Person of the Year 2008

Photo: Oleg Videnin
Every year, Expert Magazine, a business weekly, nominates its own Person of the Year a la Time Magazine. The award recognises the individual that the editorial believes has had the greatest political, economic or social impact in Russia throughout the preceding year. Previous winners have been (surprise, surprise) Putin (2007) and Medvedev (2005), as well as Abramovich and Khordokovsky (2003) and the Minisiter of Defense, Sergei Lavrov (2006).

In contrast to Time’s nomination of Obama as a ‘wind of change’, Expert chose Sergei Ignatev, head of the Central Bank of Russia, who they characterised as a rock of stability, working to prevent Russia from descending into total financial collapse. In an extremely balanced article, Expert argued that, whilst the Central Bank’s policies are far from perfect, it is this institution alone that holds the potential to ensure Russia's economic stability.

The main bulk of the article constituted an appraisal of Russian economic policy this past year, emphasising both its highs and lows. Expert neither blindly praised the bank’s handling of the crisis nor too harshly criticised it. The message was clear: despite its many mistakes, the Central Bank’s actions were instrumental in avoiding total economic meltdown. But it’s leader must not relax – difficult times lie ahead and the bank must act carefully if it wants to ride out the storm intact.

Below is the introduction to the article, which sets out why Expert chose Sergei Ignatev as Person of 2008.

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He Must Find a New Equilibrium

By nature, employees of the Central Bank are curt and enigmatic. The High Priests of liquidity do not have it in them to be loquacious. Sergey Ignatev, head of the Russian Central Bank takes this maxim to new extremes - he is simply silent.

Once or twice a year, he delivers the Central Bank's positions and predictions to an exclusive audience consisting of the President and Prime Minister. General communication with the wider public and mass media is left to his vice, Alexei Ulyukaev. Heavy chinned, peering gloomily out through old-fashioned, heavy rimmed, thick-lensed glasses, Ignatev's silence is unreadable and can thus mean many things. He, more than most, can be judged by his actions alone.

Following his appointment as head of the CB in March 2002, he set about assembling a quality team of financial professionals, who would shape CB's policies in the years ahead. Let us examine three of them.

First, there's Oleg Vyugin, who determined macroeconomic regulation of the CB: strengthening the accumulation of international resources and sterilising links with the Ministry of Finance through the establishment of the Stabilisation Fund (2004).

Then there's Andrei Kozlov, who used his strengths to create our system of insurance payments, to introduce new controls and to implement a large-scale purge of scammers and pseudo-bankers within our banking systems - work that he paid for with his life.

Finally there's the aforementioned Alexei Ulyukaev, who replaced Vyugin as the first deputy of the CB in 2004, and set in motion a new system of refinancing banks, the durability of which is currently being tested.

Despite the importance of the actions of these individuals, our choice of the main banker as person of the year represents the flexibility and decisiveness with which the Central Bank has so far faced the current crisis. We want to point out straightaway that we do not judge all elements of the Central Bank's strategy for dealing with the crisis as effective, or even successful. Furthermore, in our opinion, the acuteness of today's crisis is, in many ways, due to mistakes made by the Central Bank at an earlier stage. For example, what was the point in raising interest rates and norms of the essential reserves at the start of this year, when the means of saving Russia from the global liquidity crisis had already been neglected? Likewise, the greatest weakness and vulnerability of our financial system springs from the failure of the main bank to devise a strategic plan for its development.

Nevertheless, the main event of this year has been the crisis; the person of the year must therefore be the most important actor in the struggle against the crisis. We consider the Central Bank to be the most important actor in the crisis, and, as the head of the bank, Sergey Ignatev symbolises the bank’s policies.