Russia showcases economy as Ukraine war takes a back seat

Russia’s annual economic forum in St. Petersburg used to be known as the country’s “Davos” in a nod to the World Economic Forum that’s held in Switzerland every year.

War in Ukraine has changed the dial in global geopolitical and trade relations, however. The days when scores of Western business leaders and heads of state attended the St. Petersburg International Economic Forum, an event that enables Russia to showcase its economy and investment opportunities, are long gone.

Now, Russia is looking to use SPIEF to court new relationships with countries apparently less squeamish about doing business with a country that has invaded its neighbor — namely a number of countries in Asia, Latin America and Africa — and those willing to turn a blind eye to the war for their own economic interests, such as Russia’s oil and gas customers in eastern Europe, Slovakia and Hungary.

SPIEF is the latest effort in the Kremlin’s campaign to try to show that everything is still normal, Max Hess, fellow at the Foreign Policy Research Institute and author of “Economic War: Ukraine and the Global Conflict Between Russia and the West,” told CNBC Thursday.

“They trumpet and highlight international attendees and domestic propaganda, extremely, but except for a few of the usual characters like the Hungarian Foreign Minister [Peter Szijjarto], nobody new and notable is showing up and also no new major investments or deals will be agreed at this forum, at least not with major foreign countries,” he said.

SPIEF has been blacklisted by most Western businesses and politicians since Feb. 24, 2022, when Russian forces invaded Ukraine. But Russia is keen to show it’s open to business from elsewhere and indeed, its need and desire for economic partnerships with non-Western nations has accompanied heightened anti-Western sentiment and rhetoric in the last few years.

Moscow claims that it wants to combat Western hegemony and to establish a “multipolar” world order, and has promoted trading partnerships excluding the West as a way to do this. On that note, the theme for the 2024 SPIEF is “The Foundations of a Multipolar World — The Formation of New Areas of Growth.”

This year’s program includes sessions on expanding Russian development of the Arctic, the expansion of the BRICS group of economies and Russia’s car industry. There’s also sessions on “Family Values,” another keystone of Russian President Vladimir Putin’s fifth term in office, and Russia’s relationship with the West.

One session, entitled ”The Empire of Evil’: Has the West successfully demonized Russia?,” asks delegates to consider whether a purported “smear campaign” by the West against Russia has succeeded.

Representatives from 136 countries are reportedly attending the forum that runs from June 5-8, Russian presidential foreign policy aide Yuri Ushakov told reporters ahead of the forum.

Putin will address delegates on Friday, where he’s expected to promote Russia’s economic resilience, investment opportunities and growth despite international sanctions. It’s uncertain how much the war in Ukraine, or “special military operation,” will feature in his address, however, with Moscow likely to want to skirt over the conflict as it looks to attract investment.

What’s galling for Western nations is that Russia has indeed managed to adapt its economy to a new reality of sanctions and trade restrictions on some of its biggest industries, such as the oil and gas sector.

Russia’s economy is expected to grow faster than all advanced economies this year, the International Monetary Fund predicted back in April.

In its last World Economic Outlook, the IMF said it expected Russia to grow 3.2% in 2024, exceeding the forecasted growth rates for the U.S. (2.7%), the U.K. (0.5%), Germany (0.2%) and France (0.7%).

Russia says Western sanctions on its critical industries have made it more self-sufficient and that private consumption and domestic investment remain resilient. Meanwhile, continuing oil and commodity exports to the likes of India and China, as well as alleged sanctions evasion and high oil prices, have allowed it to maintain robust oil export revenues.

Analysts will be keeping an eye on any announcements regarding the BRICS organization — the group of economies comprising Brazil, Russia, India, China and South Africa and, since January, new members such as Ethiopia, Iran and Egypt — with Turkey mooting the possibility of joining the bloc. Opportunities for economic partnerships between BRICS nations feature heavily in this year’s SPIEF.

Kremlin spokesman Dmitry Peskov welcomed Ankara’s interest in joining the group, he said on Tuesday, saying the subject would be on the agenda of the next BRICS summit.

Analysts like Hess believed any talk of the BRICS group expanding was political posturing.

“Will Putin actually get anything meaningful for what he wants? No, maybe the kabuki theater [political posturing] will go on and Turkey will hold some more talks about BRICS membership. But as we saw with the January announcement of the expansion of that organization, it’s an entire and complete nothing burger,” Hess said.