The Yuan, the Ruble, and the US Dollar in the Russia-Ukraine War

Asia Experts Forum, Claremont-McKenna College, December 2022.
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Sanctions have encouraged Russia to redirect its export focus towards China. Without question, China’s economic engagement with Russia has helped Russia to pursue its economic and military goals in Ukraine. China has taken advantage of the situation to enhance its position in the region, as Russia needs China much more than China needs Russia.

Financial Nationalism in the EU’s East

BEAR Network Policy Memo, May 2021. With Andrew Barnes.

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Following the 2007-08 global financial crisis and its aftershocks, financial nationalism experienced a resurgence in Central and Eastern Europe, particularly in Hungary and Poland. Financial nationalists seek to employ financial levers to promote national unity, autonomy, and identity, favoring national insiders over outsiders both as an engine for growth and as a bulwark against foreign influence. All of this is done in the name of the nation, as state financial activism and national patriotism become conflated. This financial nationalism has deeply challenged the European Union even as EU policies have bolstered the political power and material resources of financial nationalist governments. The EU now has the opportunity and responsibility to draw the line and finally reject these efforts to undermine and exploit the European integration project.

Waving the EU Flag in Eurasia

PONARS Eurasia Policy Memo #590, April 2019. With Benjamin Forest.

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Why do people fly the EU flag in post-Soviet countries that are not EU member states? Waving the EU flag may assert that a particular state belongs, or should belong, to the European community. But as the EU and Russia have increasingly clashed on the international stage, displaying the EU flag in Eurasia often carries an explicit anti-Russian message as well. While Ukraine during the Euromaidan uprising in 2013-14 represents the most obvious example, it is far from the only one. Ee discuss the different political uses of the EU flag in Georgia, Moldova, and Armenia. We find that politicians and publics alike see the EU flag as a signal of both pro-European and anti-Russian sentiment, as indicated by the flag’s ubiquitous presence in Georgia, intermittent and contested use in Moldova, and near-absence in Armenia.

Lessons (Half) Learned: Comparing the 1998 and 2014 Ruble Crises

PONARS Eurasia Policy Memo #370, July 2015. Reprinted in Russian in RBC Opinion, August 5, 2015.

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In December 2014, Russia experienced the most significant drop in the ruble’s value since the financial crisis of August 1998—an event that proved devastating to then-president Boris Yeltsin’s government and its “oligarch” financiers. The December crisis encouraged pundits and scholars to make comparisons with 1998 and to wonder whether dire consequences might be in store for Vladimir Putin’s government as well. Yet despite certain similarities between the two crises, the Putin government has weathered the storm far better than did Yeltsin’s. This is because of three key lessons that Putin and his team learned from 1998 and successfully applied in subsequent years. An equally important lesson remains only half-learned, however, with significant future implications for the Putin regime.

Why the West Should Help Putin Save the Ruble

The Globe and Mail, December 17, 2014.

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The Russian ruble plummeted in value this week. A central bank rate hike on Monday evening ensured future recession but failed to stem the ruble’s rout. Western leaders can be forgiven for experiencing schadenfreude as President Vladimir Putin, faces the prospect of his country’s imminent economic collapse. Yet true financial meltdowns have far-reaching, unpredictable, and often nasty consequences. I was wrong on this one – I underestimated the Central Bank of Russia.

The Ruble and the Yuan: Allies or Competitors?

PONARS Eurasia, Policy Memo #254. June 2013.

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The BRICS states—Brazil, Russia, India, China, and South Africa—have increasingly sought to develop and diversify the international monetary system in ways that do not rely on dialogue with the system’s traditional powers. They are now using the BRICS forum to reinforce economic cooperation among themselves and to create alternatives and work-arounds to existing international institutions.

Mission Impossible:

Modernization in Russia after the Global Financial Crisis

PONARS Eurasia, Policy Memo #196. July 2012.

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After the global financial crisis, Russian President Dmitry Medvedev made modernization the centerpiece of his economic policy agenda. Most importantly, modernization meant diversifying the Russian economy to become less dependent on natural resource revenues. Medvedev, like many other policy makers and scholars, argued that the financial crisis hit Russia especially hard because of Russia’s over-reliance on oil and gas revenues and its concomitant failure to nurture high-technology export industries.

Does Central Bank Independence Matter in Russia?

PONARS Policy Memo #349. November 2004.

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According to conventional wisdom, since taking office in March 2000 Russian president Vladimir Putin has adopted a two-pronged policy of political centralization and economic liberalization. Russia’s banking system, however, has actually come under increasing state influence during that time. In particular, the Central Bank of Russia (CBR), once a fairly independent (if occasionally troublesome) institution, has lost significant policy autonomy under Putin. In the long run it raises the possibility for governmental abuse. Putin’s taming of the CBR reflects his overall economic strategy for Russia, which aims to increase state coordination and influence over the “commanding heights” of finance and natural resources.

Putin’s Power Politics

The Globe and Mail, October 28, 2003.

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A Lesson in Diplomacy

The Nation, March 18, 2003.

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In the late 1980s, Condoleezza Rice taught one of the best courses I took as a Stanford undergraduate. The most memorable sessions involved a crisis simulation designed to teach the fine art of avoiding war. Rice’s class taught us that C students rush to war, while A students work toward diplomatic resolutions. When the Iraqi crisis has ended, what grade will the current Administration have earned?

Putin’s Central Bank Coup

Radio Free Europe/Radio Liberty Newsline, March 25, 2002. Reprinted in Asia Times, March 27, 2002.

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The man Jeffrey Sachs once called “the world’s worst central banker,” Russian Central Bank Chairman Viktor Gerashchenko, resigned on 15 March to the near-universal applause of foreign investors. Yet the international community should think twice before cheering his departure. Gerashchenko’s unexpected resignation signals an end to Central Bank independence in Russia. As such, it represents the final act in President Vladimir Putin’s successful efforts to concentrate political and economic power in his own hands by removing all institutional centers of opposition to his rule.

Perspectives on Russia: Let Banks Just Twist in the Wind

Los Angeles Times, August 31, 1998. Reprinted in St. Petersburg Times (Russia).

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During the 1996 presidential race, Western pundits dubbed the influential financiers who bankrolled Boris Yeltsin’s election campaign Russia’s “robber barons.” This attribution is catastrophically misleading. The largest Russian banks have not made their money by investing in rebuilding Russian industry. Rather, the bankers became wealthy by engaging in speculative financial machinations and exploiting their close ties to the government. The collapse of the Russian treasury bill and stock markets, precipitated by the Asian financial crisis and the drop in oil world prices, laid bare this glaring structural weakness. Russia’s banks do not act like banks.

Juliet Johnson, “A Helping Hand,” Central Banking 19:1 (2008): 85-86.

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Juliet Johnson, “Tightening His Grip – and Losing It,” The Globe and Mail, Toronto, September 17, 2004.

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Juliet Johnson, “Toward the Millennium,” Russian Petroleum Investor, March 1998.

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Juliet Johnson, “The Uncertain Evolution of Russia’s Financial-Industrial Groups,” Russia Business Watch, Winter 1998.

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Juliet Johnson, “High Noon for Russia’s Banks,” Russia Business Watch, Summer 1996.