Is Putin’s Russia heading for its own Great Depression? Dave Essel translates the following item from the pages of Novaya Gazeta about ATM cash withdrawal problems in Moscow that he first saw reported by Grigory Pasko a couple of days ago in a brief item on Robert Amsterdam’s blog (the Moscow Times also had a story on banks freezing deposits, perhaps illegally, and we report the latest jaw-dropping plunge in the Russian stock market below).
Banks Restricting Client Cash Withdrawals
A banking panic is now seriously in the cards – due, furthermore, to those very institutions. In Moscow, Globeks Bank is refusing to allow clients to close their deposits before term (in other words telling them that they can withdraw their money and interest only when their deposit has reached the end of its term). Outside Moscow, in the regions, major banks are limiting the maximum amount that may be withdrawn in any one week and are furthermore charging high commission fees of up to 20% on such withdrawals.
On top of this, in Moscow and other major towns, the number of ATMs suddenly displaying the message that they are out of operation “for technical reasons” or simply not delivering cash on demand has increased. One wonders how long depositors and bank customers are going to be able to bear having their nerve tested in this way.
Meanwhile, shop displays are suddenly empty. This is not as yet due to panic buying by the population but rather to difficulties suppliers are experiencing in getting credit, which in turn is leaving them unable to pay distributors’ commissions (money paid to buy the right to be displayed on in-store shelves). This is obviously hurting everyone: customers are not able to get the goods they want, suppliers are not making money from sales, and the shop chains are not earning their commissions.
At a meeting devoted to the problems of the fuel and energy industries, Igor Sechin, the vice-premier with oversight for these, came up with the following way of sharing out the $9 billion tranche of rescue money that Vneshekonombank is prepared to allocate to Russian companies in the sector to cover their external debt. Nearly half, $4.2 billion, will go to Rosneft, whom readers will not need to be reminded is headed by the self-same I. Sechin. The balance will be shared between themselves by Gazprom, Lukoil, and TNK-BP.
No surprise, then, that, now that he has established himself and the #1 anti-crisis manager, Sechin’s help was promptly sought by the country’s largest automotive producers. It would be interesting to know if their petitions included a proposal to appoint the deputy-premier to the boards of their companies?