Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

Since the shock of 2008, Russia’s official financial position had been rebuilt. In early 2014 Moscow’s foreign currency reserves stood at $510 billion. As in 2008, it was not the state but Russia’s globalized private sector that was vulnerable. Though the oligarchs of course toed Putin’s line, the markets did not lie. The escalation of tensions over Ukraine caused an immediate capital outflow. When the Russian Federation Council, on Saturday, March 1, 2014, gave a patriotic vote of approval for the deployment of Russian troops on Ukrainian territory, it was followed on “Black Monday,” March 3, by a spectacular 11–12 percent market slump.62 For internationalized Russian banks like Sberbank—a giant that controlled 28 percent of Russian bank assets—sanctions created a truly schizophrenic situation. As its CEO, Herman Gref, mused, 50 percent of Sberbank’s freely marketable shares were held by US and British investors, but the bank was now barred from raising funds in the West.63 Perforce, over the course of 2014, Russian companies paid down their foreign debt from $729 billion to $599 billion, with the central bank deploying its reserves to enable the repayment.64 Tension was building, but it was not until autumn that the crisis broke.