Russian President Vladimir Putin told one of his longtime advisers on Friday that he was making “offensive” comments about Russia’s economy in an appearance on stage at Russia’s prized international economic summit, the St. Petersburg International Economic Forum (SPIEF).
Sergei Karaganov—who has long been a close adviser to Putin, and who served as a moderator at the SPIEF session—was discussing Russia’s future with Putin when he suggested that Putin create a working group to develop a new economic model for Russia.
Putin retorted that he already has a planning process.
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“What you said sounds offensive both to the Russian government and to other structures. You dozed a little or grunted, as people say,” Putin said in what appeared to be a jocular manner, according to footage from the event and Fontanka. “But working on a new development strategy—we have one.”
Karaganov’s suggestion that Russia may need to chart a new path forward economically comes at a testing time for Russia, with Putin working to scrape by despite sanctions, while also balancing the need to put on a show for international investors and partners.
Putin has long relied on the forum—commonly known as “Russia’s Davos” in homage to the global economic forum in Switzerland—to extol the values of Russia’s economy, innovation, and investment opportunities with prominent attendees from around the world. The summit has served as a forum for Putin to tout Russia’s economic resilience and build relationships with other countries and foreign investors.
But since Russia invaded Ukraine, the VIP attendee list for SPIEF has changed, as Western leaders have ditched the forum.
In the past, guest speakers included the likes of French President Emmanuel Macron, then-German Chancellor Angela Merkel, and then-Norwegian Prime Minister Jens Stoltenberg, who is now NATO secretary general, one of Putin’s most prominent foes.
Now, Russia tends to focus the event more on building economic ties and cooperation with countries in Asia, Latin America, and Africa. Countries “friendly to Russia” deserve special attention at SPIEF, Putin said Friday, according to CNBC.
Putin delivered wide-ranging remarks, talking about banking instruments, the minimum wage, GDP, and military readiness. He said he thinks the Russian defense sector needs to focus on updating technologically, while adding that he thinks Russian weapons are superior to other countries’ weapons, according to Fontanka.
He went on to tout Russia’s standing among nations, arguing that Russia’s economy hasn’t completely imploded despite the nation becoming a political pariah on the world stage as other governments have levied sanctions against Russia.
“Despite all the obstacles and illegitimate sanctions, Russia remains one of the key participants in world trade,” Putin claimed.
But the sanctions have been aimed at throttling Putin’s ability to fund the war in Ukraine, and the reality is much darker for Russia, according to U.S. officials.
Russia’s economy has shrunk since 2022, according to a U.S. Treasury Department analysis. According to the study, Russia’s economy contracted by 2.1 percent after its invasion of Ukraine as of late 2023.
Russia’s economy is “under considerable economic strain, contributing to rapidly growing expenditures, a depreciating ruble, increasing inflation, and a tight labor market reflecting a loss of workers,” Rachel Lyngaas, the Chief Sanctions Economist at the Treasury Department stated in late 2023.
“While Russia has the resources to maintain its war in the short-term, its leaders face increasingly painful tradeoffs that will sacrifice long-term prospects—as underinvestment, slow productivity growth, and labor shortages will only deepen,” Lyngaas said.
Doing the Rounds
Putin deployed Deputy Prime Minister of Russia Alexei Overchuk, Russian Deputy Prime Minister Dmitry Patrushev, and First Deputy Prime Minister of Russia Denis Manturov to meet with foreign officials on the sidelines of the SPIEF conference this week to shore up cooperation and bilateral relationships—including with China.
The three Putin cronies met with officials from Serbia, Azerbaijan, Hungary, the United Arab Emirates, and the Central African Republic, as well, according to readouts from the Russian government.
Some partners of Russia, including China and India, have backed away from SPIEF in recent years. Government officials from China and India both had raised concerns about the war in Ukraine directly to Putin following his invasion.
“Today’s era is not one of war, and I’ve talked to you about this on the phone several times… in the coming days, how we move towards the path of peace—we will definitely have an opportunity to discuss this,” Indian Prime Minister Narendra Modi told Putin in 2022.
But China and Russia have been deepening their ties as Russia’s onslaught in Ukraine has dragged on—although China was caught off guard by the war, Putin and Chinese President Xi Jinping have since reaffirmed their so-called “no-limits” partnership as the two countries work to form a multipolar world. China has, for instance, provided Russia with equipment and technology that is used to build drones and cruise missiles.
Overchuk and Vice Chairman of the Chinese People’s Political Consultative Conference Wang Yong held a meeting on the sidelines of SPIEF this week, according to the Russian government. During the meeting, both sides expressed “mutual commitment to further deepening cooperation,” including in the transportation and logistics sector, finance, high-tech industries, and green energy, according to a statement from the Russian government.
“The participants expressed satisfaction with the mutual support provided to the jointly held high-level international events, such as the Boao Forum for Asia and the St Petersburg International Economic Forum, which promote constructive and mutually respectful dialogue between the stakeholders, which, in turn, helps create a new architecture of global trade and economic ties within the multipolar world,” the Russian government said on Friday.
