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Vladimir Putin Says Russian Economy Will Rebound Vladimir Putin’s Annual Year-End News Conference
(about 7 hours later)
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. MOSCOW — A relaxed, at times jovial President Vladimir V. Putin brushed aside fears about Russian financial turmoil Thursday, holding court for reporters in a Moscow hotel and answering unscreened questions on topics ranging from his love life to the Ukraine crisis to the campaign against perceived “fifth columnists” in the state-controlled media.
“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.” The three-hour news conference provided Mr. Putin with a platform to make his first public remarks since the ruble exchange rate began swinging wildly earlier in the week. He said that Russia’s current economic tumult could last at most two years, and rather than offer a specific remedy, he suggested that revived global demand for oil would eventually solve the problems.
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. “We are going through a trying period, difficult times at the moment,” said Mr. Putin, answering questions at his annual news conference to mark the end of the year. “I would not call the situation a crisis. You may call it whatever you want.”
In his more confrontational moments, the 62-year-old president found a new way to expound on his favorite theme this year: that he was determined to thwart plots by the West in general and the United States in particular against Russia. Using the symbol of the Russian bear, Mr. Putin said he wondered how the creature should behave.
“Maybe he should stop chasing pigs and boars around the taiga but start picking berries and eating honey, maybe then he will be left alone,” Mr. Putin said, warming to the analogy. “But no, he won’t be! Because someone will always try to chain him up. As soon as he’s chained, they will tear out his teeth and claws.”
The latter, he said, was a reference to Russia’s nuclear deterrence.
His remarks on the economy held the most interest, given that the price of oil and the Russian ruble plummeted in tandem this week, with the ruble testing historic lows of 80 to the dollar before rallying to closer to 60, though still down about 40 percent on the year.
Analysts said the decline reflected not just the drop in oil prices but also investors’ distrust of the government’s ability to cope, or to promote economic growth through something other than oil exports.
“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.”“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.”
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 acknowledged that many Russians blamed Elvira Nabiullina, the governor of the central bank, for the crisis, but he defended the record of the bank.
“I believe that the central bank and the government are taking adequate measures,” he said. “I believe that the central bank and the government are taking adequate measures,” he said. The president did not present any new policies or a specific plan to address the problems, but rejected predictions that currency controls were in the offing.
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. He also said Russia should try not to waste its $419 billion in currency reserves. The central bank has spent about $75 billion this year defending the ruble.
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. Mr. Putin described the problems as rooted in external factors, including the drop of roughly 50 percent in oil prices this year and Western sanctions imposed over Russia’s incursion into Ukraine. Global demand for oil either next year, or in two years, would recover and that would solve the problem, he said.
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. The president, sitting on a small stage in an amphitheater in a Moscow hotel, seemed to be relying on his high popularity 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 persuade Russians, who are facing a sharp recession next year.
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. “Above all the goal was to calm people down about the crisis,” Mikhail Vinogradov, head of the St. Petersburg Politics Foundation, said by telephone shortly after the speech. “The question is whether Putin’s calming words will turn into any kind of action.”
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. Ordinary Russians are worried about the ruble’s collapse and rising inflation, which is expected to climb 10 percent by the end of the year and even higher early next year. They have flooded car dealerships, appliance stores and malls to spend savings before their rubles lose any more value.
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 popular discount Swedish furniture chain Ikea has been mobbed for the last week. 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 announced that it would raise prices — a common step by importers trying to keep up with the lower value of the ruble. Russia depends on imports for about 30 percent of its consumer goods.
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. Mr. Putin accused the West of trying to build a virtual wall around Russia by moving NATO forces closer to its border, and noted that the $50 billion that Russia plans to spend on its military next year is much less than the Pentagon’s budget.
“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. He also conceded that Russia had contributed to a recent rise in global tensions by resuming long-range military surveillance flights across Europe and along the edges of North America. “The only thing we have done is to protect our interests in a tougher way,” he said.
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.” That theme plays well at home, where political analysts estimate as many as 40 percent of the population wants Russia to regain its superpower status.
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. Mr. Putin slipped in some criticism of the C.I.A. torture report in response to a question about the legality of burning the home of suspected terrorists in Chechnya. “After 9/11 torture was legalized, how could you explain that?” he asked, a reference to the waterboarding of terror suspects by the C.I.A. during wars in Iraq and Afghanistan.
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.” Mr. Putin estimated that 25 to 30 percent of the economic distress was rooted in the sanctions over Ukraine, but conceded that Russia had not done enough to diversify an economy in which energy resources constitute 60 percent of the country’s exports.
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. Even while Mr. Putin was speaking, the European Union imposed an array of new sanctions involving investment, services and trade linked to Russia’s annexation of Crimea.
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 approximately $650 billion to Western banks, but sanctions have eliminated any chance of refinancing that debt. The foreign reserves should cover that for the time being, Mr. Putin suggested, though some analysts say that as much as half of that — around $200 billion — is tied up in other obligations, like pensions.
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.
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. 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 fighters volunteers. He did not say how many had died. Still, Russia has toned down its rhetoric on Ukraine in the last month.
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. The news conference is an annual ritual, with Mr. Putin picking questions at random from 1,200 or so reporters ranging from the mainstream Russian press to the BBC.
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. In one awkward moment, a Russian reporter suggested in slurred speech that Mr. Putin support the sale of kvass, a mildly alcoholic beverage, in international chain stores. Mr. Putin suggested that the man might have sipping a little. Russian media soon reported that the reporter was not drunk, but his speech had been slurred by two strokes.
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.” A fifth column is a group that tries to undermine a larger group.
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.” One reporter asked about Mr. Putin’s personal life. The president answered by saying that recently a European dignitary had asked him whether he had any love in his life.
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. Mr. Putin said he had assured the unidentified visitor that he did, that he saw his former wife periodically as well as his two
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?” grown daughters. “Everything is fine,” he said.
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.