Putin says Russia withstood sanctions better than Europe
Vladimir Putin said Friday that his country had resisted the worst sanctions imposed by the United States and Europe, while the Russian president had pledged to achieve the objectives of his military aggression against Ukraine.
Putin told a business conference in St. Petersburg that “gloomy predictions about the future of the Russian economy have not come true” and that sanctions have hit European businesses hard – a claim that does not is not supported by the estimates published so far.
“The Economic Blitzkrieg. . . never had a chance of success,” he said. “The weaponry of sanctions is a double-edged sword. . . European countries have dealt a serious blow to their own economy single-handedly.
Since Russia’s invasion of Ukraine in late February, Western countries have imposed sanctions that have frozen Russia’s $300 billion in foreign exchange reserves, cut off its businesses from global markets and disrupted its supply chains. .
Putin was adamant that Russia would achieve its military goals, indicating it could annex occupied territories or Moscow-backed separatist areas in the eastern Donbass region. “We will defend the interests of the people our guys are fighting for, hurting and dying for,” Putin said. “There is no other way. Otherwise what good are the victims?
Moscow-backed separatist authorities in the Donbass, whose leaders attended the conference, and officials the Kremlin has appointed to lead Ukraine’s southern regions have said they want to be part of Russia. Putin said Russia would “respect any choice it makes”. He stressed that he considered the whole of the former Soviet Union to be a “historic Russia”.
Despite claiming that the United States had provoked the war by turning Ukraine into an “anti-Russian bulwark”, Putin said that Moscow had no objection to Kyiv’s attempts to join the EU because it it was not a military alliance. The European Commission called on Friday to make Ukraine an official candidate to join the bloc.
Putin’s comments that Russia has been less affected than European economies contradict the forecasts of international organizations.
Eurostat, the commission’s statistics office, will not release growth figures for the second quarter, which will cover most of the period after the Russian invasion, until the end of July.
But soaring oil and gas prices have drastically reduced estimates. The OECD recently lowered its forecast for euro zone expansion this year from 4.3%, which it had estimated in December, to 2.6%, and from 2.5% to 1.6% for 2023.
For Russia, the downgrades were much more pronounced. Its economy is expected to contract by 10% this year, according to the OECD, down from the 1.9% growth forecast in December. The projection for 2023 has been reduced from growth of 1.6% to contraction of 4.1%.
Putin said Russia had brought inflation under control at 17.6% and boasted that it was lower than some European countries’ levels. This is only true for Estonia and Lithuania, where energy prices soared after the Baltic countries decided to cut off Russian energy supplies once the war started. The eurozone average is, at 8.1%, less than half the Russian rate.
Western central banks have blamed the conflict for exacerbating inflationary pressures by triggering sharp increases in the cost of energy and food. Putin dismissed that claim, saying the West was using the conflict as a “lifeline to blame Russia for its own mistakes.” Western countries were paying the price for years of ultra-loose monetary policy and high levels of public debt, he said.
He accused the EU, historically Russia’s biggest trading partner, of bowing to US pressure. “The EU has lost its political sovereignty. Its elites dance to someone else’s tune, harming their own population. The real interests of Europeans and European companies are completely ignored and brushed aside,” Putin said.
While Putin played down the economic damage caused by the sanctions, the Russian economic officials present were visibly shaken. Herman Gref, chief executive of state lender Sberbank and a longtime confidant of Putin, said the export-driven economic model was now a “poison” because it made the ruble too strong against the dollar.
Putin also dismissed Western accusations that Russia has exacerbated global food shortages by blockading Ukraine’s Black Sea ports and preventing its grain exports.
Instead, he said the sanctions had restricted Russia’s grain exports. “Famine in the poorest countries will be on the conscience of the US administration and Eurocrats,” Putin said.
The sanctions, which have wiped millions of dollars from the wealth of wealthy Russians, had vindicated his warnings that Russian oligarchs and rulers were taking too many risks grabbing assets in the west. “True success is only possible when you link your future and that of your children to the homeland,” he said.