The Russian government is nervous when the country faces economic problems

A Russian MP approached at the International Economic Forum of St. Petersburg.

“Are you going to bomb Iran?” he asked.

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

“I mean you, the British …”

“You don’t mean Donald Trump?”

“He said to do Britain,” the man smiled. “And deep state.”

It was a short, bizarre conversation. But this showed that in St. Petersburg this week was more in the mind of people than the economy.

Take President Vladimir Putin.

On Friday, the Kremlin leader made a major speech at the plenary session of the forum. It was focused on the economy.

But this is what the Kremlin leader said in a discussion that later spoke with the headlines.

“We have an ancient rule,” Putin said. “Where the Russian soldier is walking, this is ours.”

Imagine you are the leader of the country that conducts an economic forum, seeking foreign investment and cooperation. To brag about the fact that your army captures foreign lands seemingly the most effective way to achieve this.

But that’s the matter. Since February 2022, the state of the economy in the Russian invasion of Ukraine has been secondary to win the war against Ukraine. This is the Kremlin’s main priority. However, the Russian economy is growing, but largely due to the large-scale state expense for the defensive sector and the military-industrial complex.

And even this height related to the war is now going out.

Putin was not overly concerned.

“As for the” murder “of the Russian economy, as a well -known writer once said,” rumors about my death are greatly exaggerated, “the Russian president said.

But the Russian government is clearly nervous.

At the forum, Russian Economic Development Minister Maxim Rayitikov warned that the country’s economy is seeking “on the verge of recession”.

“We have grown two years at a rather high pace because unused resources were activated,” said the Governor of the Central Bank of Russia Elvira Nabiulin. “We need to understand that many of these resources were really exhausted.”

The International Economic Forum of Saint -Peaterburg was conceived as a brilliant showcase for the Russian economy. Many of this shine went out of the thousands of international sanctions imposed on Russia for war in Ukraine. Many Western companies have left Russia.

Can they return?

In the end, US President Donald Trump made it clear that he wants the best relationship with Moscow.

“Today, we have had breakfast with the US Chamber of Commerce, and many investors came from the US. We have the feeling that many US companies want to come back,” Kirill Dmitriev said to me, President Putin’s envoy for foreign investments. We performed on the sidelines of the St. Petersburg Forum.

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

However, Western enterprises are unlikely to return in large numbers, while Russia is waging war with Ukraine.

“I think it is clear that you should have some end of the conflict before US companies will seriously consider the opportunity to go back,” said Robert Ega, president of the US Chamber of Commerce in Russia.

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

“We were in Washington,” he replied. “We did analyze the impact of US sanctions on US business. We have submitted it to the administration.”

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

“Western enterprises made decisions on the basis of what happened three -four years ago,” Mr. Ega replied. “And it depends on their solution or the right time to come back.”

After more than three years of war and mass sanctions, Russia faces tough economic problems: high inflation, high interest rates, stagnation reports, recession. The problems in the economy are now openly discussed and discussed.

It is unclear how soon they will be resolved.