Putin says Russia has weathered sanctions storm

By bne IntelliNews April 16, 2015

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In an anticipated display of defiance towards Russia's Western critics, President Vladimir Putin on April 16 said his country is not to blame for the continuing conflict in Eastern Ukraine, has now weathered the worst of the sanctions storm, and can expect economic growth to resume in two years.

In his 13th live annual 'Direct Line' question and answer session in Moscow, Putin responded to 60 of more than two million questions received by the Kremlin before the event, as well as some put to him by studio callers. Most concerned the conflict in Eastern Ukraine and the economy, although some advice on a pet dog was also sought.

"We've survived the peak of the problems," Putin said, highlighting signs that the Russian economy is stabilising after months of precipitous decline because of Western sanctions and low oil prices.

After losing 40% of its value in 2014, the ruble has recovered about 30% in the first three months of 2015, becoming the world's best performing currency in April.

Growing pains

EU and US sanctions, imposed last summer in response to Russia's seizure of Crimea in March 2014, are likely to remain in place for some time to come, Putin warned, because these were more of a political tool to "contain" Russia's development. 

Nonethless, growth would resume in around two years, the president added optimistically, reflecting the broad consensus among Russia's leadership and financial circles.

The Central Bank of Russia expects the economy to contract by 3.5% to 4% this year and by 1% to 1.6% in 2016. However, Finance Minister Anton Siluanov expects a return to growth in 2016, while Economy Minister Aleksey Ulyukaev forecasts an average 2.5% annual growth between 2016 and 2018.

Russia’s record oil production was another cited indicator of economic strength. Production increased 1.1% to 525mn tons in 2014, a new post-Soviet record that stands to be equalled or surpassed this year too, Putin said.

He also pointed to some selective banking sector statistics as proof that Russia is not heading towards financial collapse.

"Loans in the real economy have increased ... domestic bank assets increased to 77 trillion rubles, the first time it [the sum] exceeded GDP. This is a very good indicator of the stability and reliability of the Russian banking system," he said.

'No imperial ambitions'

Russia has been increasingly isolated internationally over its role in the crisis in Ukraine, where Nato and Western leaders accuse it of fighting a proxy war by supporting ethnic Russian separatists with weapons and troops against government forces.

"There are no Russian troops in Ukraine," reiterated Putin, who also assured a caller that there would be no war with Russia's neighbour. "I think a war [between Russia and Ukraine] is impossible," he told the resident of a town located on the border.

Moscow has no imperial ambitions, but is rather looking for "regional integration" to improve the lives of Russians living outside the country, the president continued, saying that he still regarded Russians and Ukrainians as one people. 

Meanwhile, the continuing hostilities in eastern Ukraine were the result of Ukrainian President Petro Poroshenko's failure to fully implement the February peace deal reached in Minsk, he stressed.

Cool showing

In a typically calm three-hour appearance, Putin generally kept the lid on inflammatory statements about the current stand-off with the West, apart from at one particular juncture. 

"Our partners should at least try to seek compromise rather than put pressure on us," he said, before going on to liken US foreign policy to the subjugation by the Soviet Union of its satellite states after World War II. "The US doesn't need allies, it needs vassals. Russia cannot exist in such a system of relations," said Putin, whose stiff-necked stance towards the West has taken his popularity at home to unprecedented high levels.

Moreover, in economic terms, the US would do well to look more closely at its own problems. "US debt is alarming, not just for America but for the world economy," Putin said, adding that the eurozone was also "coming apart at the seams".

Addressing one source of tension with the US in recent days - Russia's decision to unfreeze the delivery of S-300 surface-to-air missiles to Iran, which was put on hold in 2010 - this merely reflected Iran's willingness to sign a deal over its controversial nuclear programme, Putin said.

Russia's suspension of the deal was never part of any UN sanctions, meaning that accusations that Russia is undermining the international sanctions against Tehran were "groundless".

In the dog house

One puzzling addition to the calls shed a little light on how the former KGB agent's mind works, as a woman asked for his help to persuade her friend's husband to agree to getting a pet dog.

Putin said he had no right to order a family to take a dog, but suggested some subtle psychological manipulation to achieve the desired result. He would ask the husband to meet his spouse halfway, and she in turn would tell her husband that she would do as he decides. Then, having primed the ground, "He would buy her an elephant" if she wanted, Putin joked.

The 62-year-old Russian leader has held a call-in almost every year since he was first elected president in 2000, fielding questions on issues ranging from housing to regional and international conflicts.

"This is a great opportunity to take one's eyes off dry statistics and see what is actually going on," his spokesman Dmitry Peskov said before the latest session, offering some statistics of his own attesting to Putin’s public speaking stamina. The president's first session was held in 2001, lasting two-and-half hours. Since that time, his appearances have totalled 36 hours. The longest was in 2013, lasting 4 hours 47 minutes.

The event has been used by Putin to show that he is in command but is also accessible to the people if they want to raise problems with him. This time too he made a point of displaying his 'common touch'.

The government's response to the current economic crisis includes 10% budget cuts in most areas of spending. But Putin said he would try not to inflict too much hardship on the population. "To carry out a competent economic policy you have to use your head, of course, but if we want the people to trust us, we also have to have a heart. And we have to feel how the ordinary person lives," he said.

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