Putin settles accounts with the West in St. Petersburg

At the Economic Forum in St. Petersburg, everything revolved around the «new realities». President Putin denied any connection between the crisis and the war in Ukraine and praised the steadfastness of the Russian economy. He denounced the West as the culprit for all evil in the world.

Russian President Vladimir Putin during his speech at the Economic Forum in St. Petersburg.

Maxim Shemetov/Reuters

The representative of the Taliban, classified as a terrorist organization in Russia, attracted a lot of attention at this year’s International Economic Forum in St. Petersburg. In some places he was taken as a bitter symbol of who Russia is trying to get close to in times of far-reaching Western sanctions. The organizers hastened to emphasize how many distinguished foreign guests attended the 25th edition of the forum despite the absence of Western celebrities. After all, Kazakh President Kasym-Jomart Tokayev was a guest at the high point of the plenum.

Taliban or not – one thing was particularly striking about the event: The radically changed economic and political environment was completely taken out of context in the discussion rounds. Russian ministers, presidential advisers, members of parliament and entrepreneurs acted as if the malicious West had imposed the toughest sanctions on Russia out of nowhere, turning the global economy upside down. The war against Ukraine triggered by Russia was the elephant in the room – hardly anyone spoke to it.

“colonialism” of the West

President Vladimir Putin made an exception when his appearance was delayed by more than an hour and a half, allegedly because of a hacker attack. In a sweeping global economic sweep, however, he came to exactly the opposite conclusion: In his eyes, the “special military operation” had nothing to do with the global economy that had gotten out of joint; that is pure demagogy and propaganda.

Putin basically settled accounts with the West. The blame for high inflation, broken logistics and the threat of hunger in the world has to do exclusively with years of irresponsible financial and economic policy, especially in the USA, but also in the European Union. These would have lived at the expense of the rest of the world for years; a kind of modern colonialism. In order to cover up the failure of this policy, they are now targeting Russia, which is being blamed for the failure. Totally misjudging Russia’s economic strength, they thought they could isolate the country and totally miscalculated.

Sovereignty is key

Putin almost whitewashed the picture of a badly shaken but steadfast nation with many prospects that is defending its sovereignty so as not to become a colony. Only strong, sovereign countries could have a say in the new, multi-polar world order. Individual economic problems are insignificant on the other hand. Using the usual arguments, he defended the need for war in Ukraine. The West, on the other hand, pursues a suicidal policy out of ideological obstinacy and destroys the reputation of its institutions. He extensively presented his analysis of the social, political and economic problems in Europe and the USA that led to their decline. The West has not understood the signs of the times.

He also presented the most important economic policy principles, taking into account the “new realities”. He described the openness of the economy to the world as crucial. Putin announced a number of concrete simplifications, especially for companies – entrepreneurial freedom must be increased. That was certainly balm for the battered souls of many participants. But it’s hypocritical: Putin has had two decades to improve it, and he’s said it many times before. He criticized all those who had not thought enough about their homeland for years and had taken their money and children abroad. “It’s more reliable at home,” he said and appealed to the entrepreneurs to do more for their home country.

Optimistic officials

At the forum, the mood oscillated between indignation, fierce determination and disappointment that the West had completely lost trust through its behavior. The prevailing conviction was that Russia was not isolated, but that the West had isolated itself. Nonetheless, the discussions were often primarily about Russia. The premises have changed for a long time, maybe forever, said Russia’s central bank governor Elvira Nabiullina, who is generally one of the more concerned voices in the country.

Maxim Oreshkin, on the other hand, President Putin’s economic advisor, was often content with propaganda-sounding phrases about Russia’s strength, which now needs to be played out, and about the West, which is harming itself the most. There was repeated talk of the opportunities that Russian producers could take advantage of by withdrawing foreign brands in a market that has so far been heavily influenced by imports. The tenor was: the worst is now over – an assessment that independent economists do not share.

Modernization or Demotion?

Above all, the entrepreneurs who are facing colossal challenges sounded realistic: Russia’s imports and exports have gotten completely mixed up, the exchange rate is straying, capital controls and volatile interest rates make it difficult to act as quickly as the head of Russia’s largest financial institution Sber, German Gref , such as steel industrialist Alexei Mordashov as a representative of a crisis-ridden industry that has come under severe pressure.

Andrei Makarov, the long-time chairman of the Duma’s budgetary policy committee, repeatedly touched on the sore spots, warning against complacency on the part of the administration and repeatedly citing the example of the Lada Granta, which is now being sold with fewer accessories at a higher price. If this is the adaptation to the new realities, then Russia does not expect modernization, but degradation, he said gloomily. Those who later listened to Putin, on the other hand, got the impression that everything was on the right track in Russia and that Russia had all the prerequisites for a successful future – if only it believed in itself and its strengths.

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