Putin lambasts US and highlights Russia's pivot to the east

By bne IntelliNews May 23, 2014

Ben Aris in St Petersburg -


Russian President Vladimir Putin gave one of his most pugnacious speeches ever at this year's St Petersburg International Economic Forum. In his keynote speech delivered May 23, he challenged the US directly, calling it out of tune with the times, and said the Kremlin remains open for talks to end the showdown in Ukraine as long as they are conducted with mutual "respect."

Putin implied that Russia would respect "the choice of the people" in the presidential election in Ukraine due to be held on Sunday, May 25. However, he didn't go as far as admitting they would respect the result of the vote itself.

Washington was treated to a long lecture by Putin. He made explicit his objection to the US' pre-eminent role in the globe, condemning the unipolar version of international relations and instead promoting his multipolar view that is also shared by Russia's newest best friend China.

"The unipolar model of the world has failed even for those trying to continue to work in the system that does not exist any more. They are trying to maintain their monopoly in policy, trade and finance," Putin said. "The model has been built on domination, but the world has changed in the meantime. The inability of partners to find a compromise and the lack of will to listen to the partners are aggravating the chaos… Today we are living in a multipolar world where people want to decide what is best for them and preserve the geopolitical identity status."

The conflict over Ukraine has led to the most serious breakdown in relations between Russia and the US since the end of the Cold War. Putin went on to highlight the cost of the end of cooperation between Washington and Moscow. Putin repeated that Nato's expansion in Central and Eastern Europe has been a cause of serious concern in Russia. "Over the last two decades Nato military infrastructure has been approaching our borders, but they say not to worry as this is nothing to do with you. If Nato comes to Ukraine, we would be told again that it is nothing to do with us. We're sick and tired of this. We have genuine security concerns, but what are we supposed to do?"

He pointed out the common criticism that Washington needs Russia's help in many issues including counter terrorism, combatting international crime and arms control. Putin gleefully pointed to the fact that although Washington has said it is suspending military cooperation with Russia, it continues to make use of Russia as a transit for military supplies to its operations in Afghanistan. "We have not refused them," Putin told a packed conference hall. "But our common work in security, counter terrorism, against international crime and other issues is stumbling."

Putin also highlighted the weakness in the sanctions regime being imposed on Russia, which will end up hurting Europe and the other countries of the Commonwealth of Independent States (CIS). "Isn't it obvious that economic sanctions as a tool of pressure has a boomerang effect and eventually they will collectively affect the business and economies of the other countries," said Putin.

He went on to rub Washington's nose in it; the US State Department put heavy pressure on US company CEOs not to attend the summit, but many companies with big investments in Russia chose to ignore it and come anyway. "Foreign businesses have invested hundreds of billions of dollars into Russia are concerned as they gain a good reputation in the country and have been very successful," said Putin, specifically addressing the foreign CEOs in the audience.

"The engineering and infrastructure companies have built on trust they have earned here," he said in a backhanded compliment to several leading German companies that have publicly thrown their support behind Putin.

Putin returned to a long-term pet project of the Kremlin, the desire to negotiate and sign a new European Security Agreement that would cover many of the concerns behind the current standoff. "We call on the European Union to discuss and finalise the new basic agreement that relates to Russia," said Putin, who went on to say that Prime Minister Dmitry Medvedev attempted to float the idea in Brussels while he was president and continues to do so as PM. However, Brussels has refused to even begin a discussion on the subject, much to the annoyance of Russia.

Gas policy

Putin's most fiery rhetoric was reserved for expounding on Russia's position on Ukraine. "The problems with her gas supplies that have occurred are not due to Russia, but due to the situation in Ukraine, which as a transit country is in a difficult position," said Putin.

Beating a retreat into what can be called the "commercial arguments" when dealing with Ukraine, he reiterated that Ukraine had signed a gas supply contract in 2009 yet was now "not willing to pay."

"Instead, they insisted on some benefits that were not in the [original] contract. We know the economic situation is very difficult in Ukraine and we are trying to help. Last year we gave Ukraine $3bn as a loan and discounts on the gas price. But we did that provided they can repay the old debts. As of Wednesday this week they had not paid and they're not even making their current payments either. The question is where has our money gone, what was the multi-billion dollars spent on?"

Russia is on firm ground when making the commercial argument: it has sent 10bn cubic metres of gas to Ukraine but has received little for it. "We are doing this more-or-less free of charge. There must be some red lines in the international community that cannot be crossed," Putin said in another apparent sideswipe at US President Barack Obama. "If they want discounts and benefits, then at least they had to repay their debts from the period where the discount was already in effect," Putin added.

After this, Putin turned to the gas supply deal signed between Russia and China on May 21. He highlighted that ties between the two countries were entering a new and significant phase, with the relationship now a strategic one. "We are planning to form a strategic Russia-China energy alliance to support the security of energy for the whole region. And this will be a powerful incentive for the development of both countries," Putin said.


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