TIME russia

Russians Brace For Thrifty Christmas As Sanctions Hit

RUSSIA-ECONOMY-FOREX-RUBLE
Pedestrians walk under a board listing foreign currency rates against the Russian ruble outside an exchange office in central Moscow on November 10, 2014. Vasily Maximov—AFP/Getty Images

Since the Russian currency has lost around 40% of its value, it is much harder for locals to afford a trip abroad or shopping for the holidays.

The Kanounnikova family had big plans this year for the holidays. They were going to gather in Florida, the adopted home of Natalia Kanounnikova, who’d become an ice skating celebrity since moving to the U.S. from Russia. In 2006, she even made it into the Guinness Book of World Records for the fastest spin on ice skates (topping 300 rotations per minute) and had since broken her own record during an appearance with Al Roker on the Today Show. “It’s time to spin!” Roker cooed at her on the rink in New York City’s Rockefeller Center as two officials from Guinness – and millions of Americans – looked on.

But instead of shopping for presents last week and preparing to travel to Florida for the reunion, her mother Irina was standing in line at a B&N Bank branch in Moscow, standing near a sign showing the ruble’s exchange rate – the ubiquitous omen of financial woe that hangs all over the Russian capital. “We’ve had to cancel the reunion,” she sighed.

The reason? It’s become too expensive for many Russians to travel abroad. Weighed down by western sanctions, a falling oil price and a surprisingly strong dollar, the value of the Russian currency has plummeted to historic lows. It cost nearly 49 rubles at the end of last week to buy a single greenback, compared to only 32.9 in January. That means millions of Russians have seen their purchasing power – and the dollar value of their savings – slashed by nearly 40 percent since the beginning of the year. “I didn’t really think about exchange rate before, but now I have to check it every day,” Kanounnikova said while waiting to see the bank clerk. “I can’t just pay for something without thinking.”

In many ways she and her fellow citizens have their President to thank. The decision of Vladimir Putin to invade and annex the Ukrainian region of Crimea this spring has brought a series of sanctions against Russia from the West, gradually cutting off the access that major Russian firms once enjoyed to the Western financial system. To scrounge up enough dollars and euros to make payments on their Western loans, these corporations now have to sell off billions of rubles, putting enormous pressure on the value of the currency. Regular Russians have thus sprinted to their local money changers to get rid of their rubles before their value drops any further, causing a knock-on effect that has decimated not only the value of the currency but the faith that many Russians have in their country’s financial health.

According to a survey released on Friday by the Kremlin’s leading pollster, only 17% of respondents in a nationwide poll were upbeat about the direction their economy is headed. “Most social indexes of how people are feeling have demonstrated a negative trend in the past months,” the sociologists at the WCIOM center in Moscow reported.

That shouldn’t come as a surprise. Even Russia’s own central bank predicts that economic growth will hit a zero percent growth in 2015 after sagging to around one percent this year. A further drop in the price of oil – Russia’s most important export – could easily send the country into deep recession, and further isolation from the West will do nothing to help.

The impact of the slump will not only reach the bankers and oil barons whose incomes depend on global financial markets. People like Jocelyn Malicse, who moved to the Russian capital from the Philippines six years ago to work as a nanny, have also seen the value of salaries cut nearly in half. The family that employs her promised her the equivalent of $1,000 dollars per month, which at the time amounted to 24,450 rubles. Although that is still her ruble salary, it’s now worth only $523, leaving her a lot less cash to send back to her husband and four children in Manila. “It’s really affecting me,” she says. “I just cancelled my plans to go back home to see my family for Christmas.”

Foreign travel, which was banned for most people living in the Soviet Union, has become a national pastime for Russians since the 1990s, making them one of the biggest sources of income for tourist destinations from the Mediterranean coast to the Gulf of Mexico. Now millions of them will have to look for cheaper places to holiday and shop – or seaside towns in Russia where rubles are accepted.

“You can feel the way politics change things,” says Valery, a personal trainer exchanging rubles for dollars on Saturday afternoon at a currency exchange booth in central Moscow. His wife and children, 19-year-old triplets, all live in Kiev, and he’s just had to cancel a trip to visit them later this month. And what about the holidays? “Everybody will get their presents,” he said with mock reassurance. “But they won’t be cars. This year, we’ll keep it simple.”

But there is little sign that such anxieties are weighing on Putin’s popularity. The annexation of Crimea sent his approval ratings soaring toward record highs this summer on a wave of nationalist euphoria, and as of last month, they remained at a whopping 88%, according to the latest survey by the Levada Center, Russia’s leading independent pollster.

So the President, at least in public, still feels comfortable enough to brush off the slump in the national currency. “We are now seeing speculative jumps of the ruble, but I think that it should stop in the near future,” Putin told an economic summit in Beijing on Monday. “The events we are seeing now in Russia have absolutely nothing to do with the fundamental economic reasons and factors,” he added.

But that seems out of sync with the stagnation that most economists see in Russia’s future. “I would certainly contend that fundamentals are indeed driving ruble weakness,” noted Timothy Ash, head of strategy at Standard Bank in London, in response to Putin’s remarks. “Sanctions are not some kind of aberration, but a fact, and a reflection of policy choices made by Russia,” he added.

In the coming months, as the pressure of those sanctions continues to weigh on the broader economy – and on the pocketbooks of millions of workaday Russians – Putin’s approval ratings are likely to fall back to earth, says Lev Gudkov, the director of the Levada Center. “The euphoria can’t last forever, especially as the costs start to become clear.”

The most tangible cost is likely to remain inflation, a word still loaded in Russia’s collective memory with the financial chaos of 1998, when a full-blown currency crisis led to debt default, hyperinflation and the rapid decimation of people’s savings. Today, the country’s inflation rate is already at a worrisome 8.3 percent, and food prices have risen 11.4% since the beginning of the year.

Yet even as Russians nerve themselves for a gloomier holiday season, they often see no way to do anything about it. “I’m a pessimist,” says Vladimir, a brawny refrigeration mechanic at a mall over the weekend. “It’s not the first time we’ve been in this mess and I have zero faith the government will handle it right. But what can you do? You just have to put up with it.”

TIME russia

Russian Media Narrative on MH17 Tragedy Highlights Kremlin’s Grip on Public Opinion

A camoflage sheet is hung to block the view through a gate of the Malyshev Factory, a state-owned producer of heavy machinery where a train transporting the victims of Malaysia Airlines flight MH17 was taken on July 22, 2014 in Kharkiv, Ukraine.
A camoflage sheet is hung to block the view through a gate of the Malyshev Factory, a state-owned producer of heavy machinery where a train transporting the victims of Malaysia Airlines flight MH17 was taken on July 22, 2014 in Kharkiv, Ukraine. Brendan Hoffman—Getty Images

Most Russians get their information about the world from television, much of which is controlled or influenced by the state

Outside Russia, the tragic crash of Malaysia Airlines Flight 17 (MH17) has refocused the world’s attention on the separatists in eastern Ukraine who are suspected of shooting down the plane with Russian arms. But inside Russia, a dramatically different narrative has taken hold. The conspiracy theories are as varied as they are bizarre: The Ukrainian military shot down the plane in a failed assassination attempt on Putin, the plane was filled with dead bodies, the crash was orchestrated by the U.S. or NATO.The theories have one thing in common: Russia, and Putin, are not to blame. It may be mind-boggling in the West, but one thing the crash has brought disturbingly to light is the extent of Putin’s grip on public opinion in Russia.

When it comes to the information wars over the MH17 crash, the Kremlin fights its battles almost exclusively on TV. Despite an expansion of new-media outlets in the 1990s and early 2000s, the state has since reasserted control over much of Russian media. According to a recent poll by the Levada Center, an independent non-profit research organization based in Moscow, 90 percent of Russians say they get their information about Russia and the world from television, nearly all of which is owned or influenced by the Kremlin. Only 24 percent said they get information from the Internet.

“We used to hear many people saying they are fed up with state television,” says Mikhail Zygar, the editor-in-chief of TV Rain, Russia’s only independent news channel. “Probably this changed because Russian television changed. It used to be like North Korea and now it’s like Fox News.”

Not long after Putin first came to power in 2000, the Kremlin began exerting its influence over Russia’s privately owned television stations. By the end of 2001, all of the country’s major channels were owned by either the Russian state or by companies with close ties to the government. Since then, pro-Kremlin news coverage has seen a gradual but flamboyant makeover. State-owned channels like Rossiya and its many sister stations, Channel One and NTV, broadcast flashy, graphic-enhanced bursts of sensationalism on the various “threats” and “enemies” battering away at Russian wellbeing.

It reached a fever pitch with Russia’s annexation of Crimea. State-controlled outlets began running bombastic, round-the-clock coverage depicting the Crimean crisis as a battle of good versus evil: benevolent, virtuous Russian-speakers defended by heroic rebel militias, battling against a stranger-than-fiction partnership of bloodthirsty Ukrainian fascists and the American political class, among other perceived interlopers intent on weakening Russia politically and economically. Earlier this month, Channel One took the media onslaught to new lows when it aired an uncorroborated and highly disputed story claiming the Ukrainian military had crucified a three-year-old boy in the former rebel stronghold of Slavyansk.

“This campaign of raw propaganda on Russian television has gone on for some time, but its intensity is unprecedented,” says Masha Lipman, a political analyst at the Carnegie Moscow Center think tank. “The conflict was framed here in a very clear way—‘ours’ versus a variety of evil-doers identified with a number of bad words, like ‘fascist’ and ‘Nazi.’”

“The shift during the Crimean crisis was very psychologically important,” says Zygar. “The significance for many people was that we’ve been weak and we’ve been wrong for many years, but now we’re right and we’re strong. It’s a very pleasant thing to discover, that at last you’re strong and you’re loved and you’re on the right side and you don’t have to feel sorry.”

Putin’s disinformation campaign taps into a deep history of media manipulation, which has left many Russians distrustful of almost everything they read and hear. The mesh of vague and often-conflicting insinuations is well suited to a long-held Russian tradition of conspiracy-minded skepticism and a sense of grievance towards the West.

“I don’t think that there is some kind of extraordinary force of state propaganda persuading the Russian audience that the pro-Russian militias are not to blame,” says Zygar of TV Rain. “Conspiracy theories are eternally popular within the country. They usually aren’t real accusations. It’s some kind of half-joking everyday speculation. If we have bad weather, probably it’s the result of some weather weapon from Washington… This is really the way a lot of people’s brains are functioning.”

TV Rain, which launched in 2010, is one of a small but tenacious crop of independent outlets that continue to challenge the mainstream narrative. Others include the opposition-leaning newspaper Novaya Gazeta, Russian Forbes and financial daily Vedomosti, which is partially owned by the Wall Street Journal and Financial Times. But for the most part, they are all preaching either to the choir or to the deaf. According to Levada Center, Putin’s approval rating in June was 86 percent, the highest it’s been in 14 years.

“For at least a decade, Putin has not had to worry about any real political opposition,” says Lipman. “He didn’t crush non-governmental media but he sort of insulated them, where they could say what they want but did not have access to a broader audience.”

Only two percent of Russians say they watch TV Rain regularly, the Levada Center found, compared to 71 percent for Rossiya-1, 48 percent for NTV and 8 percent for Channel One.

So in the days after the MH17 downing, while TV Rain was supplementing live coverage from the crash site with a broad range of on-air commentary, from guests, including separatists, Ukrainian officials and independent experts, the vast majority of Russians were watching something quite different. The phrase “on Ukrainian territory” punctuated every twist and turn of the coverage on state media, as Russian arms and aeronautical experts were brought on camera to blame Ukraine and argue the impossibility that the rebels could have fired weaponry sophisticated enough to bring down the jet.

These days Russia’s independent media seems increasingly on the brink of extinction, especially since December 2013, when Putin decreed into existence the state news conglomerate Rossiya Segodnya, which subsumed leading news agency RIA Novosti and the international radio service Voice of Russia. The man he appointed to head the massive organization is Dimitry Kiselyov, a right-wing TV presenter best known in the west for bragging that Russia is “the only country in the world capable of turning the United States into radioactive dust” and recommending burning the hearts of gay people who die in auto accidents.

“We have this kind of tradition of black August in our country. Every year something horrible happens in August. This year we joke that August has come in July,” said Mikhail Zygar of TV Rain. “Just half a year ago, no one could believe the annexation of Crimea. When we discussed the possibility, all of us told each other, ‘No. That’s not possible. Never.’ But we are all living in some fantastical reality now. After Crimea, after war in eastern Ukraine and after everything else that’s happened, it’s possible to believe anything.”

TIME russia

Russian Media Blame Ukraine For Plane Disaster

Russia's President Vladimir Putin chairs a meeting at the Novo-Ogaryovo state residence outside Moscow on July 17, 2014.
Russia's President Vladimir Putin chairs a meeting at the Novo-Ogaryovo state residence outside Moscow on July 17, 2014. RIA Novosti—Reuters

One common theory: Ukraine was trying to shoot down Vladimir Putin's plane

In televised comments this morning, Russian President Vladimir Putin said that responsibility for the tragic downing of Malaysia Airlines Flight MH17 on Thursday lay with “the government of the territory on which it happened.” He stopped short of directly blaming the Ukrainian military for launching the missile – but Russia’s many state-controlled media outlets have been only too happy to do that for him. On Friday morning, as the world tried to make sense of the crash in separatist-controlled Ukraine, the Russian spin machine was already doing damage control. Gruesome images of the wreckage were splashed across this morning’s papers under headlines blaming Kiev for the attack.

“The leadership of Novorossiya considers the destruction of the liner a planned provocation by Kiev,” wrote daily Izvestia, in its lead news story, employing the resurrected term used frequently in Russian media to describe the region of Eastern Ukraine stretching from Odessa to Donbass. Rebel assertions that the plane was hit by a Ukrainian BUK missile ran across the cover of tabloid Tvoi Den under the headline “Echelon of Death.”

The theory that seems to be making the most traction throughout Kremlin-backed media is that the Ukrainian military shot down the passenger jet, either as part of a sinister plan to frame the separatists and galvanize the West against Russia, or alternately, after mistaking the Malaysian jet for a plane transporting Putin, who was on his way back to Moscow from Brazil. Citing the Interfax news agency, Kremlin-funded network RT described the similarity of the flight paths of MH17 and the presidential plane above a split-screen graphic intended to show the visual similarities between the two aircraft. Many Russians have taken to Twitter and Facebook both to voice their sympathy for the victims and often, to echo the theory that it’s all Ukraine’s fault.

Several news sources drew comparisons to 2001, when the Ukrainian military mistakenly shot down a Russian passenger jet over the Black Sea. The accident, which killed 78 people on board, is now being trumpeted as evidence of the Ukrainian military’s culpability in the Malaysia Airlines crash. “According to experts, military equipment used by the Ukrainian army was acquired during the Soviet era, and its use in the course of military operations could lead to a repetition of the tragedy,” wrote Russia’s leading news agency Ria Novosti on Friday.

Leadership of the self-proclaimed Donetsk People’s Republic, the pro-Russian breakaway group that currently controls parts of Eastern Ukraine, as well as purported arms and aeronautical experts like celebrity test pilot Anatoly Kvochur, have been making the rounds on Russian television to attest to the fact that the shooting couldn’t possibly have been the work of the rebels. The rebels themselves, of course, have denied all involvement in the crash, which occurred in territory under their control. At first, the rebels denied possessing the BUK missile launchers believed to have been used in the attack, despite the fact that the news agency of the Russian Ministry of Defense aired a report in June stating that a BUK had been taken by the separatists. Later on Friday, however, a reporter for Russian state-controlled channel Rossiya-24 reported that the militia does possess the launchers, but that they’re “all undergoing repair.” More recently, the rebel claims took a turn for the grotesque, with Donbass separatist commander Igor Strelkov telling militant site Russian Spring that he believes the plane may have been filled with dead bodies before it crashed, saying workers who cleared the site told him the bodies were “stale – [like] people who had died several days ago.”

Yet as the Kremlin advances its narrative, Russia’s small and ever-shrinking pool of independent media outlets have countered with blistering critique. In the independent daily Noviya Gazeta, columnist Pavel Felgenhauer pointed to the probable culpability of the rebel forces and criticized the scramble to dodge blame. “It would be better if the separatists and the Russian authorities would stop lying, fantasizing and ‘making Ukraine take responsibility,’ and would as quickly as possible acknowledge their own guilt insofar as it exists,” he wrote.

Appearing this morning on the independent TV Rain channel, Ukrainian military analyst Dmitry Tymchuk also placed blame for the incident squarely on the Russian government. Since the end of last week, he said, “little green men, that is, Russian servicemen,” had joined the flow of military equipment from Russia to Eastern Ukraine. The rebels and the authorities in Moscow “are busy trying to cover up the tracks of their monstrous crime,” Tymchuk wrote in a post on his own website.

Yet as international consensus mounts that Russia’s role in arming the separatists makes Moscow at least partially accountable for the disaster, the Kremlin is struggling to control the narrative. Early Friday afternoon, Russian watchdog blog Gospravki reported that someone had attempted to alter the Russian Wikipedia entry on the Malaysia Airlines crash from an IP address linked to Kremlin state-media holding VGTRK, changing the assumed perpetrator from “terrorists of the self-proclaimed Donetsk People’s Republic” to “Ukrainian military.” The passage has since been changed to a murky statement that “Russian and Ukrainian authorities, as well as representatives of the self-proclaimed republics of eastern Ukraine, have denied any involvement in the tragedy and blame each other for what happened.”

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