Unable to criticize Putin, Russian oligarchs turn ire on central banker

Recent additional U.S. sanctions caused the ruble to plummet, while local companies are slashing expansion plans

- Georgi Kantchev

For more than two years, Russia's expanding war economy fueled consumer spending and juiced company profits. But lately, the conflict has pumped up inflation and interest rates, pummeling bottom lines and leaving a trail of disgruntled Russian oligarchs and executives in its wake.

Instead of blaming the war for the hostile business environment, though, Russia's business elites are pinning their discontent on the governor of the country's central bank.

Elvira Nabiullina, in a so-far fruitless effort to crimp inflation, has jacked up the bank's key interest rate to a record, sending borrowing costs soaring.

"Today's central bank rates are a very serious challenge to the development of the economy and industry," billionaire Alexei Mordashov, who controls steelmaker Severstal, was quoted as saying recently by Russian business publication RBC. "Is this the right medicine? I hope that the medicine does not turn out to be more harmful than the disease."

The corporate discontent is a symptom of the increasing economic pressures facing President Vladimir Putin's Russia. Propped up by oil sales and massive military spending, the economy has been surprisingly resilient, but the conflict has also amplified economic imbalances, propelled inflation higher and set off a deep labor crunch. Recent additional U.S. sanctions caused the ruble to plummet, while local companies are slashing expansion plans.

"The elites are fighting for survival and while they remain loyal to Putin, they are increasingly discontent," said Alexandra Prokopenko, a former Russian central bank official who is now a fellow at the Carnegie Russia Eurasia Center in Berlin. "Nabiullina has become a convenient target."