12月22日，上海交通大学上海高级金融学院副院长、金融学教授朱宁做客CCTV NEWS《Dialogue》栏目，就近期备受关注的俄罗斯卢布危机展开分析和解读。
 
Host: Hello, welcome to dialogue. I am Yang Rui coming to you live from Beijing. On December 16th, the Russian Ruble nose dives to the no time low, hitting 80 Rubles per U.S. dollar and 100 Rubles per euro in Moscow trade. The Ruble has lost about 50.7% of its value against dollar this year. It's the worst job since the previous Ruble crash in 1998. And, many are asking whether Russian currency crisis will lead to a full blown economic crisis. Who should be blamed for the plunging Ruble and how might the Russian slow the Ruble plunge? Today I am happy to be joined in the studio by Zhu Ning, who is professor from Shanghai Jiaotong University and Einar Tangen, author and columnist. And also, we shall be talking to Mr Pavel Felgenhauer via satellite. He is standing by in Moscow. And he is the defense analyst, by the way. But before we start the interview, let's look at this.
 
Correspondent: taking the plunge: with Christmas and new year festivity just around the corner, here is the currency collapse and economic recession hanging in the streets of Russia. The Russian Ruble plummets almost 50% against dollar this year, 20% just this week alone. The Central Bank hiked its interest rate by roughly 16.5%, trying to halt the currency slide. But it turns out the tide a free fall on Tuesday. Moscow might slow the dive on Thursday by pumping in governmental support just in time for President Vladimir Putin interviews the news conference.
President Vladimir Putin (interpreted by correspondent): but there is also no doubt and I would like to underline it that the rebound, the subsequent rise of the Ruble and as it's from the current situation is unavoidable.
 
Correspondent: the Ruble downward spiral is also exacerbated by the steep falling of global oil price to below 60 dollars a barrel, the worst since 2009. Oil and gas provide half of Russian fiscal revenue. On Thursday, U.S. president Barack Obama signed a new Russian sanction bill passed by Congress. But, it did not intend to pose further sanction against Moscow for now. Still, experts warn the painful western sanction over the Ukraine crisis will continue to damage the economy.
Christian Schulz: Only if Russian makes political steps to ease that pressure, for instance, by agreeing to a more permanent ceasefire in Ukraine, stopping or maybe at least not increasing the support for the separatists there, do I see a chance that Russia will get out of this.
 
Correspondent: the alarming plunging Ruble brought back memory of the Russian Financial Crisis in 1998. Here is the Residents scrambling to stock upon goods. And shops in Moscow have been put up prices rapidly to keep up with lower value of the currency. Even Apple closes its online shopping in Russia.
 
Elena, Moscow Resident (interpreted by correspondent): pricing are increasing all the time. I can't say what the effect on my life will be. But the process is painful and it is making people distressed and concerned. I have no confidence. That's all I can feel and all I can see.

Correspondent: with the Ruble now volatile not so fast, many hope the worst is over, despite predication that Russian economy could go into recession next year. Whether or not recovers and how fast remains to be seen.
 
Host: welcome back, gentlemen, what would be the worst case scenario if the Ruble continues to fall?
 
Professor Zhu: I think if the worst comes to its worst, there is a lot to be feared. Not just the economic crisis, it's going to be leading to social unrest, maybe some political instability in Russia.

Host: what's your hunch?
 
Einar Tangen: well, from the financial perspective, you worry about the default that all the sovereign debt is worthless. There goes to be a free fall, that will require a lot. But I think you cannot underestimate the character of Russians. They are the people who were willing to burn their cities before they allowed anyone to get half their foothold on their sovereign territory. This is very much, Putin is still very high in setting. He is running about 70%~80% and that's actually up from premier when he was about 52%. There is the worst case scenario. But I don't think it's happening.
 
Professor Zhu: but I think to some extent, enough is enough. I think the Russia has been going through quite a bit of ups and downs. It's just yet to see what's going to happen if the Ruble and the oil prices are continuing to be falling.
 
Einar Tangen: well, the key here is energy price. I mean oil is what's driving this. These sanctions are exacerbating it. But it's oil that's driving this. As long as OPEC continues to hold the flow open, Russia is going to pay the price. There is about 11% of world's oil production. And if they can't get the revenue, they need to do this. This is really what's going to affect the economy. This is almost 50% of their budget.
 
Host: but the latest statement by the Saudi oil minister has made very clear they will not cut the oil output to raise the prices. Do you think Putin is likely to make any comprise by for example helping to ease the tension between separatists in east Ukraine and Kiev?
 
Professor Zhu: I think the whole situation has gone so far that there is no step-back board. Given the characteristics of Mr Putin and given what has already been done and what has been said, I don't think there is very likely he is going to bury the bullet right now, say we are going to take back what has already been done. There is the concerning part, because without certain compromises been made, it's very difficult to see whether there is any supporting factor that will help the ruble or the energy prices.     
 
Einar Tangen: I see it a little bit differently. Putin has a large part of his popularity coming from the fact that he projects this tough image that he doesn't give an inch. This is a nation that felt very much down and out when the Soviet Union collapsed. They are not happy about the incursion by NATO and the EU into what they see the legitimate buffer states that supposed to be between Russian lands. I think they never give up Crimea. I don't know they soften a little bit on this. I think what's going to happen, you are going to see more over turns from Europe because this is not a one-sided game. This is something that's happening all over Europe. It's going to drive the wedge between U.S. and Europe as they go into different directions.
 
Host: exactly, that's my next question. Professor Zhu Lin, do you think there is a single war coming out of the alleged solidarity from two sides across the Atlantic Ocean?
 
Professor Zhu: I think there will be. I don't think it's very loud on the book right now. But let's be clear, the EU and U.S. have different stakes in this Ukraine crisis. I mean one is far away from the other side of the Atlantic, basically it can afford everything they want to do, whereas, let's not forget, the Ukraine and Russia have been the major providers of energy to the entire Europe. And also, let's not forget, if there is any political war or military tensions, it's EU that's going to feel the direct impact whereas the worst case to the U.S, it's the collateral damage. So I think they have different stakes.
 
Einar Tangen: I think the recent comments by the Canadian prime minister that he is going to impose more sanctions. It's quite odd what you see happening in Germany right now. Walter Shoulder and a lot of other past leaders have written open letter to Angela Merkel, saying, look enough is enough; let's figure this thing out. Germany has a lot to lose here. This is not just about trade, which U.S. measures tens of billions and in Europe measures hundreds of billions. This is about investment, that's going heavily into Russia from Germany and other nations. There is going to be a real renaissance about pushing this further and further, especially as EU is suffering its own economic relations
 
Professor Zhu: also, I think there is an identity problem. I mean Mr Obama feels the biggest blow, especially given his live dark situation right now. He is trying to do everything in his capacity to gain American pride and American sovereignty in the entire world. EU is going to be far more pragmatic about what is the real benefit and what is the real cost that's going through this crisis.        

Einar Tangen: I do agree with that. It turns out a little bit differently. Obama is looking at the legacy issue. He is trying to salvage what's been the very rocky and uncertain presidency. I think he is kind of vaccinates between his principle, which is basically isolation, and getting the wind factor, saying OK, I am going to run there through troops when I say I wouldn't.
 
Host: now, what do you think of maneuvers, political maneuvers by president Obama in recent days, for example, announcing the release of the torturing report by the senate intelligence organization as well as the announcement of normalization of relationship with Havana, Cuba. This time around, he signed into law another round of economic sanctions against Russia. Is that because he has come under tremendous pressure from the rebel Republic who overtook the Congress?  I mean they took over Congress in terms of elections. It's perhaps about the issue of legacy. How to look at his presidency in the next two years?       
 
Einar Tangen: he and his staff are struggling and meddling with this. The problem most people don't realize within the U.S. government, you know, you have your cabinet secretary who are getting basically everyday, they are getting a set of talk points from a bunch of young people who were dazzling the president from within the white house. You have basically two parallel governments going at the side of the president there. In terms of Obama, the immigration in Cuba will definitely throw cold water in the face of Republicans; the other issue in terms of pulling troops in there in Russian sanctions, I think there is more on the line. You are seeing a lot of Republicans concerns out there, saying we need to do more on both sides, being very militaristic and belligerent towards this thing. I don't know where he is going on that. He is sending a lot of mixed messages I agree.
 
Host: perhaps the tough face of president Obama is part of the political fallout of Mr Hagel's resignation, the former secretary of defense because of the alleged standoff between Susan Rice, the national security advisor of the team and secretary Hagel. What will be the legacy of Putin, is he going to run for the next term of presidency in four years because in the latest press conference of the year, the annual conference he was asked whether he will run for presidency in four years. He said it's too early to make that decision but we got to solve out the immediate problems. How do you read this mind?
 
Einar Tangen: he stays on a number of reasons. He is the man who takes charges. This is the person who in most of his day, almost very solitary way meeting with different groups, mainly just to say what he wants done, things like that. That kind of person doesn't give up power very easily from the psychological point. From the political point, I think he feels that things had not been finished yet. He still has the mission out there to provide a buffer zone around the Russian and to return to its former glory.
 
Host: all right, gentleman, let's cross over to Mr Pavel Felgenhauer, the defense analyst from Moscow. Hello, Pavel.
 
Mr Pavel: Yeah, I hear you very well.
 
Host: yes, I can hear you clearly as well. Why do you think your president is able to enjoy enormous approval rating despite economic sanctions and sharp decline in the Ruble?
 
Mr Pavel: both the sharp decline of Ruble has just happened, it shocked the Russian public. But it has to take time to have any kind of serious effect on the personal popularity of the president. Under foreign pressure, almost any nation, of course very much including Russia, the nation tends to rally around the flag, rally around the leader. This has been happening this year in Russian. The real hardships, the economic hardships will be traced down to the bubble, they begin to do so. The future year is going to be quite a year. The fall in the Ruble has been stabilized more or less right now by government action. But the price is going to be very steep according to Alexei Kudrin, who was the finance minister under Putin in different governments for more than ten years, the deputy prime minister. Next year, Russia is going into a full-blown economic recession. There going to have full-digit inflation, there going to have growing unemployment that goes down in different kind of parts actually in Russian economy. Right now, tittering and bankruptcy are going on there. So the real effect of sanctions and the fall of price of oil and the recession will be felt next year. Then we will have to see will Putin's popularity survive or not.
 
Host: despite the cautious policy posture from the Chinese government about the current crisis in Russia, namely, our foreign minister Wang Yi said cautiously do what we can do to reach out to our foreign friend if we are to be asked for help. It seems the Chinese tourists will be the biggest beneficiary of the current Ruble crisis because they are sweeping most of the shopping centers, buying luxuries for their comrades and friends back at home. Is that true?
 
Mr Pavel: yes, those who right now bring (come to Russia) with foreign currency will have lots of very good bargain because in dollar terms the currency is connected. Pin to the dollar, you can make very bargain, find bargain prices in Russia. For Russian earning Rubles, the situation is very different. Many items are going up in price, that's just the beginning of very serious blown inflation, which is going to hit the Russian public together with the recession.
 
Host: let's turn to something more sexier, the relationship between Moscow and the European Union, why do you think a group of outstanding Germans submit a letter to Angel Merkel, calling for reconsideration of the policy options between Berlin and Russia cause there are some differences across the Atlantic ocean on there.
 
Mr Pavel: there of course are a lot of people in Germany who have business interest in Russia, those who believe that several decades of building trust between Europe and Russia, especially between Russia and Germany should not be squandered because of differences on Ukraine and Crimea. There is a kind of pro-Russian lobby right way in Germany. But right now, the tune is called by the federal chancellor Angel Merkel, who seems to be very much upset with Russian behavior. So Germany under her is moving actually to punish Russian for Crimea and Ukraine despite the serious internal opposition. Moscow of course, we hope that this opposition will eventually modify German policy. But up to now, it's not really happening.
 
Host: thank you very much, that's Pavel Felgenhauer, the Russian expert about defense affairs. You are watching dialogue with Mr Einar Tangen and professor Zhu Lin. We are discussing the latest Ruble crisis following western sanctions and sharpest drop (fall) in oil prices. We will back in a few minutes.
 
Correspondent: the Russian economy is suffering as the Ruble plunges. But for some customers, it has not been so bad. In Moscow, the queue onsite the luxury stores are actually longer than usual. In the Iphone 6, it's already out of stock. Many of those waiting there are students and tourists from China.
 
Chinese student in Russia (interpreted by the correspondent): because of the plunges in Ruble, those things here are cheap. I have bought many perfumes, cosmetics and bags for my friends in China.
 
Correspondent: the Ruble has lost about 50% percent of its value against U.S. dollar and EU since March. So many items are almost half the expenses right now than they would be in China. In addition to bags and clothes, luxury car brands have also seen a significant jump in sales. Brands like BMW and Mercedes are even selling out. Many big brands in other sectors have been forced to raise prices. But the auto industry doesn't have that option. Once dealers have fixed the selling price, they have to wait until the following year to purchase new stock at new prices from manufacturers. As a result, customers are rushing in before 2014 closes or suppliers have suspended deliveries.
 
Host: welcome back, gentlemen. Pavel, are you with us? Let me ask you, what would be the worst case scenario for president Putin if the current Ruble crisis continued?
 
Mr Pavel: well, the Ruble crisis may have been over for this time being, the Russian government and Putin personally put kind of unofficial but serious pressure on big Russian companies, like export gas and oil, metals and fertilizers and so on for them to sell their hard currency earnings on the Russian Moscow berth. They never give a kind of timetable to sell it at one time, a kind of parcel out to keep the Ruble stable. So for the time, first the Central Bank is also coming in with these reserves. So for the time being, the Ruble has stabilized. Of course, the price is going to be very high for the Russian economy. The interest rate is sky rocketing. The industry will not get the money needs for development and actually running business itself. The air companies right now almost all go into bankruptcy or semi-bankruptcy, including Aeroflot because they are wasting payment for their foreign made planes in dollars and the earning on Ruble, actually international traffic by Russian companies is contracting and the internal traffic, which doesn't bring much money, it's more or less increasing or the same. So right now, there are very big problems in many sectors of Russian economy. This seems to be just the very beginning. So, by stabilizing the Ruble, by contracting Ruble liquidity, the Russian government at the same time has hit its economy very badly.
 
Host: most of the western economic sanctions were slapped on the following three sectors: defense, energy and banking. What do you make the consequences arising from the continuing massive outbound capital fled?
 
Mr Pavel: I didn't get that, sorry.
 
Host: given the panic, what do you think of the consequences arising from the massive outbound capital fled cause most of the economic sanctions so far being slapped on energy, defense and banking. Do you think the outflow of capital will add to the economic woes?
 
Mr Pavel: the banking sector is in serious problems right now. The problem with the banking sector is also growing. The inter-bank exchange capital market here in Moscow is almost not functioning. Overnight interest in some case is up to over 16% per annum of course (counted). That seems to me there is loss of trust within banking and financial sector in Russia because of this wild fluctuation of the Ruble. So no one really believes anyone. Banks are not lending to each other. The financial system is working very badly, that's going to reflect on all the economy. And of course, loss of trust means that there is going to be increasing fled of capital out of Russia. There was a lot before. Now it's going to increase. And there should be some kind of more serious measures to just stop the gap, to stabilize the Ruble.
 
Host: thank you very much.
 
Mr Pavel: now, what the Russia president says we should, yes.
 
 
Host: thank you, Pavel. That's Pavel Felgenhauer, the Russian expert on defense issues. We appreciate his analysis except for perhaps the question about whether new cold war is descending on continental Europe and president Putin is convinced that the U.S and his allay would join hands in antagonizing Russia. They will put bears on the chain, pull out the teeth and cut out the claws so that Russia will forever be seriously weakened and will become a weak tiger. What do you think of the conspiracy theory?
 
Professor Zhu: Well, I think there is always a conspiracy theory behind almost everything. This time I think there are two ways to look at this problem. One is I am sure the Obama administration and some of the European leaders are very happy to see what has been happening in Russia. There is little doubt about that. But on the other hand, it is a question about how exactly the western powers are precisely maneuvering or confuting the process. It's a little bit too much for conspiracy theory. It could have I mean, the political, economic and capital market would have to all happen at the same time to have this triple crunch crisis. What I am really concerning is though, I think as Pavel has mentioned, the banking sector, cause like many European countries, the banking sector is the major provision of liquidity and capital to the entire economy. And now, the Ruble has depreciated by so much and there is little help coming from overseas. So, it's important that the Russia should have been able to provide liquidity by itself. However, given the loss of confidence, given the loss of willingness to lend, there could be a credit crunch. So just like 2007 and 2008 global economic crisis, the fundamentals are still intact. But you could have a big loss of faith and crunch.
 
Host: Einar, don't forget the former Soviet Union disintegrated following the sharp decline in oil prices in the 1980s. Do you think this is likely to be repeated?                   
 
Einar Tangen: I don't believe so. There is a lot depending on what OPEC does. I think at some point with the next couple of months that Saudi Arabic is going to come back in the table to negotiate behind doors, to create a peg like that, to lessen the supply so that oil prices goes up. I don't think they have a choice. If you look at all producers around the world, I mean every single producer, they are now losing money. And it's within their means to be disciplined. And if they have to take a little bit of my hair cut on the amount of oil they are doing, they are getting a higher price. And then, they come out of the hell.
 
Host: excuse me, let's focus on the issue of oil prices. Do you think Saudi Arabia, the biggest player in OPEC is likely to be the first blinking of standoff with U.S. if you look at the high efficiency of fossil fuel consumption, if you look at, what do you call back the revolution in U.S. the shale gas. Do you think in terms of market shares, Saudi Arabia will never ever make any concessions? Therefore, this world recession is likely to persist.
 
Professor Zhu: I took a slightly different view from Einar. I think there is a counterstrike strategy here. Of course, they are suffering. They are also concerning what's the worst case scenario if the U.S. wants to one, stop buying because of the shale gas: two, exercising some other forms of penalties against Saudi Arabia sovereignty. Of course, they are losing money. They are not making as much money as they wish for.
 
Einar Tangen: they cancel the budget, they are going into deficit.
Professor Zhu Lin: I understand. But the flap out of that is what if U.S is turning its back against itself, given the unrest in the Middle East in these days. They are facing a more urgent need for keeping the stability than just losing a few bucks.
 
Einar Tangen: well, I would agree with you. There is a complexity to do this. The Saudi Arabia is opening the valve, the price of oil will go to a free fall. It's hurting a number of people that he doesn't like, Iran for example. And they are also sending out. But the fact is shale is not going away because of this fluctuation on oil prices. This would have to continue for years. We are talking about billions of dollars that have already been invested. People are walking away from that. And if it continues, I think you will start to see countries moving in to protect themselves over the long run. The U.S. is not going to give up its reserves. It's now down about 50% imports from the Middle East, it wants to go lower, not higher. So, I think you are going to see a counterbalance. In terms of Saudi Arabia, I think they just want to show everybody that after years they are trying to get some discipline into OPEC and that they do have the ability to really punch people.
 
Host: thank you very much. With that, we come to the end of this edition of dialogue. We are discussing the Ruble crisis in Russia and what it means politically for the future of president Putin's office terms in Russia. I will see you next time. Good bye.