Russia Update: Kremlin Mulls Tapping Buckwheat Reserves as Price Jumps

November 20, 2014
Russian man stocks up on buckwheat kasha as shortages are feared.

Welcome to our new column, Russia Update, where we will be closely following day-to-day developments in Russia, including the Russian government’s foreign and domestic policies.

Yesterday’s issue is here, and see also our Russia This Week.

The Russian government has contemplated opening up reserves of buckwheat, a staple of the Russian diet, as prices jumped after a poor harvest.

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Capital Flight from Russia Reaches $113 Billion This Year

Capital flight from Russia has accelerated to $28 billion during October 2014, TASS reported, bringing the total to $113 billion already this year.

Aleksei Vedev, deputy minister for economic development, cited this figure in a presentation on Russia’s economic problems and challenges. The ministry believes the capital flight has reached its maximum level.

Last week, the Bank of Russia increased its forecast of capital flight to $128 billion from $90 billion predicted earlier. The Ministry of Economic Development is predicting $100 billion. Vedev said this figure could vary “from minus $10 billion to plus $20 billion.”

The fall in the price of oil and the drop of 30% in the value of the ruble against the dollar has motivated people to withdrawal capital abroad; $85.2 billion was already taken out of Russia from January-September 2014, says TASS.

The drop in the value of the ruble and limitations on inputs means a growth in inflation, say experts.

— Catherine A. Fitzpatrick

Forbes Russia Releases List of Most Highly-Compensated Russian Executives

Russian-language Forbes magazine released its annual list of the most highly-compensated Russian executives.

First place is taken by Andrei Kostin, head of VTB bank, who reportedly makes $37 million a year.

Andrei Kostin. Via Forbes

After Kostin comes Aleksei Miller, head of Gazprom, at $25 million; third is Mikhail Kuzovlev of the Bank of Moscow at $17 million. German Gref, head of Sberbank, made $16 million, according to Forbes.

Missing from the Forbes‘ list is Igor Sechin, head of Rosneft, a close associate of President Vladimir Putin.

But that’s not because he didn’t earn enough this year. Last year, Forbes estimated that Sechin made $50 million a year. Then he sued Forbes, claiming that the figure they gave was inaccurate and that his business reputation had been harmed.

Forbes‘ appeal still hasn’t been heard yet, so they put him in the list, but without a ranking. Forbes had listed Sechin’s income as less in 2013 than in 2012, but will have to wait until their court case is over until they can publish this year’s rank.

Both VTB and the Bank of Moscow were placed on the US sanctions list on July 29, 2014; Gazprom was put on the list on September 12.

Vladimir Yakunin, head of Russian Railways, said to make $15 million this year and last year, is also on the US sanctions list.

The rest of the list can be seen at Forbes Russia.

— Catherine A. Fitzpatrick

Compromise Reached Between Ekho Moskvy Editor and Gazprom-Media Chairman

In recent days, as Aleksey Venediktov, editor-in-chief of the radio station and web site Ekho Moskvy has been struggling to keep his station’s independence, he has tended to post just pictures and not comments.

Two nights ago the staff of Ekho Moskvy held a meeting with Mikhail Lesin, the chairman of the board of Gazprom-Media, which is the majority shareholder in the station. The meeting had the feel of a town hall and a lecture hall and a party all in one — but a reader who noted that it was pseudo-democracy got it right.The real decisions about the issues that had troubled the station — reporters who were too frank on the air or on social media and pressure from the Kremlin to conform — were going to be decided later behind closed doors.

In an interview with Novaya Gazeta, Lesin had talked about how he wasn’t going to “re-educate” Aleksandr Plyushchev, a reporter who had written an ill-advised tweet insulting Kremlin administration chief Sergei Ivanov. Yet the very invocation of the term got people mad.

A series of photographs of the meeting shows us a lot of the young staffers who were likely the ones tweeting from the meeting and leaking Lesin’s comments to the press. In the end, as Venediktov telegraphed on Instagram, he and Lesin were each in their corners.

Translation:  This is he.
Trans:  And this is I.

In the morning, Venediktov appeared wearing a Game of Thrones t-shirt

Translation: Today we are the Starks!

The t-shirt is from the House of Starks, whose motto was, “Winter is Coming.”

Then before his meeting with Lesin, the editor posted a picture of a child playing chess with a cat.

Translation: M.Yu. Lesin and us this evening (likely).

Then after the meeting — crossing the chasm in two leaps:

At the end of four grueling hours, Venediktov said in a piece on Ekho Moskvy last night that an agreement was reached: that the dismissal of reporter Aleksandr Plyushchev was revoked, and Venediktov’s right to the final say on staff dismissals was restored.

But the agreement was not without some compromises. Plyushchev is back — but he will not be allowed on the air, he will write for the web site. And a working group will be established of Ekho journalists to draft recommendations for all journalists of Gazprom-Media regarding their participation in social networks.

“And finally…the personal responsibility of Ekho Moskvy’s editor-in-chief — that is my personal responsibility for what journalists say and do on the air — will be increased.”

That seems to imply that the next time a reporter mouths off on Twitter, Venediktov will pay.

But the board meeting originally scheduled for November 21, with an agenda item to discuss Venediktov — which he feared might mean his dismissal — is now cancelled. That seemed a victory — for now.

“That was the story of the four-hour compromise. It is a compromise. The foundations of the editorial policy of Ekho Moskvy are not touched. They are preserved. And that means stability.”

Venediktov re-tweeted a colleagues’ comment that seemed to summarize the situation:

Translation:  @navalny @plushev – The end was achieved – Plyushchev was demonstratively bent over, and the rest got a lesson and a warning. Now, they are walking on mines on tip-toes.

Plyushchev may have been subdued but he continued to tweet.

Translation: the buckwheat which you were all so fired about was taken away in humanitarian convoys to the rebel regions of Ukraine. Olevsky has described it… [link to Ekho Moskvy article].

— Catherine A. Fitzpatrick

Russians Fear Scarcity of Buckwheat, Staple of Their Diet

Russians began stockpiling buckwheat in recent days, as prices jumped after a poor harvest.

The Russian government is now contemplating opening up reserves of the grain, which is used in grechovaya kasha, buckwheat kasha, a kind of porridge many have for breakfast or as a side in dinner.

Translation: The world without buckwheat isn’t the same.

The wholesale price of buckwheat jumped 27.6% this week, the business daily  Kommersant reported.
Rosreserv, the state depot, considered opening up stockpiles.
Meanwhile, the Ministry of Agriculture said there was no need for panic,
as there should be sufficient quantities by the end of the year. The
implication was that people’s hoarding was causing the price to go up.

Translation:  Some supermarkets have started limiting the sale of buckwheat.

Sign: Dear Customers: Recently there have been cases of the buying up  of goods in the Lenta shopping center in order to re-sell them for a higher price. We work every day so that more buyers can acquire quality goods for low prices. In this connection, the Administration of the shopping center is introducing a restriction on the sale of buckwheat grains in the amount of no more than 5 packs per customer per day (buckwheat grains 3 kg – no more than 3 packs).

The kasha crunch was seen coming weeks ago by some media.

Translation: The low amount of the harvest in Altai threatens a shortage of buckwheat.

When Russia began to retaliate against Western sanctions by banning
imports of fruits or cheeses, some more prosperous Russians in Moscow
and other big cities felt the impact. But now ordinary Russians feel
affected by the drop in the rate of the ruble against the dollar and the
euro, now at $46 and $58, respectively  — and the hit on their kasha.

Translation: The Ministry of Agriculture has denied the
shortage of buckwheat… There’s enough for everyone! the Ministry has
promised. But once again Russians are to blame for the rise in prices.

Provincial regions have reacted differently to the news:

Translation:  #News #Saratov Minister Vladimir Pozharov: there is no shortage of buckwheat in Saratov Region.

Translation: the authorities want to sell buckwheat from Rosrezerv #Barnaul

The kasha crisis has naturally proved fodder for all the parody accounts and comics — and some have been joking for weeks:

Fake Russian Foreign Ministry – Translation: Oil punched through a 4-year support to $88.11. Are you already preparing stockpiles of Spam and buckwheat?

Translation: @Lev Sharansky They say virgins are already being sacrificed in Omsk for buckwheat.

@Victoria_Pol: @LevSharansky @margo12170228: But why don’t we
have panic in Nizhnevartovsk regarding buckwheat??? Perhaps it’s an
invention of social networks?

Translation: Guys, give me a hint, where can I find the rate of buckwheat in the bi-currency basket? Or is it already banned from trading in Russia?

Translation: The Central Bank has announced the introduction of a floating rate for buckwheat.

This parody account is a play on words for the last name of Dmitry Peskov, the Kremlin administration spokesman, which means “sandy” in Russian.

Last week, the Russian government moved closer toward floating the ruble, and widened the  “corridor” or band, Bloomberg reported.

Buckwheat is not so well known in the United States, where it is used mainly for animal feed and mulch. But there is one leading producer of buckwheat — which is actually not a kind of wheat but a fruit — Birkett Mills in Penn Yan, New York, in operation for 217 years. Wolff’s Buckwheat, familiar to patrons of kosher delis and ethnic restaurants, is the best-known brand.

— Catherine A. Fitzpatrick