Every week, The Ukrainian Week/Tyzhden publishes an overview of the political, social and economic situation in Russia and Belarus in partnership with the Foreign Policy Council “Ukrainian Prism”. The Council’s Russian and Belarusian Studies Programme presents a new weekly #aggressoranalysis, in which Iaroslav Chornogor and Anton Oksentiuk analyse the latest news in Russian domestic and foreign policy.
This week’s highlights: potential shifts in Russia’s stance on peace talks, the BRICS summit in Kazan, a significant increase in the key interest rate, and the shutdown of the Arctic LNG 2 plant are all noteworthy developments
Domestic policy takeaways:
- Russia’s Central Bank raised the key rate to 21%. On October 25, the Central Bank of Russia raised its key policy rate to 21%, continuing its established inflation-fighting strategy. This rate marks a 20-year high, and bank officials have suggested it may not yet be at its peak, with further hikes to 23% potentially on the horizon by December. Ukrainian Prism has consistently examined the economic implications of such Central Bank policies, which stymie business development in Russia. Previously, Central Bank Governor Elvira Nabiullina’s financial policy met limited public resistance, but this time, several Russian politicians and officials openly criticised the rate increase.
- Notably, Finance Minister Anton Siluanov has made it clear that the government is drafting Russia’s 2025 budget with an assumed key rate of 15%. In response, the Central Bank noted that its own decisions took the upcoming budget’s figures into consideration. What we are witnessing here is a broader discord within Russia’s financial and economic leadership. Ukrainian Prism’s previous report highlighted this dynamic, pointing to Deputy Head of the Presidential Administration Maxim Oreshkin’s opposition to Central Bank Governor Elvira Nabiullina. Yet, there are currently no indications that Nabiullina’s position is under threat—a sign that Putin is prepared to pursue rate hikes to combat inflation, even at the expense of business growth.
- The Arctic LNG 2 project is suspended. Last week, Bloomberg reported on the status of the Arctic LNG 2 terminal, a project now heavily constrained by sanctions. According to the report, operations at the facility have nearly halted, largely due to Russia’s inability to find buyers for its processed gas. Currently, Arctic LNG 2 is processing only the minimum amount required to maintain its infrastructure, with no gas being exported. Meanwhile, reports indicate that the United States may further tighten restrictions on Russia’s LNG sector, potentially targeting vessels that transport Russian LNG. In this scenario, the U.S. has another lever it could deploy: extending similar sanctions to Russia’s Yamal and Portva LNG plants, both of which remain fully operational and unsanctioned. Overall, the U.S. has a relatively straightforward method to restrain Russia’s LNG ambitions.
Foreign policy takeaways:
- Results of the BRICS Summit in Kazan. The BRICS summit took place last week in Kazan, Russia, where Moscow sought to showcase the gathering as a major global political event—a narrative pushed heavily in state-controlled media. A central agenda item was the creation of an alternative to the Western financial system through the BRICS Bridge project, an alliance of banks aiming to establish a substitute for SWIFT, from which Russia has been largely cut off. For Moscow, such a framework would help to mitigate the effects of Western financial sanctions, allowing trade with its partners without risking secondary sanctions. However, reactions to this Russian initiative were tepid, both from full BRICS members and other partner countries. The final summit declaration did not directly mention this alternative payment system, only alluding to “further discussion of the cross-border payment initiative.” Broadly, Russian authorities attempted to promote several financial and economic proposals, including the elusive “common currency” discussed at the Kazan summit, despite Putin’s own admission that it is not currently under consideration. There was also the BRICS Pay system, envisioned as a shared platform for contactless payments, which may ultimately operate only within Russia. None of these initiatives gained traction at the summit.
- Another key theme of the summit was Russia’s push to transform BRICS into an alternative bloc to the current international order. In reality, however, the summit revealed that most BRICS members and newly joined “partner countries” were reluctant to present a united front against “Western hegemony.” The final declaration barely touched on this, only condemning “unilateral sanctions.” India’s stance on this is telling; Bloomberg reported after the summit that India does not support turning BRICS into an anti-Western coalition. This view is shared by Brazil, South Africa, and the UAE. India, in particular, is uneasy with Moscow’s push to abandon the dollar. Instead of anti-Western rhetoric, summit attendees were more focused on Middle East security and condemnation of Israel’s actions—certainly not the narrative Putin had hoped to advance in Kazan.
- Before the Kazan summit, it was widely anticipated that the expansion of BRICS would be a key topic. However, no major enlargement materialised. Instead, member states announced a new “partner states” format, though without providing details on what this new cooperative framework would entail. The Kazan meeting also exposed significant internal conflicts. For instance, Brazil blocked the proposal to grant even partner status to Venezuela, a close Kremlin ally under the Maduro regime. Meanwhile, India opposed Turkey’s entry into BRICS due to Ankara’s support for Pakistan.
- It remains unclear how actively the issue of the Russian-Ukrainian war was addressed at the BRICS summit. The final declaration refers to the conflict only once, mentioning “national positions on the situation in Ukraine,” the importance of acting in line with the purposes and principles of the UN Charter, and the acknowledgement of offers for mediation. This diplomatic phrasing indicates a lack of consensus among member states. Notably, the declaration does not explicitly reference the Sino-Brazilian peace initiative, which Beijing has been promoting. This omission likely stems from the divergence between Russia’s stance on peace talks and the China-Brazil proposal, which effectively advocates for freezing the conflict along the front line—a position that Russian authorities have so far rejected.
- Potential change in the Kremlin’s position on peace talks. Until the BRICS summit in Kazan, the Kremlin’s stance on ending the war had remained consistent. It’s important to recall that in June 2024, Putin explicitly outlined Russia’s conditions for initiating negotiations: the annexation of all territories in four Ukrainian regions, Ukraine’s renunciation of NATO membership, and the lifting of sanctions. Only after these conditions are met would the Kremlin consider entering into comprehensive negotiations, which would return to the so-called “Istanbul agreements,” effectively curtailing Ukrainian sovereignty.
- During the summit in Kazan, it is plausible that Russia faced some pressure, particularly during the bilateral meeting between Putin and Chinese leader Xi Jinping. Throughout his visit, Xi employed non-confrontational rhetoric regarding the Russian-Ukrainian conflict on two occasions. He highlighted the Sino-Brazilian initiative and underscored the need for “de-escalation of the military conflict” alongside a political settlement. Notably, Xi also emphasised China’s opposition to the involvement of third countries in the war, a statement made against the backdrop of reports about North Korea sending troops to Russia to participate in hostilities.
- It is reasonable to assume that Russia faced pressure to initiate peace talks during the Kazan summit. This notion is indirectly supported by Putin’s press conference following the event. Amidst his typical rhetoric regarding NATO expansion and perceived disrespect from the West, one detail stands out: Putin did not directly reiterate his radical conditions for negotiating an end to the war, articulated in June. While he emphasised the need to “take into account the realities on the ground”—another familiar Russian narrative—this could potentially be interpreted as a move towards a ceasefire along the front line.
- Furthermore, Putin stated that Russia is open to considering any options for peace agreements and expressed the necessity of returning to the negotiating table. The true indicator of a shift in Moscow’s position will emerge from subsequent statements by Russian officials. Notably, Putin is scheduled to speak at the Valdai Forum on November 7, where he is known for making significant political pronouncements. Should the Kremlin begin to refrain from mentioning its conditions regarding the territories in the four regions, it would suggest that the BRICS summit exerted considerable pressure on Russian authorities.
