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Vladimir Putin’s Annual Year-End News Conference Vladimir Putin Says Russian Economy Will Rebound
(about 4 hours later)
MOSCOW — President Vladimir V. Putin of Russia on Thursday delivered an acidic message of defiance and anger at the West at an annual news conference in Moscow, showing no sign of softening his position on Ukraine despite the financial turmoil that has gripped the country. MOSCOW — President Vladimir V. Putin tried to play down Russia’s dire economic straits in his annual news conference on Thursday, attributing the troubles to declining oil prices that, following a short period of economic turbulence, were bound to recover along with global demand.
Mr. Putin blamed “external factors,” including Western sanctions and falling oil prices, for the collapse of the Russian currency, the ruble. But he played down the severity of the economic crisis, saying that it would last a maximum of two years before a return of growth. “We are going through a trying period, difficult times at the moment,” Mr. Putin said at the three-hour get together with 1,200 reporters from Russia and around the world. “I would not call the situation a crisis. You may call it whatever you want.”
“I believe that we are right,” Mr. Putin said of the conflict in Ukraine, likening the West’s expansion of NATO toward Russia to a new Berlin Wall. “And I believe that our Western partners are not right.” Russia’s oil and gas-dependent economy crashed this week, with the ruble testing historic lows of 80 to the dollar before rallying to closer to 60, still down about 40 percent on the year. Analysts said the panic reflected not just the oil price drop but investors’ distrust of the government’s ability to cope with the crisis or to promote economic growth through something other than the extraction of natural resources.
At the conference, which was attended by about 1,200 journalists, Mr. Putin said that initial moves to stabilize the ruble might have been too slow, but he promised quick action to avoid further economic damage. He also promised to maintain social welfare programs at their current level. “Economically, socially and politically, the country will have to go through severe economic tests in the years to come,” said Dmitri Trenin, the head of the Carnegie Moscow Center. “Not having a working, realistic, credible model for economic development, not just muddling through, will become critical.”
“I believe that the central bank and the government are taking adequate measures,” Mr. Putin said. Addressing these concerns, a relaxed, at times even jovial Mr. Putin repeated several times that he thought the Central Bank of Russia and the government overall were doing the right things to halt the ruble’s nose-dive, if acting slightly late. The president did not present any new policies or a specific plan to address the mushrooming problems.
Mr. Putin recognized the efforts of President Petro O. Poroshenko of Ukraine in ending the conflict in the southeast of that country, but he suggested that others in Kiev, the Ukrainian capital, may be trying to prolong the conflict. “I believe that the central bank and the government are taking adequate measures,” he said.
“Undoubtedly, the president of Ukraine certainly wants a settlement, and I have no doubt that he is striving for this,” Mr. Putin said. Mr. Putin described the problems as mainly rooted in external factors — the approximately 50 percent drop in oil prices this year along with Western sanctions imposed over Ukraine — and acknowledged that it might take up to two years for the country to emerge.
“But he’s not alone there,” he added, referring to more hawkish officials. That assumes the slump in oil prices is traceable to slow global growth, particularly in China. However, energy strategists have pointed to surging North American production and increasing substitution of other fuels in response to climate change as factors that might dampen oil prices indefinitely.
“We hear a lot of militant statements; I believe President Poroshenko is seeking a settlement, but there is a need for practical action,” Mr. Putin added. “There is a need to observe the Minsk agreements” calling for a cease-fire and a withdrawal of forces. The president, sitting on a small stage in an amphitheater in a Moscow hotel, seemed to be relying on his high popularity in Russia to carry the day, noting that Russia had emerged from the 2008 financial crisis relatively unscathed under his leadership. But it remained an open question whether that would be enough to convince Russians, who are facing a sharp recession next year.
Russia has toned down its talk on the Ukraine crisis in the past month, and some of its most incendiary language, like “junta” and “Novorossiya,” a blanket term used for the separatist territories, is no longer used on state-run television news. Mr. Putin also notably omitted those terms, which he had used in other public appearances, on Thursday. Currently, Russians are worried about the ruble collapse and inflation, expected to reach 10 percent by the end of the year and to climb even higher early next year. They have flooded car dealerships, appliance stores and malls to spend savings before their rubles lose any more value.
Foreign Minister Sergey V. Lavrov said in an interview on the news channel France 24 on Tuesday that Russia was not suggesting federalization “for the separatist territories” and “not suggesting autonomy.” The popular discount Swedish furniture chain Ikea has been mobbed for the past week, and on Thursday the company announced that it was suspending all sales of kitchen furniture and appliances for two days to catch up with the orders. It also chain announced that it was gradually adjusting prices — a common step by importers trying to keep up with the lower value of the ruble. Russia depends on imports for some 30 percent of its consumer goods.
Mr. Putin has managed to maintain high popularity ratings in his 15 years leading Russia, in large part by assuring security and prosperity, but the recent nose dive of the national currency is threatening that achievement. The ruble, which has lost more than 46 percent of its value against the dollar this year, was broadly stable on Thursday, trading at 61.14 to the dollar in the afternoon. In keeping with the themes of his presidency, Mr. Putin blamed the West for many of the problems, saying it has historically conspired to to tear down Russia every time it seems to gain strength. On this occasion, he found a new, vivid image, saying that the West was trying to restrain the Russian bear by using NATO to come up to the very borders of Russia.
The currency’s plunge came in large part as a result of a precipitous drop in oil prices. Energy resources constitute 60 percent of the country’s exports. Russia’s budget is built around an oil price of roughly $100 a barrel, whereas oil is now selling at about $61 a barrel. But Western sanctions imposed after Russia annexed Crimea and destabilized Ukraine have compounded the problem. The West wants the bear to sit around eating honey and berries, not chasing around the forest after piglets, Mr. Putin said, suggesting that its adversaries wanted to turn it into a stuffed animal.
Russian companies owe about $650 billion to Western banks, while the country’s foreign exchange reserves are pegged at about $400 billion. The government tried to calm the exchange markets by announcing that it had sufficient money to cover the debts, but with all new financing from the West cut off by sanctions, the source of that money remained unclear. “They won’t leave it alone, because they will always seek to chain it,” he said. “Once they manage to chain it, they will rip out the teeth and claws.” The teeth and claws in this case are nuclear deterrence, he said.
Russia’s state-controlled television has been promoting the news conference all week with a fast-paced advertisement that shows clips of some of the year’s major events, including the Olympic Games in Sochi, the annexation of Crimea, charts of financial performance, the situation in the Middle East and floods in Russia’s far east. It ends with a screen of print giving the name and date of the news conference. Mr. Putin conceded that Russia had contributed to a recent rise in global tension through long-range military surveillance flights across Europe and along the edges of North America. He said Russia had abandoned such flights for too long while the United States continued such surveillance, so now the “only thing we have done is to protect our interests in a tougher way.”
Mr. Putin said that perhaps 25 percent of the economic problems were caused by sanctions, but conceded that Russia had not done enough to diversify an economy in which energy resources constitute 60 percent of the country’s exports.
Even while Mr. Putin was speaking the European Union imposed an array of new sanctions involving investment, services and trade on Crimea, including banning investments and barring cruise ships from stopping. In Moscow, the Russian foreign ministry issued a statement calling the decision “confrontational.”
During his news conference, Mr. Putin said any economic problems linked to Russia regaining Crimea should not be thought of as punishment but as the price that had to be paid to defend Russia’s sovereignty.
Much of the concern over the Russian economy is rooted in its strained economic relations with the West, prompted by Moscow’s March annexation of Crimea and the subsequent destabilization of neighboring Ukraine.
Russian corporations owe some $650 billion to Western banks, but sanctions have severed any refinancing for that. The country holds some $419 billion in foreign reserves, Mr. Putin noted, though some analysts say that as much as half of that is tied up in other obligations, like pensions.
Mr. Putin stressed that Russia wanted to solve the crisis in Ukraine, and said he thought that President Petro Poroshenko of Ukraine did, too, but that some nationalists there did not. In response to a question from a Ukrainian reporter about how many Russian soldiers had been dispatched into eastern Ukraine and how many died there, Mr. Putin again called Russian fighting there volunteers.
He said they were not mercenaries because they were not being paid for the work, and blamed Kiev for the conflict. He did not respond to a question about the number of Russians killed.
Russia has toned down its rhetoric on the Ukraine crisis in the past month, and some of its most incendiary language, like “junta” and “Novorossia,” a blanket term used for the separatist territories, are no longer used on state-run television news. Mr. Putin also notably omitted those terms, which he had used in other public appearances, on Thursday.
Some 1,200 journalists attended the news conference, both from within Russia and around the world. Most of the Russians tried to attract Mr. Putin’s attention by holding signs indicating the name of their region or as the conference wound down shouting out his name.
Several journalists asked why the state media had been unleashed to attack government critics as fifth columnists, to which Mr. Putin said it was sometimes hard to tell where “the opposition ends and the fifth column starts.”
In response to a question about the legality of burning down the homes in Chechnya of those linked to recent terrorist attacks, without any trial, Mr. Putin said such practices would follow the law.
But he used the answer to refer to the release of the C.I.A. torture report in the United States, saying, “Torture was legalized, how could you explain that?”
At least one reporter asked a question about his personal life, and Mr. Putin answered by saying that recently a European dignitary had asked him whether he had any love in his love.
Mr. Putin said he had assured the unidentified visitor that indeed he did, that he saw his former wife periodically as well as his two grown daughters, although the children not as much as he would like.
“Everything is fine,” he said.