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| U.S. sees continued economic decline in Russia, but Moscow strikes an upbeat note | U.S. sees continued economic decline in Russia, but Moscow strikes an upbeat note |
| (about 1 hour later) | |
| Trade between the United States and Russia has increased by 7 percent, despite U.S. economic sanctions, Russian President Vladimir Putin told lawmakers in Moscow this week. | |
| “When I looked at the statistic today . . . [it] even surprised me a little,” Putin said, according to Russia’s Interfax news agency. | “When I looked at the statistic today . . . [it] even surprised me a little,” Putin said, according to Russia’s Interfax news agency. |
| It also surprised U.S. Commerce Department officials, who say that while U.S. exports to Russia are up by about 1 percent in 2014 from last year, imports from Russia are down by about 13 percent. | It also surprised U.S. Commerce Department officials, who say that while U.S. exports to Russia are up by about 1 percent in 2014 from last year, imports from Russia are down by about 13 percent. |
| Even allowing for lag times in reporting, the differences are as stark as the two countries’ public descriptions of the overall effect that U.S. and European sanctions have had on Russia. While the United States insists it sees signs Putin’s government is beginning to crack under the penalties imposed as punishment for Russia’s activities in Ukraine, the Kremlin says that any current discomfort is only temporary. | Even allowing for lag times in reporting, the differences are as stark as the two countries’ public descriptions of the overall effect that U.S. and European sanctions have had on Russia. While the United States insists it sees signs Putin’s government is beginning to crack under the penalties imposed as punishment for Russia’s activities in Ukraine, the Kremlin says that any current discomfort is only temporary. |
| “We have been in much worse situations in our history, and every time we were getting out of these fixes much stronger. This will happen this time,” Foreign Minister Sergei Lavrov told French television last week. | “We have been in much worse situations in our history, and every time we were getting out of these fixes much stronger. This will happen this time,” Foreign Minister Sergei Lavrov told French television last week. |
| Whichever side turns out to be right, however, both agree that substantive change in either direction, despite events such as last week’s plunge in the value of the ruble, is likely to come slowly. | Whichever side turns out to be right, however, both agree that substantive change in either direction, despite events such as last week’s plunge in the value of the ruble, is likely to come slowly. |
| Speaking to reporters Friday, Russian Finance Minister Anton Siluanov said the Russian economy could contract by 4 percent next year and have a budget deficit of more than 3 percent unless the price of oil rises. | Speaking to reporters Friday, Russian Finance Minister Anton Siluanov said the Russian economy could contract by 4 percent next year and have a budget deficit of more than 3 percent unless the price of oil rises. |
| In a news conference last week, Putin told Russians that the economy would rebound within the next two years. The Obama administration sees a similarly long timeline, but with the trend moving in the opposite direction. | In a news conference last week, Putin told Russians that the economy would rebound within the next two years. The Obama administration sees a similarly long timeline, but with the trend moving in the opposite direction. |
| Beyond Putin’s confident demeanor and his high domestic approval rating reflected in recent polls, U.S. officials working on the Russia account spend much of their time studying other tea leaves. Twitter feeds and bank statements, they say, indicate that the smart money is leaving Russia. | Beyond Putin’s confident demeanor and his high domestic approval rating reflected in recent polls, U.S. officials working on the Russia account spend much of their time studying other tea leaves. Twitter feeds and bank statements, they say, indicate that the smart money is leaving Russia. |
| “We don’t think there are going to be big public protests against Putin, but quiet, very concerned protests of the wealthy, powerful people who depend on Putin and whom Putin depends on,” said a senior official who was authorized to discuss the subject on the condition of anonymity. If Putin changes course, the official said, “it won’t be because of public demonstrations but the concerns of the broader leadership around him.” | “We don’t think there are going to be big public protests against Putin, but quiet, very concerned protests of the wealthy, powerful people who depend on Putin and whom Putin depends on,” said a senior official who was authorized to discuss the subject on the condition of anonymity. If Putin changes course, the official said, “it won’t be because of public demonstrations but the concerns of the broader leadership around him.” |
| “We’re not saying the Russians aren’t tough. They’re very tough,” a second administration official said. “Will they survive it? Of course, they’ll survive, but that doesn’t mean it won’t have an effect in their thinking about their leadership or that the leadership isn’t worried.” | “We’re not saying the Russians aren’t tough. They’re very tough,” a second administration official said. “Will they survive it? Of course, they’ll survive, but that doesn’t mean it won’t have an effect in their thinking about their leadership or that the leadership isn’t worried.” |
| Putin’s “bravado,” the official said, “is an indication itself” of his concern. | Putin’s “bravado,” the official said, “is an indication itself” of his concern. |
| The Obama administration says it recognizes that Russia’s current economic problems, including last week’s increase in interest rates after the ruble’s drop, have as much, if not more, to do with the plummeting price of oil, Russia’s primary export, as they do with sanctions. | |
| “There are a lot of combined factors,” Secretary of State John F. Kerry said at a news conference last week, “but the sanctions were clearly intended to invite President Putin to make a different set of choices” on Ukraine. | “There are a lot of combined factors,” Secretary of State John F. Kerry said at a news conference last week, “but the sanctions were clearly intended to invite President Putin to make a different set of choices” on Ukraine. |
| Although President Obama last week signed a bill in which lawmakers authorized more extensive sanctions against Russia and supplies of lethal equipment to the Ukrainian military, administration officials said they had no specific additional measures against Russia currently planned. | Although President Obama last week signed a bill in which lawmakers authorized more extensive sanctions against Russia and supplies of lethal equipment to the Ukrainian military, administration officials said they had no specific additional measures against Russia currently planned. |
| European leaders, who met Friday in Brussels, warned Moscow that they are ready to “stay the course” if Putin does not make progress on a promised cease-fire in eastern Ukraine. | European leaders, who met Friday in Brussels, warned Moscow that they are ready to “stay the course” if Putin does not make progress on a promised cease-fire in eastern Ukraine. |
| Although the European Union has managed to hang together on sanctions, its members remain conflicted over additional measures they see as more damaging to them than to Russia or the United States. What often seems like a strategy whose gains come so slowly that they are difficult to ascertain is designed to preserve unity with the Europeans at all costs, U.S. officials said. | Although the European Union has managed to hang together on sanctions, its members remain conflicted over additional measures they see as more damaging to them than to Russia or the United States. What often seems like a strategy whose gains come so slowly that they are difficult to ascertain is designed to preserve unity with the Europeans at all costs, U.S. officials said. |
| Putin, in his remarks to lawmakers, acknowledged that trade with Europe — normally 10 times that of Russia’s trade with the United States — has been affected. “Our trade with the European Union has fallen by 4.3 percent, and imports from these countries have also dropped somewhere in the region of seven, eight, 10 percentage points approximately with various countries,” he said. | |
| But Andrey Bondarev, deputy head of the economic office at the Russian Embassy in Washington, said that Putin’s assessment of growing trade with the United States was correct. “It is all about the difference between the U.S. and Russian statistics,” he said in an e-mail. U.S. figures include goods that pass through third countries, but “our agencies calculate just direct export-import from/to Russia.” | But Andrey Bondarev, deputy head of the economic office at the Russian Embassy in Washington, said that Putin’s assessment of growing trade with the United States was correct. “It is all about the difference between the U.S. and Russian statistics,” he said in an e-mail. U.S. figures include goods that pass through third countries, but “our agencies calculate just direct export-import from/to Russia.” |
| While U.S. officials say change is more likely to come through pressure from Putin’s inner circle rather than from the Russian public, they still hope for a broader reaction. | While U.S. officials say change is more likely to come through pressure from Putin’s inner circle rather than from the Russian public, they still hope for a broader reaction. |
| “Now, it’s coming right to the Russian kitchen tables with the devaluation of the ruble, with inflation gone wild, with the cost of borrowing,” Victoria Nuland, assistant secretary of state for Europe, said last week. | “Now, it’s coming right to the Russian kitchen tables with the devaluation of the ruble, with inflation gone wild, with the cost of borrowing,” Victoria Nuland, assistant secretary of state for Europe, said last week. |
| “So, the question is, will this start a conversation inside Russia about the course that they’re on,” Nuland said, “about the fact that the Kremlin has prioritized their foreign adventures over the well-being of the Russian people now, not to mention all the Russian mothers and girlfriends and sisters and parents who lost children in the adventure in the [Ukrainian] east when so many Russians were killed?” | “So, the question is, will this start a conversation inside Russia about the course that they’re on,” Nuland said, “about the fact that the Kremlin has prioritized their foreign adventures over the well-being of the Russian people now, not to mention all the Russian mothers and girlfriends and sisters and parents who lost children in the adventure in the [Ukrainian] east when so many Russians were killed?” |