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The woman who built 'Fortress Russia' can deal a huge blow to Putin's wretched war - The Telegraph

Cracks are emerging in the Russian president's inner circle

Ben Marlow - Chief City Commentator for the Telegraph - 26 March 2022

Vladimir Putin’s grip on power is weakening. Professor Mark Galeotti compares the Russian regime to “a circular firing squad”. High profile figures are being quietly unseated, others will follow as the invasion stalls altogether.

Colonel General Sergey Beseda, head of the foreign intelligence branch of the FSB, was arrested two weeks ago on suspicion of embezzling money. Roman Gavrilov, the deputy head of the National Guard, has been accused of leaking classified information to the West and "squandering fuel". His boss Viktor Zolotov hasn't been seen for weeks, nor has Defence Minister Sergei Shoigu amid rumours of "heart problems".

As the atmosphere of paranoia and distrust ratchets up, the defections have begun, with Anatoly Chubais the first to flee in protest at the war. As climate envoy, Chubais is a mid-ranking official but as the man credited with launching the political career of Putin in the 1990s his departure is a big blow and a huge opportunity for the West.

With cracks emerging in the Russian president’s inner circle, the intelligence services must now target other top figures that they think can be persuaded to follow Chubais’s brave example and defect, starting with highly regarded central bank governor Elvira Nabiullina. If Nabiullina can be convinced to change sides it will be a huge blow to Moscow's war effort. The prospect of a mass exodus of senior people has sent the Kremlin into panic mode. United Russia, the Kremlin-backed party that dominates the parliament, has brought in new measures that require MPs to ask for permission to travel abroad, stating the purpose and dates of the trip.

In Nabiullina there is every reason to suspect she would secretly love to escape. The 58-year-old attempted to resign after Putin ordered the invasion but he refused to allow it and instead, she was appointed to serve another five years. Nabiullina has one of the most thankless jobs in finance right now but unfortunately for her, she has been very good at it, which is why she commands such respect both inside the Kremlin and on the international stage, a rare feat for any Russian official these days.

She was a key figure in Putin’s “Fortress Russia” plan to insulate the Russian economy from external shocks. Her decision to bolster foreign reserves with a $650bn (£490bn) war chest enabled the country to weather Western sanctions and the tumbling rouble.

Even when Russia fell into recession, Nabiullina stood by her ultra-conservative monetary policy. When inflation was eventually brought under control, she won the admiration of Putin and widespread plaudits abroad. Former IMF chief Christine Lagarde once compared Nabiullina to “a fantastic conductor”, a nod to their shared passion for opera, while several financial publications declared her the world’s number one central banker. The latest sanctions blitz have tested her skills to the limit. The decision to double the key interest rate to 20pc and impose strict capital controls to stanch the outflow of cash have stabilised the rouble and taken the edge off the West’s punitive measures.

But Nabiullina’s reputation has suffered. She has been criticised for failing to anticipate a war that experts say has been years in the making, while questions have been asked about her failure to honour a pledge to resign if capital controls were imposed.

The jury is out on other measures such as a demand for “unfriendly nations” to pay for Moscow’s gas in roubles. Some experts believe the move will backfire because it allows buyers to renegotiate the purchase price. Others have called it a masterstroke that will prompt a scramble for roubles that strengthens the currency.

Fellow financiers also question how long she will allow herself to be associated with Putin’s war. In Russia there is a divide between the technocrats and financial experts whose job it is to keep the economy on the straight and narrow and are opposed to the war, and the security thugs tasked with containing unrest, disobedience, and dissent, who enthusiastically back the invasion in the hope of acquiring more power, money and influence.

Nabiullina is said to be torn between her opposition to a war that has enacted huge damage on the Russian economy and a sense of duty to help ordinary Russians.

Still, it is obvious that her faith and allegiance have been severely tested by the invasion, which is why all diplomatic channels should be opened to her. Nabiullina’s defection would not just be a huge propaganda coup, it would also further destabilise the Russian economy.

Chubais has courageously shown the way. She should also be reassured by the actions of Boris Lvin, who resigned as a senior adviser to Russia’s representative at the World Bank, because “I can no longer associate myself with my government”, and Oleg Anisimov, a senior Russian climate delegate, who said he could not find “any justification” for the war.

The fate of Beseda and Gavrilov, along with the mysterious disappearance of Zolotov and Shoigu may provide further food for thought.

Whichever way you cut it, Nabiullina is enabling the invasion, and as former Ukrainian central banker Valeria Gontareva told the Financial Times, one day that may mean “sitting in The Hague with all these bandits.” Perhaps that thought will help her, and indeed other high profile figures in Moscow, decide whose side to be on in Putin’s wretched war.

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Elvira Nabiullina, Russia's highly regarded central bank governor Credit: SHAMIL ZHUMATOV/ REUTERS

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