Steve Rosenberg
Russian Editor
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At the St. Petersburg International Economic Forum, Russian lawmakers came to me.
“Are you planning to bomb Iran?” he asked.
“I’m not going to bomb anyone!” I replied.
“I’m you, British…”
“Don’t you mean Donald Trump?”
“He said what Britain should do,” the man smiled. “And by deep conditions.”
It was a short, strange conversation. But this week in St. Petersburg, it showed that there was more people’s minds than just the economy.
I’ll take President Vladimir Putin with me.
On Friday, Kremlin leaders gave a keynote speech at the forum plenary session. It focused on the economy.
But that’s what the Kremlin leader said in a subsequent panel discussion.
“We have old rules,” declared Putin. “We belong to the foot of Russian soldiers.”
Imagine you are the leader of the country holding an economic forum and seeking foreign investment and cooperation. It appears that bragging about your army seizing foreign lands is not the most effective way to achieve this.
But that’s the point. Since Russia’s full-scale invasion of Ukraine in February 2022, the economic situation has been secondary to the goal of winning the war with Ukraine. That is the Kremlin’s comprehensive priority. Certainly, Russia’s economy is growing, but mainly due to large national expenditures on the defense sector and the military industrial complex.
And even this war-related growth is now being peeked out.
Putin wasn’t overly worried.
“As far as the ‘murder’ of the Russian economy is concerned, as well as the famous writer once said, ‘rums of my death are very exaggerated,'” the Russian president declared.
However, the Russian government is clearly nervous.
At the forum, Russian Economic Development Minister Maxim Less Shetnikov warned that the country’s economy was shaking “on the brink of a recession.”
“We grew for two years at a rather high pace as unused resources were activated,” said Elvira Nabiurina, governor of the Russian Central Bank. “We need to understand that a lot of these resources are really exhausted.”
The St. Petersburg International Economic Forum was conceived as a glossy showcase for the Russian economy. Much of its brilliance faded due to the thousands of international sanctions imposed on Russia in the war in Ukraine. Many Western companies have withdrawn from Russia.
EPA
Will they come back?
U.S. President Donald Trump has made it clear that he wants a better relationship with Moscow.
“Today, we had breakfast with the US Chamber of Commerce and many investors came from the US, and it gives us a sense that many American companies want to return,” Kiril Dmitriev on Putin’s foreign investment told me. We talked about the bystanders at the St. Petersburg Forum.
“I think the American administration understands that dialogue and joint collaboration are better than sanctions that are not doing their job and hurt your business.”
However, it is unlikely that Western companies will return with a large number of them while Russia is in the war with Ukraine.
“The United States Chamber of Commerce and Industry” said: “The United States Chamber of Commerce and Industry is a great leader in the country.
“Have you ever asked the Trump administration to remove sanctions from Russia?” I asked him.
“We’ve been to Washington,” he replied. “We analyzed the impact of American sanctions on American businesses, and we told the administration.”
“Do you accept that the idea that Western businesses will return is controversial in light of the war in Ukraine?” I asked.
“Western companies made decisions based on what happened three or four years ago,” Agee replied. “And it’s up to them to decide if it’s the right time to return.”
After more than three years of war and massive sanctions, Russia faces severe economic challenges including high inflation, high interest rates, reporting stagnation and a recession. Economic issues are currently openly debated and debated.
It is unknown how quickly it will be resolved.
