President Vladimir Putin was in an ebullient mood during the plenary session at this year’s St Petersburg International Economic Forum (Spief). He batted away hard questions from the US NBC News anchor Megyn Kelly who was moderating the session and dropped several of his trademark one-liners. Trump has rejected the Paris Accord? “Don't worry. Be happy,” quipped Putin.
Spief is always closely watched as a bellwether for where Russia is going and this year was no exception. Putin has been visibly stressed at his public appearances over the last two years and lost his usual swagger. But not this year. While he failed to comment on the plans for deep reforms to Russia’s economy that were submitted last month, he is obviously feeling more confident about the future and Russia’s ability to cope.
Russia’s economy has just emerged from some three years of recession, but growth prospects are still anaemic – economists are saying economic expansion is capped at 2% for several years to come.
The big hitting CEOs that flocked to the imperial northern capital in the boom years that ended in 2008 were told to stay away two years ago by the US State Department, and kept a low profile last year. And this year few bothered to turn up, as if you are not already in Russia there is little point entering now. The cost of entry is high, elections are looming and returns remain low since the devaluation of the ruble in 2015.
But Russia can’t be ignored. Its economic status is diminished, but Putin is punching above his weight politically with military adventures in Ukraine and Syria, as well as allegedly working to undermine the legitimacy of elections in the US, France and a string of smaller countries in his own backyard.
Most commentators have reacted with righteous indignation as the idea of a country as militarily powerful as Russia disrespecting sovereign borders in the 21st century is very unsettling indeed. However, their analysis goes little deeper than putting the Kremlin’s motives down to “Putin and his gang of cronies” seeking to enrich themselves and maintain their grip on power.
There is an element of this, but Spief is a chance for Putin to show off the more nuanced aspects of his complaints about the way Russia has been handled by the West, which the Kremlin says justifies its actions. And this year’s forum was interesting as it highlighted that despite the best attempts to Washington and Berlin to isolate Russia, it has allies that agree with much Putin has to say.
Putin started with a gift of a softball question by Kelly, who asked what he thought of the news du jour: US President Donald Trump’s decision to withdraw from the Paris Accords on climate change. Russia has accepted the deal but has yet to ratify the accord as Putin said it was awaiting the details on how resources will be affected. Russia is famous for being polluted, but thanks to its forests, which stretch almost half way around the world, it is carbon credit positive. It was easy for Putin to sound statesman-like.
Seeking new partners
Russia has been working to drive wedges between the Western coalition that united to impose sanctions on Russia following its annexation of Crimea in 2014, even if those sanctions are mostly mild and symbolic. Trump is making Russia’s efforts to look sensible and just adult easier.
One of the unintended consequences of this punishment is it unnerved the other leading emerging markets, which fear being the next in the crosshairs of Western wrath for their failure to mirror Western values. On top of this, the emerging markets have now largely emerged. Two years ago, the emerging markets overtook the Western world in terms of the value of their combined economies.
Less interested in civil society and more interested in growth and profits, these markets are increasing looking at each other as customers or sources of capital. Their interest in the Washington Consensus is next to nil, but their interest in cooperating with each other is rising.
Putin shared the stage with India’s Prime Minister Narendra Modi from the Brics countries, Prime Minister Christian Kern of Austria, one of Russia's traditional supporters in Europe, as well as –suprisingly – President Igor Dodon of Moldova, one of Russia's strongest hopes for rolling back EU encroachment on its doorstep.
India has become a big market and is increasingly interested in investing in Russian business. The Austrian presence was also interesting as Austria has been one of the biggest winners from the fall of the Soviet Union. Previously it was said that if Germany sneezes then Austria gets a cold as the smaller country was so heavily dependent on the larger. Then overnight in 1991 Austria got its traditional hinterland back. Today some 80% of companies listed on the Vienna Bourse derive at least part of their income from eastern Europe.
Support for the Russian sanctions in Central Europe has been lukewarm as so many of these countries are so heavily dependent on not only Russian energy but also exporting to its consumer market, inbound Russian investment, and tourism.
Last week, German Chancellor Angela Merkel said Europe must take its fate into its own hands, in comments that were widely seen as a break in the traditional close ties with the US. Austria’s Kern agreed with Merkel’s comments, pointing out: “If the US steps out of this story then that is a step into the past and won’t benefit the development of mankind”. He added: “We should not only think about America but think of one’s own development in all dimensions.”
Back in form
Compared with the last two Spief meetings Putin looked relaxed and his self confidence has returned. Last year he looked wooden and his speech was empty of anything, concrete other than a suggestion to set up boy scout troops.
When Kelly harangued Putin on the claims of election interference and hacking, Putin joked and swatted her questions away. “What real evidence is there? IP addresses? Anyone can set these up. Even your three-year old daughter,” Putin responded. “Its all hysteria.”
He went on to equate the international opprobrium for Russia with anti-Semitism, saying it gets blamed for everything. More chillingly, he then turned on foreign (implicitly US) NGOs and journalists who have been “systematically working to interfere with our domestic politics. That has to stop”, Putin concluded, the smile falling from his face.
These are pet peeves of Putin, who objects to the US right to be world leader and denies it has any right to comment on Russian domestic issues. However, whatever the rights and wrongs of this, Putin has found plenty of other leaders that are happy to join him in rejecting anything America has to say about how Russia, or any emerging market, is run on principle. Those allies range from the barmy, such as Turkmenistan’s Gurbanguly Berdimuhamedow, to the rapaciously power-hungry, such as Turkish President Recep Tayyip Erdogan, through to the significant, such as China’s President Xi Jinping.
There is a lot to object to in Putin’s policy choices. He has taken an extremely combative position that led to the violation of Ukraine’s sovereign territory. He has taken a leaf out of the US State Department’s book and actively interfered in other people’s elections, shockingly including Western democratic electoral processes.
The bottom line is he has given up on any hope of civilised partnership with the West, as he warned he would do in his famous Munich speech in 2007. He has instead resigned himself to a state of prickly pragmatism, hoping that the West will be forced to engage with Russia simply because of geography.
In the meantime, Putin is working to divide the EU to build up its stock of allies in Brussels, while building closer ties with the other leading emerging markets, with China and the Middle East in pride of place.
Putin is not afraid to hold his corner. It has become a tradition to invite a top US journalist to moderate the Spief plenary session discussion. Kelly ran Putin over the hurdles, asking him the hard questions, as did CNN anchor Fareed Zakaria before her (although Bloomberg anchor Charlie Rose did a poor job when it was his turn).
In this context, Modi’s participation was obvious and significant as the Indian leader took the seat that Xi occupied two years ago. However, the presence of Kern was also significant as it shows that Russia’s market remains very important to many Western countries which remain keen to find some sort of work-a-day solution to the current impasse.
In Putin’s world these clashes are about a clash in world view: his multipolar world vs the US lead unipolar view. In previous years the difference was black and white and it would be impossible to justify Putin’s illiberal views over the Western mores. But in the Trumpian dystopia the West is drifting into? Perhaps that is why Putin came over as so relaxed and jovial. Set against Trump, Putin looks positively presidential.