The Russian government nervous as the country faces economic challenges

A Russian MP appeared at the International Economic Forum in St. Petersburg.

“Will you bomb Iran?” he asked.

“I don’t plan to bomb anyone!” I answered.

“I mean, the British …”

“Don’t you want to say Donald Trump?”

“He said what to do from the UK,” the man smiled. “And from the deep state.”

It was a short, bizarre conversation. But this showed that in St. Petersburg this week there is more about people’s minds than just the economy.

Take President Vladimir Putin.

On Friday, the Kremlin leader gave the main speech to the forum plenary session. It focuses on the economy.

But this is what the Kremlin leader said in the discussion of the panel afterwards, made the titles.

“We have an old rule,” Putin said. “Where the step of a Russian soldier steps, it’s ours.”

Imagine that you are the leader of a country that hosts an economic forum, seeking foreign investment and cooperation. Straising your army for seizing foreign lands will not seem to be the most effective way to achieve it.

But this is the question. After the full -scale invasion of Russia in Ukraine in February 2022, the state of the economy is a secondary to win the war against Ukraine. This is the comprehensive priority of the Kremlin. It is true that the economy of Russia is increasing, but is largely due to the mass government spending on the defense sector and the military-industrial complex.

And even this war -related growth is already out.

Putin didn’t sound too worried.

“As for the” murder “of the Russian economy, as a famous writer once said,” The rumors of my death are greatly exaggerated, “the Russian president said.

But the Russian government is obviously nervous.

At the forum, the Minister of Economic Development of Russia Maxim Presnikov warned that the country’s economy was engaged “on the brink of recession”.

“We have grown for two years at a fairly large pace because unused resources have been activated,” said Russian governor of the central bank Elvira Dabilina. “We have to understand that many of these resources have really been exhausted.”

The International Economic Forum in St. Petersburg was designed as a shiny showcase for the Russian economy. Much of this splendor has faded due to the thousands of international sanctions imposed on Russia during the war in Ukraine. Many Western companies withdrew from Russia.

Can they come back?

In the end, US President Donald Trump made it clear that he wanted a better relationship with Moscow.

“We have had breakfast with the US Chamber of Commerce today and many investors came from the United States. We have the feeling that many US companies want to return,” I told me Kiril Dmitriev, President Putin’s envoy for foreign investment. We talked on the sidelines of the forum in St. Petersburg.

“I think the US administration understands that dialogue and joint cooperation are better than sanctions that do not work and hurt your business.”

However, the Western business is unlikely to return to a large number while Russia waged a war against Ukraine.

“I think it is clear that you should have some termination of the conflict before US companies are considering seriously returning,” said Robert Agi, president of the US Chamber of Commerce in Russia.

“Have you asked the Trump administration to remove some sanctions from Russia?” I asked him.

“We were in Washington,” he replied. “We have analyzed the impact of US sanctions on US business. We have passed this to the administration.”

“Do you accept that the idea of ​​returning Western businesses is contradictory in the light of war in Ukraine?” I asked.

“Western enterprises made decisions based on what happened three or four years ago,” said AGI. “And it is up to them to decide whether it is the right time to return.”

After more than three years of war and mass sanctions, Russia faces difficult economic challenges: high inflation, high interest rates, stagnation reports, recession. Economy problems are already being discussed and discussed.

It is not clear how soon they will be resolved.