Putin’s Economic Conference Struggles to Attract Western Interest

This week, Vladimir Putin’s economic conference in St. Petersburg struggled to draw in Western businesses. Even countries that typically support Russia have sent lower-level representatives, with the exception of Indonesia, where the president is attending.

Relatives of top Kremlin officials have taken part in this flagship event, which follows years of conflict and severe Western sanctions impacting Russia’s economic situation.

Alexandra Prokopenko, a fellow at the Carnegie Russian Eurasia Centre in Berlin, remarked, “No one is discussing investments in Russia under these circumstances. We have war, sanctions, slowing growth, and persistent inflation.” She went on to say that the forum seems more about showcasing that the economy isn’t stagnant, rather than presenting real business opportunities.

Putin is expected to speak at the forum on Friday, with state television indicating a significant address regarding international matters and those who accuse Russia of various issues today.

Alongside him will be Indonesian President Prabowo Subianto, China’s Vice President Ding Xuexiang, and Sheikh Nasser bin Hamad al-Khalifa. This is arguably the most notable gathering of world leaders at such a conference since the onset of the war in Ukraine, as many of Russia’s allies have distanced themselves amid widespread condemnation and fears of backlash from the West.

Notably, Prabowo has expressed intentions to deepen ties with Russia, unlike many other foreign leaders who have shunned Putin. During a recent trip to Russia, he labeled the country a “great friend” and notably chose to attend this conference instead of the G7 Summit happening concurrently.

Under Prabowo’s leadership, Indonesia has engaged in its first joint naval exercise with Russia and recently joined the BRICS group, which includes emerging nations led by China and Russia. He even proposed a peace plan regarding Ukraine, which has drawn criticism from Kyiv due to its impracticalities.

Evan Laksamana from the International Institute for Strategic Studies mentioned that enhanced relationships with Indonesia might be more advantageous for Russia. “From a political perspective, it’s significant for Russia not to be perceived as isolated, especially considering that Indonesia is the largest Southeast Asian nation,” he said.

However, sentiments among civil servants and economic elites in Russia seem to be overshadowed by concerns about the ongoing war’s impact on the country’s economic landscape. Rising borrowing costs aimed at controlling inflation have begun to dampen the wartime economic growth, with living standards also on the decline.

Russia’s military successes appear to have lessened Putin’s desire for a peace agreement in Ukraine, complicating any hopes of lifting Western sanctions. The Kremlin’s stance suggests a strong interest among Western investors to return, should sanctions be removed, though a formal approach has not been made yet.

Deputy Finance Minister Ivan Chebeskov recently indicated that there have been no requests from companies that exited the market. “If there were exit transactions, we’d be flooded with requests,” he noted.

While Putin seems less inclined to pursue a US-mediated peace deal, he indicated a shift in perspective last month. Prime Minister Dennis Manturov stated, “Our management is equipped to handle the most complex import replacement issues,” suggesting Western companies should first work on lifting sanctions before they could reenter the market.

Expectations of a recession seem to have deterred many prominent Russian business leaders from participating in discussions. Officially, only six of the nation’s wealthiest individuals plan to be present, with notable absences among leaders of Russia’s major state energy companies like Rosneft and Gazprom.

Instead, the forum turned into a platform for relatives of high-ranking officials. For example, Putin’s daughter, Katerina Tikhonova, is expected to join through a video link. Additionally, Alexander Vaino, the son of a government staff member, is set to speak on multiple panels.

Interestingly, one session related to the Sports Federation features several familiar figures linked to Putin, but only a couple of athletes.

Despite the scarcity of substantial speakers, displays of familial connections remain noticeable throughout the conference. A VIP train in Moscow offered an extravagant nine-course meal with select wines, and state media shared visual updates showing promotional merchandise featuring quotes from Putin.

“It feels like a familiar show,” Prokopenko commented, “I suppose the main goal here is to keep Putin satisfied.”