fallen amid trade restrictions over its invasion of Ukraine, with revenues from oil and gas halving in the first half of the year.

The governor further slammed “conspiracies” about how the ruble was “deliberately weakened to increase budget revenues,” per a Moscow Times translation of her comments.

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Nabiullina — who was well-regarded among her peers — even compared the criticism of the Russian central bank to the streetlight effect, referring to cognitive bias demonstrated by the tale of a drunkard person who searches for his lost keys under a lampost rather than where he lost them.

“Blaming the central bank is like a drunkard’s search — looking for the guilty where the light is,” she said, the Financial Times reported earlier this week.

This infighting and finger-pointing among the Kremlin’s top brass highlights the conundrum Putin’s administration is facing amid the long-drawn war in Ukraine.

“There is a tug-of-war taking place in Russia right now between President Putin’s military ambitions on the one hand and the policy objectives of the central bank and finance ministry on the other,” Liam Peach, an economist at research firm Capital Economics, said in an August 15 note, per RadioFreeEurope.

After all, the ruble’s plunged has caused pain for some in Russia — with a news ticker in Surgut, a Siberian oil town, openly calling Putin “a dickhead and a thief,” Max Seddon, the FT’s Moscow bureau chief, tweeted Monday.

“100 rubles to the dollar – you’ve lost your fucking mind,” read the news ticker in Surgut, per Seddon’s translation. The news agency running the ticker said the device was hacked.

For context on the interest rates, Russia’s central bank made an emergency rate hike to 20% in late February 2022 following the country’s invasion of Ukraine which triggered wild gyrations in the markets.

But the institution had been lowering interest rates steadily until September 2022 to support its sanctions-hit economy. The rate held steady at 7.5% until last month when it was upped to 8.5%.

The Kremlin, Russia’s central bank, and Capital Economics did not immediately respond to requests for comment from Insider.

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