Russian President Vladimir Putin presides this week over the St. Petersburg International Economic Forum, continuing a charm offensive that aims to revive Brand Russia.
This year’s forum features high-profile guests: French President Emmanuel Macron is scheduled to participate, as are Japanese Prime Minister Shinzo Abe, Chinese Vice President Wang Qishan and Christine Lagarde, managing director of the International Monetary Fund.
It’s the biggest international lineup for the St. Petersburg forum since before 2014, when Russia was hit with US and European economic sanctions over its annexation of the Black Sea peninsula of Crimea and support of a separatist conflict in eastern Ukraine.
Back then, Putin was snubbed by international leaders: At a G20 summit in November 2014, he got a cold shoulder from his counterparts, and cut short his visit.
Putin and his inner circle went on to experience further friction with the West over interference in the 2016 US election, the Kremlin’s support for Syrian President Bashar al-Assad and the poisoning of a Russian former spy and his daughter in the United Kingdom.
Today, Putin is at the center of a whirl of geopolitical activity. Last week, he hosted German Chancellor Angela Merkel for talks on the situation in Ukraine and the Middle East. And on Monday, ahead of the St. Petersburg gathering, Putin hosted India’s Prime Minister Narendra Modi.
The Kremlin’s message is clear: Russia is open for business, regardless of sanctions.
In an interview with CNN’s John Defterios, Kirill Dmitriev – the chief executive of the Russian Direct Investment Fund, a sovereign wealth fund created by the Russian government – said “doomsday scenarios” of Russian economic collapse have not borne out, despite the current political confrontation with the US.
“The Russian economy has 2% growth this year, the oil price is very stable and yes of course we have obvious difficulties in the relationship with the US, but we have great partners in Asia, great partners in the Middle East, President Macron and Prime Minister Abe are here visiting the St. Petersburg economic forum, so the forecasts that Russia is going to be isolated … have proven to be wrong,” he said.
Dmitriev said that “pragmatic business dialogue” could help bridge some of the massive political gaps between Russia and the West. And that’s a message, interestingly, that resonates with what Jon Huntsman, the US ambassador to Moscow, recently said.
Huntsman recently explained his participation in the forum, saying that business ties were a positive step toward improved relations with Russia.
“Unfortunately, some commentators would have you believe that any US-Russian dialogue right now is somehow suspect,” he said. “I disagree.”
While Huntsman said there were “a lot of questions regarding Russian behavior that Americans deserve answers to,” he added: “The fact is that dialogue represents the way forward, while mutual isolation will only drive us further apart. That’s why I’m going to SPIEF.”
Talk of improved dialogue and high-profile visits at Putin’s economic forum doesn’t mean Russia is out of the woods, economically speaking. Russia is emerging from an economic slump brought on by sanctions and weak international prices for oil, its main revenue earner. The World Bank predicts modest gross domestic product growth for Russia of between 1.5% and 1.8% over the next three years.
And Russian entrepreneurs are not optimistic, particularly given the lack of systemic economic reform.
In a recent survey released by state pollster VTsIOM, Russian entrepreneurs said their businesses were being adversely affected by Russia’s battered economy. According to the poll, around 63% of the executives surveyed said their company’s situation has deteriorated because of the current economic situation.
And that, in turn, may explain why Russia has been measured in its response to new US sanctions. Russia’s parliament has advanced legislation to introduce countermeasures against countries that impose sanctions on Russia.
Putin weighed in on the matter last week in his meeting with Merkel, signaling that such legislation need not drive away foreign investment.
“It has to be balanced; it should not harm our own economy and those of our partners, who work honestly in Russia,” he said. “I am sure this will be the case.”
