Call me maybe
Putin hosts his annual press conference and call-in show, "Direct Line"
Hello from the Bear Market Brief. BMB will take a short break for the holidays and will return next year. Happy Holidays!
This week in the news:
Putin hosted his annual call-in show and press conference, addressing topics such as the war in Ukraine, national fertility rates, and the Russian economy.
Lieutenant General Igor Kirillov, the head of Russia’s Radiation, Chemical, and Biological Protection Troops, was assassinated in Moscow.
Two Russian tankers were badly damaged during a storm, causing an oil spill in the Black Sea.
The Central Bank of Russia maintained the key rate at 21% despite criticism of its monetary policy.
— Sara Ashbaugh, Editor in Chief
Putin’s call-in show
Vladimir Putin held his yearly marathon press conference on December 19. Like last year, it was merged with “Direct Line,” his call-in show, during which he answers hand-picked questions submitted by Russian citizens. In the 4.5-hour show, Putin spoke about a vast array of topics, ranging from local problems (e.g. citizens’ troubles with mortgage programs or phone scams) to global issues. As in earlier years, however, the main purpose of the show was to speak to a variety of audiences, from citizens and regional leaders to Russia’s adversaries.
The war in Ukraine occupied a significant part of the airtime, as Putin attempted to show strength and determination while also showing concern for the Russian soldiers sent to Ukraine (who he said needed to return home before he can claim to be fully happy). He said that, in hindsight, he should have made the decision to attack Ukraine earlier and Russia has gotten stronger over the past years as it has become “more sovereign.” In particular, Putin talked up the “Oreshnik” ballistic missile that Russia used to attack the Ukrainian city of Dnipro last month, inviting the Western coalition supporting Ukraine to try and bring down the missile with U.S. air defense. In regards to Syria, Putin simply claimed that Russia had never “waged war” in the country and that its original plan there—the prevention of the emergence of a terrorist state—had been accomplished.
At the same time, Putin gave no timeline for the reconquering of the entirety of the Kursk Region, still partially occupied by Ukrainian forces. Discussing the prospects of a ceasefire in Ukraine, like before, Putin gave decidedly mixed signals. He told a Chinese reporter that he preferred peace talks to ceasefire, which, according to him, would allow Ukraine to rearm; meanwhile, he told a correspondent of the American NBC network that he did not seek to talk with President-elect Donald Trump. Putin also said that Russia was ready to conduct talks with Ukraine “without preconditions” but, at the same time, repeated his earlier demands of Ukraine.
As regards the Russian economy, while Putin acknowledged persistently high inflation, he also claimed that the economy was stable and that high prices were mostly the consequence of supply chains affected by sanctions. Crucially, he hinted that Central Bank head Elvira Nabiullina still enjoyed his trust after weeks of criticism of the Central Bank’s monetary policy from both the State Duma and business leaders.
Putin also signaled to governors that he regards the raising of fertility rates (which was recently added to the list of “key performance indicators”) as a key task, stressing that governors “need to start and end their days” with the issue. He was, at the same time, vague on both migration and abortion, both controversial issues on which a series of regions have adopted restrictive laws, anticipating an ultraconservative turn. Apparently the Kremlin is not ready to follow suit, however. Putin also placed responsibility for access to health care and medication squarely with governors.
Indeed, access to medication and shortages of medical personnel were among the most-discussed topics in the interviews and call-in shows of governors that took place prior to Putin’s show over the past few weeks. Other uncomfortable topics that Putin skipped but governors had to deal with were the series of utility breakdowns affecting Russian regions and growing utility tariffs.
— Andras Toth-Czifra
During Putin’s annual press conference and call-in show this week, he displayed a gift from the 155th Marine Brigade. He said that the soldiers of the Brigade, who are “fighting for the motherland” in the Kursk Region, sent him a signed copy of their battle flag. He then asked two journalists to hold up the flag as he answered a question about the situation on the frontlines. (photo: Alexander Zemlianichenko / AP / Scanpix / LETA)
Blown up in Moscow
The head of Russia’s Radiation, Chemical, and Biological Protection Troops, Lieutenant General Igor Kirillov, and his aide were killed in an explosion in Moscow on Tuesday. A scooter loaded with explosives was remotely detonated as Kirillov and his aide were leaving a residential building on Ryazansky Prospekt. The Security Service of Ukraine (SBU) quickly took responsibility for the assassination, and Russian authorities apprehended an Uzbek man, Akhmad Kurbanov, who was reportedly offered $100,000 to carry out the attack. According to Kommersant, Kurbanov admitted to detonating the explosives while under interrogation. He has since been charged with murder, arms trafficking, and terrorism, and he faces a life sentence if convicted.
On Monday, prior to the assassination, the SBU formally charged Kirillov with war crimes in absentia. Ukrainian authorities said that he was responsible for ordering the use of chemical weapons against Ukrainian troops on the eastern and southern fronts, including the toxic choking agent chloropicrin. A source in the SBU commented, “Kirillov was a war criminal and a legitimate target, as he issued orders to use prohibited chemical weapons against Ukrainian soldiers.” Kirillov was also sanctioned by the United Kingdom for his involvement in the use of chemical weapons in Ukraine, as well as spreading disinformation. In a statement on the assassination, the British government reiterated that Ukraine has the right to defend itself against Russia's illegal war, emphasizing that the killing of a Russian general in Moscow is part of this right.
Several high-ranking Russian political leaders have urged retaliation against Ukraine for the killing, including former Russian President and current Deputy Chairman of the Security Council Dmitry Medvedev, who said that Ukraine will pay for Kirillov’s death. Kirillov is the highest-ranking military leader to be eliminated by Ukraine in Russia since the beginning of the full-scale invasion, although Ukraine has targeted high-ranking Russian officers at the frontlines, officials in occupation administrations, and people within Russia who, like Kirillov himself, spread unsubstantiated conspiracy theories about “U.S. military labs in Ukraine” or were propaganda mouthpieces (e.g. Darya Dugina, daughter of the nationalist philosopher Alexander Dugin, and war blogger Vladlen Tatarsky). The purpose of such attacks is likely to call into question the Kremlin’s ability to protect people who are actively participating in or supporting Russia’s war effort, as well as to undermine the morale of the Russian military.
— Andras Toth-Czifra & Lisa Noskova
Oil tankers wrecked in the Black Sea
Two Russian oil tankers were badly damaged on Sunday, killing a sailor and causing an oil spill in the Black Sea. “Today, as a result of a storm in the Black Sea waters, two tankers, the Volgoneft-212 and the Volgoneft-239, were wrecked. On board the ships are crews of 15 and 14. As a result of the accident there was an oil spill,” said Rosmorrechflot, Russia’s federal shipping agency. Volgoneft-239 was damaged and ran aground, while Volgoneft-212 split in half and sank during the storm in the Kerch Strait. 13 of its 14 crew members were rescued; one died of hypothermia.
According to TASS, the two tankers were carrying a combined total of 9,000 tons of mazut, a low-grade heavy fuel oil, which was “partially” spilled. Rosprirodnadzor, Russia’s Federal Service for Supervision of Natural Resources, is cooperating with the Marine Rescue Service to evaluate the extent of the damage. Early estimates suggest that around 3,000 tons of mazut were leaked into the ocean, although Natural Resources and Environment Minister Alexander Kozlov stressed that it is too early to tell. When discussing the incident, President Putin said that up to 40% of the oil had been spilled. He ordered the creation of a working group to deal with the incident, headed by Deputy Prime Minister Vitaly Savelyev. Additionally, the Investigative Committee opened two criminal cases into the accident for violations of traffic safety rules and operation of sea transport.
On Tuesday, oil began to wash up along Russia’s Black Sea coastline. Videos from the Krasnodar Region show oil-stained beaches and birds struggling to take flight. Environmental news outlet Kedr.Media reported that almost 50 kilometers of shoreline have been affected, and a state of emergency was declared in several surrounding villages. According to Krasnodar Governor Veniamin Kondratyev, on Tuesday, 267 people and 50 pieces of equipment were deployed for cleanup work in the Anapa and Temryuksky districts near the Kerch Strait. “I am grateful to the volunteers who came to the rescue…If necessary, we will increase the number of forces and resources,” he said. By Thursday, the Emergency Situations Ministry reported that more than 5,000 personnel and volunteers were involved in the cleanup effort.
The full extent of the environmental damage is yet to be determined. The Director of the Russian Ornithological Society, Vladimir Romanov, said that approximately 10,000 birds live in the spill zone (including grebes, coots, mallards, cormorants, swans, sandpipers, diving ducks, and more), and over half of them may die. The region’s dolphin population is also likely to be severely affected, as well as commercial fish and other marine organisms. “You can say they hit a key place,” Dmitry Glazov, research fellow at the Severtsov Institute of Ecology and Evolution, said. “I think that such a large spill as this will [impact on the ecosystem] for another 10 years for sure, and maybe even more,” he remarked.
— Sara Ashbaugh
At least one person was killed and twelve wounded in a Russian missile strike on Kyiv on Friday morning. Although the Ukrainian Air Force reportedly downed all five ballistic missiles that were shot at the city, falling debris still caused widespread destruction. Damage to a heating main in the Holosiivskyi district left nearly 700 buildings without heat. According to the Russian Defense Ministry, the strike was in response to Ukraine’s attack on a chemical plant in Russia’s Rostov Region earlier this week. However, some have speculated that it was also in retaliation for the recent assassination of Lieutenant General Igor Kirillov. (photo: State Emergency Service of Ukraine)
Businesses vs. the Central Bank
Andrei Gangan, the head of the Russian Central Bank’s Department for Monetary Policy, gave a long interview to Komsomolskaya Pravda last Monday. During the interview, he refuted criticism of the Bank’s monetary policy, notably its high key interest rate. On December 20, the Bank decided to keep the rate at 21% (in spite of expectations that it could be raised even higher). Gangan highlighted that Russia’s inflation rate—currently over 9% year-on-year—was not significantly higher only because of the Bank’s decision to keep the key rate high. He said that, unlike in 2020 when the bank was able to reduce the rate relatively quickly after an initial sharp hike (to 20%), Russia’s current inflation is driven primarily by internal and not external factors. Notably, this contradicts the message that Vladimir Putin formulated during his end-of-the-year press conference (see above). Gangan also warned that the supply of money in the Russian economy has grown by 65% since 2022.
Addressing the demand for cheaper loans (which many in the business sector claim is necessary to increase investments), Gangan stressed that, considering current labor shortages and difficulties expanding productive capacities, such a step would inevitably lead to further inflationary pressure. Companies that the government considers strategically important already benefit from subsidized loans at lower rates.
The business sector and the federal government have put growing pressure on the Central Bank over the past weeks, due to what they see as risks to corporate liquidity and investments triggered by the Bank’s monetary policy. The Center for Macroeconomic Analytics and Short-term Forecasting (TsMAKP), a government-adjacent think-tank, warned last week that—considering a rise in rental expenses—high interest rates have already increased the number of companies facing a high risk of bankruptcy by twofold this year, and their numbers will grow further in 2025. Several state-owned companies have also warned that they need to cut investment programs due to high rates.
— Andras Toth-Czifra
On the podcast
Between a Russian offensive and the reelection of Donald Trump, the war in Ukraine hangs in the balance. Janis Kluge joins host Aaron Schwartzbaum to explore how we got here and what might happen next.
Quickfire: Regions
Vladimir Putin instructed the federal government to come up with emergency measures to support the coal producing sector. According to the Energy Ministry (led by Sergey Tsivilyov, himself a coal sector entrepreneur), the sector is on the verge of a wave of bankruptcies due to high transportation and production costs, low coal prices, and the loss of European markets. According to recent figures, coal extraction in the Kemerovo Region (Russia’s main coal-producing region) decreased by 8% this year, and coal exports fell by 12%. Several coal mining companies have stopped or significantly decreased operations over the past few weeks. The government does not expect to increase coal exports in 2025, despite earlier pleas by coal producers for the government to put pressure on Russian Railways to this effect (albeit at the same time, the OTEKO Black Sea cargo terminal reduced its shipping rate for coal, potentially making exports via the terminal profitable). The decline of the sector is especially concerning for the Russian government as it supports several single-industry towns. Andrey Panov, the head of the Kemerovo regional government, warned that the region could see inflation and higher utility prices due to decreasing exports.
Last week, the former governor of the Ryazan Region, Nikolay Lyubimov, was arrested on charges of corruption amounting to 250 million rubles ($2.4 million). Lyubimov, a native of the Kaluga Region, managed Ryazan in 2017-2022 as one of the early alumni of the “School of Governors.” He was appointed to the Federation Council by his successor, Pavel Malkov, but prior to his arrest he was forced to resign his mandate in the upper chamber (and with it, his immunity). Igor Grekov, a former deputy of Lyubimov, was also arrested in July last year. It is not uncommon for newly-appointed governors to conduct purges of the associates of their predecessors with the help of law enforcement agencies. However, the arrests of governors themselves, while not unprecedented, is considered rare and suggests that the case against Lyubimov was sanctioned by the Kremlin.
Public discontent with the state of public utility networks and tariffs in Siberian regions has continued. More than 20,000 residents of the Irkutsk Region signed a petition against a planned new system of differentiated electricity tariffs in the region. Some have appealed to Vladimir Putin himself after Governor Igor Kobzev failed to resolve the issue to the satisfaction of local residents. In the Novosibirsk Region, where even the President’s Siberian plenipotentiary complained about the region’s lack of preparedness for the heating season, local Communist deputies started collecting signatures in support of nationalizing heating networks. In the Kemerovo Region, the Investigative Committee opened a probe into heating outages. Meanwhile, Viktor Tomenko, the governor of the Altai Territory, announced that utility tariffs would be raised by up to 18% from July 1 (this is the maximum amount allowed by the federal government)—a decision that is likely to have repercussions in a region that saw several protests against high tariffs last year.
— Andras Toth-Czifra