July 25, 2021

Russia sees cautious recovery at St Petersburg Economic Forum

Russia has tamed the Covid-19 pandemic and intends to move forward, or even play a leading role in the global recovery. This is the message that was repeated on the occasion of the Saint Petersburg Economic Forum (SPIEF), from Wednesday 2 to Saturday 5 June, the only holding of which, after the 2020 parenthesis, illustrated this declaration of intent.

“Nothing that looks like a disaster has happened, argued Vladimir Putin during his concluding speech on Friday. It was possible, given the conditions, but it didn’t happen. “ In fact, the figures prove the Russian president right – if we omit, as he systematically does, those of mortality (465,000 additional deaths recorded between April 2020 and April 2021 compared to the mortality usually observed).

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The Russian economy, very briefly confined, contracted less than the European economies. After declining 3.1% in 2020, gross domestic product (GDP) should return to its pre-crisis level by the end of 2021, according to the Bloomberg agency. The Managing Director of the International Monetary Fund, Kristalina Georgieva, even said her « admiration » for Russian financial management during the pandemic.

Main problem addressed by the Russian officials present: inflation. While it appears reasonable at first glance (5.5% in April), the indicator masks a difficult reality for households. First, the rise in prices is particularly marked in the food sector; then, it is superimposed on a continuous drop in income since 2013. In the name of the major macroeconomic balances, state support to businesses and households has remained weak, including during the crisis (around 4% of the GDP).

Modest presence of foreign investors

Rare display of differences within the government, we have seen the Minister of Finance, Anton Silouanov, warning his colleagues against the temptation to regulate prices in a too artificial way. In the winter of 2020, such attempts, driven by Mr. Putin, had ended in failure.

The other big lesson of the Forum was the modest presence of foreign investors. If part of this state of affairs has been attributed to travel restrictions, the finding existed long before the Covid-19. And it is similar with regard to the signing of contracts, in sharp decline. “SPIEF is no longer made to make new friends, but to count itself”, summed up a regular.

“Political tensions worry us, but no French company has left Russia since 2013,” said Emmanuel Quidet, president of the Franco-Russian Chamber of Commerce and Industry.

The personalities present, both Russian and foreign, once again denounced the policy of Western sanctions, largely responsible for this relative isolation. Former French prime minister François Fillon, head of a consulting firm, called them “Stupid and illegal”, while the Russian representative to the European Union, Vladimir Tchijov, added: “This is no longer an epidemic of sanctions, but a pandemic. “

At the same time, many participants insisted on the now customary nature of the confrontation between Moscow and the West – a routine belied by the episode of cancellations of flights by European companies to Russian territory, linked to the Belarusian crisis. “Political tensions worry us, but no French company has left Russia since 2013”, argued Emmanuel Quidet, president of the Franco-Russian Chamber of Commerce and Industry.

“We got used to it”, confirmed Frédéric Oudéa, director of Société Générale, noting however that the American measures were less predictable and therefore more threatening than their European counterparts. American entrepreneurs, for their part, have complained of difficulties in obtaining visas for their employees, due to reductions in diplomatic personnel. The meeting announced on June 16 between Vladimir Putin and Joe Biden aroused only moderate optimism.

” Brain drain “

Less commented on, but just as present in people’s minds, the Russian political hardening is another source of concern, even if foreign companies consider themselves protected from it (the case of Philippe Delpal and Michael Calvey, two managers of the investment fund Baring Vostok, long imprisoned and now on trial for a trade dispute, has only been touched upon).

Still, this climate permeated the discussions. Thursday, on the first day of the work, the economic information site VTimes announced its closure, for fear of legal proceedings, after being classified “Foreign agent”. For his part, a deputy from the ruling United Russia party joked: “Three days of work and no arrests to deplore …”

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This concern (that of seeing the political tension and the control of the security services deteriorating the business climate) was perceptible on the Russian side, despite the caution required. The business ombudsman, Boris Titov, recalled the results of a poll according to which 80% of entrepreneurs felt that their activity put them in danger and admitted to being afraid of arbitrary procedures and arrests. The director of a chain of cafes evoked, with tears in her eyes, the case of colleagues arrested and concluded: “You spit on us and consider us beggars. (…) Power talks about support measures, but what we need is efficiency and security. “

“The lines laid down by Russian power are clear; the problem is that they don’t stop moving ”, quipped, privately, the head of an online sales company, adding: “The real subject is going to be the brain drain. “ Asked how to reassure Russian entrepreneurs and bring back foreign investors, the president of the Accounts Chamber, Alexeï Kudrin, concluded, very diplomatically: “It’s the job of politicians. “