Elvira Nabiullina could barely hide her unease. The governor of the central bank of Russia – famed for sending coded messages with her attire – had chosen to dress in funereal black as she warned about the devastating hit to the Russian economy from sweeping sanctions imposed by western governments in retaliation for the invasion of Ukraine.
With the ruble plunging by more than a quarter and tails forming for foreign currency, Nabiullina announced last Monday that the central bank’s key interest rate would be more than double to a record 20%, to curb soaring inflation. In steps to cushion the blow for ordinary Russians, capital controls would be put in place, while the stock market would temporarily close.
Her choice of clothing, as well as an awkward appearance on TV with Vladimir Putin at an emergency meeting on Monday, have raised questions over what she really thinks about her decision to wage war. Ashen-faced and remote, did she really support the war?
“We know she hates the war as she was wearing black on Monday. She always wears something to give her views away,” said Charlie Robertson, global chief economist at Renaissance Capital. “She’s in mourning for the Russia she helped to build. I don’t think her feelings will be hidden, and Putin will be aware of it. But he doesn’t care.”
Highly respected in the international community, including among some of Putin’s harshest critics, Nabiullina is viewed as a moderniser who reformed the central bank and kept Russia’s economy out of worse trouble despite challenging conditions since taking her post in 2013.
As a former trusted adviser to the president, she is credited with helping to build up a “fortress Russia” economyone with less dependency on the US dollar and better equipped to cope with western sanctions than during Putin’s 2014 annexation of Crimea.
Softly spoken, she communicates not just through words but through her apparel – especially brooches – to drop hints about her policy thinking. In May 2020, as the government urged people to stay at home, she wore a house-shaped brooch. A month later, after cutting rates, she choose a pigeon – in Russian, the word also means “dove”.
“I put something into each symbol but I’m not going to explain,” she told Russian TV two years ago.
For Sergei Guriev, a professor of economics at Sciences Po in Paris and leading authority on Russia, this week’s coded message was to demonstrate the severity of the blow being dealt by western sanctions.
“This time she was in black and had no brooch. It should not be read as she disagreed with Putin’s policy, but as a sign that it is time to bury normal monetary policy,” he said.
Guriev, a liberal-minded former Kremlin adviser who left Russia abruptly in 2013 amid a political crackdown by Putin, has known Nabiullina for 15 years. “[She is] very highly regarded and respected. Viewed as competent, modest, and honest.
“She is trusted by Putin. She has built a lot of elements of fortress Russia – not just foreign exchange reserves but also a domestic payment system and the payment card ‘Mir’ – but I am sure she was not part of the narrow circle making the decision on going to war. ”
Analysts expect Russia’s economy could be set for a deeper recession this year than the one caused by Covid-19. Sanctions freezing the central bank’s assets have severely limited Nabiullina’s room for manoeuvre. Out of $630bn (£475bn) in foreign currency reserves built up by the central bank – which could have been used to protect the ruble – experts say much of the sum has been rendered useless.
Analysts estimate $300bn worth of assets could be tied up at foreign banks, while much of the remaining sum is thought to be in Chinese yuan and gold bullion stored in Moscow, which cannot be sold quickly or easily. With the central bank sanctioned, any possible Middle East or Chinese buyers could also face reprisals from the US.
For Nabiullina, the developments unpick almost a decade of work going against the grain of Putin’s increasing global isolation by opening up the economy. When western sanctions came in 2014 following his invasion of Crimea, she opposed capital controls and pressed ahead with floating the ruble on the currency markets, while adopting inflation targeting, in line with the world’s leading central banks.
In recent years she has taken public positions to urge the government to accelerate reforms to encourage private investment. “She is a brilliant governor. The war is not her fault,” said one Russian economist based in London. “Putin makes geostrategical decisions with huge economic consequences and leaves it to his team of experienced technocrats to pick up the pieces and sort out the mess.”
An ethnic Tatar – the largest minority group in Russia – she was born in the Russian republic of Bashkortostan, between the Volga river and Ural mountains, a year after the Cuban missile crisis. Her mother was a manager at a factory, while her father was a driver. A fan of opera who recites French poetry from memory, she was the first woman to lead the central bank of a G8 country, before Russia’s suspension from the group of rich nations in 2014.
Last week, in an internal video, Nabiullina told staff the economy was facing an extreme situation they had all hoped would not happen. “You can just sense that something really serious has just happened. She pleads with her staff not to start arguing about politics. That’s pretty unusual,” said John Lough, an associate fellow of the Russia and Eurasia Program at Chatham House, who was sent a copy of the video.
“There are signs of panic. It’s extraordinarily serious and it’s going to bring the Russian economy to its knees.”
Now Russian economists question whether she will stay when her five-year term expires in June, although they say her priority could be to help protect ordinary Russians from the consequence of Putin’s actions by staying in post.