There is no sign of a détente in the new Cold War between Russia and the West (Winter has come after all). EU leaders said they would ‘stay the course’ as they slapped more sanctions on Russia yesterday and Putin - well Putin was his usual self.
The EU also said it was ‘ready to take further steps if necessary’ as it announced further curbs on investment in Crimea, which Russia annexed from Ukraine earlier this year, including banning cruise ships from stopping off there (Black Sea package holidays will never be the same again).
And, as fighting continues to rage in eastern Ukraine, German chancellor Angela Merkel was pretty clear the sanctions weren’t going anywhere – despite Germany’s high levels of exports to Russia.
‘We see it as a strategic question, whether the self-determination rights of people are decisive or whether somebody who lives in the sphere of influence of a specific country cannot decide freely where he belongs,’ she said at the post-summit news conference.
Earlier in the day Putin had his own news conference – an annual affair that featured the Russian leader bantering with journalists about his love life and comparing his country to a honey-eating bear that the West wanted to chain.
He spent much of the three hour conference blaming, you guessed it, the West for the economic crisis that has seen the value of the rouble fall by more than half this year as the price of oil (two-thirds of Russia’s exports) has tumbled from $100 (£64) a barrel to less than $60.
The rouble against the US dollar. Credit: Bloomberg
Russia’s central bank stabilised things somewhat on Wednesday by announcing it was ready to recapitalise banks and sell off more dollar reserves if necessary – although Putin wasn’t quite so sure, stating ,‘We mustn’t give away our foreign exchange reserves.’ The rouble is now trading at around 59 to the dollar, having seesawed as high as 79 at one point on Tuesday.
That will ease the pressure a bit on Russian companies, which owe some $700bn in foreign debt and are run by the crony capitalists that keep Putin in power. But Russia watchers warned it was still teetering on the edge, as Western companies from Apple to General Motors stop sales in the country and Russians rush to buy value-retaining assets (Ikea kitchen anyone?) before inflation spirals above its current 10% level.
‘This is a full-blown currency crisis,’ Bill Browder, the head of Hermitage Capital, who made a fortune in Russia before he fell out with Putin and his lawyer was murdered, told the Telegraph.
‘People are lining up at night to convert their roubles into dollars and they are buying anything they can that keeps its value. Putin is trying every trick, but the only trick left is capital controls.
‘They won’t announce it: they will just starting doing it quietly by forcing companies to convert dollars into roubles. It won’t work.’
'Putin is a Macbeth figure... bad things will happen to him' - Read MT's interview with Bill Browder