Sanctions-hit Kremlin to stage annual ‘Russian Davos’ bereft of financial elite

Source: Reuters | Original Published At: 2022-06-14 15:47:00 UTC

Key Points

• Russia's annual St Petersburg International Economic Forum (SPIEF) lacks Western financial elite due to sanctions over Ukraine
• Focus shifts to non-Western participants including China, BRICS nations, and Russian allies
• Sessions emphasize economic adaptation to sanctions, alternative payment systems, and information warfare
• Domestic firms are taking over Western-owned businesses abandoned due to sanctions
• VTB CEO warns sanctions will reshape global economic divisions long-term

Flags with the St. Petersburg International Economic Forum (SPIEF) logo fly near the St. Isaac’s Cathedral in Saint Petersburg, Russia June 14, 2022. REUTERS/Maxim Shemetov

This week, Russia is giving pride of place to smaller players or countries like China – the world’s second largest economy – that have not joined in sanctions.

“Foreign investors are not only from the United States and European Union,” Kremlin spokesperson Dmitry Peskov told reporters on Tuesday, pointing to the Middle East and Asia.

The Kremlin launched the St Petersburg International Economic Forum (SPIEF) in 1997 to attract foreign investment, discuss economic policy and project an image that it was open for business after the demise of Soviet communist rule.

Now, with Western leaders shunning dealings with Russia, longtime President Vladimir Putin will have no traditional meeting with political movers and shakers and corporate bigwigs from the United States and Europe.

There were no names of U.S. and European companies or their CEOs on the published schedule for the June 15-18 SPIEF – reflecting fears of punishment under the most sweeping sanctions regime ever imposed on a major power.

Russia’s relations with the West have turned toxic since it sent armoured forces into Ukraine on Feb. 24 in what it calls a “special military operation” to remove threats to its security. Ukraine and its Western backers call Russia’s actions an unprovoked invasion aimed at grabbing territory.

HAVING ONCE ROLLED OUT THE RED CARPET FOR THE LIKES OF THEN-GERMAN CHANCELLOR ANGELA MERKEL, EX-IMF CHIEF CHRISTINE LAGARDE, GOLDMAN SACHS’ LLOYD BLANKFEIN, CITI’S VIKRAM PANDIT AND EXXONMOBIL’S REX TILLERSON, RUSSIA WILL GIVE TOP BILLING THIS WEEK TO THE PRESIDENTS OF ALLIED STATES KAZAKHSTAN AND ARMENIA.

As foreign companies write down billions of their once promising Russian investments, domestic firms and banks are rushing to take over businesses left behind.

“Sanctions are for the long haul. Globalisation as it used to be has ended,” Andrey Kostin, CEO of sanctioned bank VTB, Russia’s second-largest, told RBC business daily. “The world will likely be strictly divided into ‘us’ and ‘them’ once again.”

This year, SPIEF’s official title is “New Opportunities in a New World”. Session topics include new possibilities for Russian economic growth, improving trade with the five non-Western BRICS powers and the future of Russia’s sanctioned financial sector.

Another session – “A new form of international cooperation: how will payments be made?” – touches on Russia’s ejection from the global SWIFT payment system and its move to circumvent the ban by demanding payments for gas exports in roubles. It will have speakers from Russian allies Cuba and Venezuela as well as Turkey and Egypt, which have also eschewed sanctions.

There will even be a session on “fake news” – a panel attended by state media, the General Prosecutor’s Office and the Foreign Ministry as Moscow pursues an information war with the West to shape perceptions of events in Ukraine.

Other countries sending officials to attend or speak there via videolink include China, Belarus, Central African Republic, India, Iran, Nicaragua, Serbia and the United Arab Emirates.

According to Russian state TV, business figures from nearly 130 countries will take part despite sanctions.

Some forum participants asked that their employers’ names not be printed on their personal badges, RBC reported, citing Rosgoncress, the state company that organises the forum.

“Money loves silence now as never before,” said Denis Denisov, head of the Russian branch of international advisory firm EM.