Putin’s signature conference plots ways to bear with international “punishments”


ST. PETERBSURG, Russia — Sanctions.

It’s a word that’s rarely heard among the Russian politicians, business leaders and foreign dignitaries gathered for President Vladimir Putin’s signature economic conference.

Even as Canada and its allies seek to increase their measures against Russia to retaliate over its involvement in Ukraine, there’s little suggestion of compromise on the key issue contributing to the country’s economic pain and an aversion to even mentioning the word ’sanctions’.

In fact, the fighting in Ukraine was referenced only in passing and often in fuzzy terms at the St. Petersburg Economic Forum.

The annexation of Crimea, which started an escalating wave of international sanctions and travel bans against Putin’s government, wasn’t mentioned at the event’s showcase panel discussions, including one with former British prime minister Tony Blair.

“We will have to bear with the limitations, even if we consider them politically motivated,” said Alexy Kudrin, a former finance minister who is now dean of the faculty of liberal arts at St. Petersburg State University.

Prime Minister Stephen Harper spoke Friday by phone with Ukrainian President Petro Poroshenko to assure him that Canada and its G7 allies would not let up.

On Friday, the two leaders agreed that the sanctions were more appropriate than ever, especially given recent violence in Ukraine, said a statement from Harper’s office.

But the Russians don’t even like to use the word sanctions.

Vladimir Yakunin, head of the country’s railways and a Putin confidante, referred to them as “illegal restrictions” in an interview with international news agency heads and insisted that only the United Nations has the legitimate power to level true sanctions.

Others more politely refer to them as “punishments.”

The Harper government has said trade sanctions are “putting real pressure” on Russia and that is evident in the numbers floating around the gathering of international business leaders, which is modeled on the annual World Economic Forum in Davos, Switzerland.

The combination of sanctions and the collapse of oil prices mean that the Russian economy is expected to contract by about three per cent this year.

There has been a 13 per cent decline in real incomes, officials acknowledged at the conference and inflation was running at a 15.8-per-cent pace last month.

The country revised its budget in April, but experts at the New Economic School in Moscow recently warned the pace of defence spending — a combination of the war in Ukraine and Putin’s ambitious military modernization agenda — is unsustainable in this era of low oil prices.

Officials talked up more co-operation with Asia and a burgeoning relationship with China, leaving Kudrin wondering aloud in a panel discussion what was to become of two decades of bridge-building and co-operation with the West.

“What do we hope to achieve by pivoting to Asia? I’ve got apprehensions,” he said.

It was left to Igor Shuvalov, the Russian deputy prime minister, to put the best face on the simmering crisis and to reassure the largely business audience.

He underlined the government’s recent road map to economic stability and noted that the country’s indicators are better than the dire forecasts laid out last fall.

Both in the conference rooms and on the gleaming trade show floor, there was a strained business-as-usual air.

Russian officials feverishly oversaw the signing ceremonies of 12 trade or business deals — everything from electricity to barley — before lunch on Thursday with an additional with 23 more inked in the afternoon.

There was also a sense of expectation that there would be further “punishments.”

A European Union summit — slated for Brussels on June 25-26 — is expected to see the sanctions extended until early 2016. Plus, on Friday, the Russian news agency TASS reported that the EU has extended a ban on the import of products from Crimea and Sevastopol until 2016.

But most of the talk at the forum has not been about how to end the measures, but rather how to cope and manage with them.

Herman Gref, the CEO of Sberbank, a bank majority-owned by the state, said he’s heard some government officials suggest sanctions are good because they will force Russia to look elsewhere for growth and economic opportunities.

The ending of trade restrictions will not solve all of the country’s problems and in a remarkably candid assessment, Gref urged Russians, who notoriously look to blame outside influences for their ills, to consider something else.

“Crisis is always the development of poor management,” he said.