At the St Petersburg International Economic Forum, a Russian MP came up to me.
“Are you going to bomb Iran?” he asked.
“I’m not planning to bomb anyone!” I replied.
“I mean you, the British…”
“Don’t you mean Donald Trump?”
“He’s told what to do by Britain,” the man smiled. “And by the deep state.”
It was a brief, bizarre conversation. But it showed that in St Petersburg this week there was more on people’s minds than just the economy.
Take President Vladimir Putin.
On Friday, the Kremlin leader delivered the keynote speech at the forum’s plenary session. It focused on the economy.
But it’s what the Kremlin leader said in the panel discussion afterwards that made headlines.
“We have an old rule,” Putin declared. “Where the foot of a Russian soldier steps, that’s ours.”
Imagine you’re the leader of a country that’s hosting an economic forum, seeking foreign investment and cooperation. Boasting about your army seizing foreign lands wouldn’t appear to be the most effective way to achieve this.
But that’s the point. Since Russia’s full-scale invasion of Ukraine in February 2022, the state of the economy has been secondary to the goal of winning the war against Ukraine. That is the Kremlin’s overarching priority. True, Russia’s economy has been growing, but largely due to massive state spending on the defence sector and military-industrial complex.
Russia fears another loss in Middle East from Iran’s conflict with Israel
How the West is helping Russia to fund its war on Ukraine
And even this war-related growth is now petering out.
Putin didn’t sound overly concerned.
“As far as the ‘murder’ of the Russian economy is concerned, as a famous writer once said – ‘rumours of my death are greatly exaggerated,'” the Russian president declared.
But the Russian government is clearly nervous.
At the forum, Russia’s Minister for Economic Development, Maxim Reshetnikov, warned that the country’s economy was teetering “on the brink of recession”.
“We grew for two years at a fairly high pace because unused resources were activated,” said Russian Central Bank Governor Elvira Nabiullina. “We need to understand that many of those resources have truly been exhausted.”
The St Petersburg International Economic Forum was conceived as a shiny showcase for the Russian economy. A lot of that shine has faded due to the thousands of international sanctions imposed on Russia over the war in Ukraine. Many Western companies pulled out of Russia.