(ST. PETERSBURG, RUSSIA) – Russia’s flagship economic forum was meant to project resilience and attract global capital. Instead, it laid bare an economy increasingly deformed by the fifth year of the Kremlin’s war against Ukraine, where officials touted strength whilst a drone strike on an oil terminal and naval base sent thick black smoke billowing over the host city.
Sky News spent three days inside the St. Petersburg International Economic Forum, an event the Russian dictator Vladimir Putin has long styled as the country’s answer to Davos. The report found a glossy veneer of high-tech robotics and electronic jamming systems papering over a reality of economic contraction, soaring defence spending, and shuttered businesses.
“I’ve just spent three days here at the St. Petersburg Economic Forum to try to get a better understanding of how Russia’s war against Ukraine is impacting its economy and crucially how the Kremlin feels about it,” Sky News reported. “I listened to what Vladimir Putin had to say. I saw plenty of drones and military equipment and I tried to ask officials what they think about the situation.”
The dissonance was immediate. Outside the venue sat three armoured personnel carriers. “It’s an economic forum,” the correspondent noted. “But the war in Ukraine is the big issue.” When asked how much longer Russia could afford its so-called special military operation, officials deflected. “As long as it needs,” came one reply. Pressed on whether the war was hurting business, the response Maria Zhakarova, foreign ministry spokesperson was curt: “That’s right. Come on. Are you serious?”
Away from the forum, a different side of the economy emerged as the cost of war piles up. Street after street of shuttered shops and businesses that have gone bust lined the city. Galina, who has run her beauty salon for nine years, said it had never been this bad. Her main problem is higher taxes. The government recently raised VAT to help fund the war. With rising costs and falling demand, many businesses have been pushed to the brink.
Inside the event, no expense appeared spared on making the Russian economy look powerful, energetic, and racing towards victory. The report described an entire display made up of real flowers. “I mean, there must be thousands here,” the correspondent said. Yet the numbers suggest otherwise. With soaring defence spending and dwindling revenues, growth is wilting. In the first quarter of this year, the economy contracted.
The one topic no one wanted to talk about was the downturn itself. Russia’s richest woman, Tatiana Kim, CEO of the country’s largest retailer Wild Berries, declined to engage. “How do you feel about the Russian economy? Is it Are you worried about it? The lack of growth? Is it hurting your business?” she was asked. “It’s an economic forum, but she doesn’t want to talk about the economy,” the report noted.
Deputy Foreign Minister Sergey Ryabkov offered a similar response. Asked if growth was a problem and how much longer Russia could afford the special military operation, he replied, “As long as it need.” The report characterised the atmosphere as a case of war, what war, with everyone happy to look the other way.
“You know, it’s a bit like I’ve entered a parallel universe here where the war just doesn’t exist. Ukraine isn’t mentioned once on the official programme and no one wants to talk about the war’s economic consequences. It’s like everyone’s just behaving as if it’s business as usual and ignoring what is a massive elephant in the room.”
On day two, a panel discussion was held on returning to a trajectory of sustainable economic growth amid global uncertainty. The war was not mentioned, but it was heavily implied. On stage sat Putin’s top economic team: the Minister for Economic Development, the Finance Minister, and his deputy chief of staff. A couple of months earlier, Putin had publicly scolded them when the contraction was announced and ordered them to devise new ways to resume growth.
The forum was supposedly where they would present their answers. “Stopping the war would certainly help, but no one is saying it out loud,” the correspondent said. When Sky News asked, “Is it time to stop the war? Is the special military operation becoming a problem?” the response was deflection. “Excuse me, I’m trying to ask a question,” the correspondent pressed. The official line remains that the problems are cyclical, standard boom and bust.
Kremlin investment envoy Kirill Dmitriev finally offered an admission that the economy does face challenges. Asked to assess the health of the Russian economy, he said, “Well, I think it’s doing better than many other countries because there is a major crisis unfolding in UK and in Europe because of the energy wrong energy decisions of decoupling from Russian energy. So I would say Russian economy is definitely doing better than UK and European economy but of course there are challenges and Russian economy will be working on those challenges as well.” Asked directly if the special military operation, now in its fifth year, was a challenge for the economy, Dmitriev replied, “Let’s not go there. Of course, you can it’s not a Okay, let me do it. Let me do it. Okay, fine. I think Russian economy is doing well despite challenges like that. But it’s really doing much better than what UK media shows.” Pressed on whether outperforming the UK was the key metric, he said, “No, I think the key metric is the sovereignty and success of Russian people.”
The guest list was eclectic. Right wing American influencer Candace Owens attended alongside former Hollywood action hero Steven Seagal, a vocal Putin supporter who obtained Russian citizenship several years ago. “There will always be nations and people and organisations that are fighting and disagreeing,” Seagal said.
The report described it as very strange to see him seated at an economic forum. There was even a member of the Trump administration, Rodney Mims Jr., who heads the US Commission of Fine Arts. He is the first American official to visit the forum since Russia’s invasion of Ukraine. When asked if his presence was a political statement from the Trump administration and whether he was normalising Russia’s war against Ukraine, Mims did not offer a substantive reply. “What’s wrong with asking these questions?” the correspondent asked.
At the same time in Moscow, a musical welcome was arranged for self styled misogynist Andrew Tate, evidence perhaps of a new online influence campaign by the Kremlin.
Day three brought Putin’s big moment, a plenary address to the country’s elite. Ahead of the speech, Ukrainian President Volodymyr Zelensky had thrown down the gauntlet, challenging Putin to a meeting in an open letter and taunting him over recent attacks. Inside the conference hall, the correspondent noted, “He’ll be giving a speech on stage there and a Q&A to the thousands of delegates here. Will he acknowledge the pressure on the economy? Will he signal a shift in direction somehow? I doubt it.”
Putin did acknowledge that Ukrainian drone attacks have caused some economic damage, but insisted they are not a threat to the economy. He hailed Russia’s forces, urging them to victory, and ridiculed Zelensky’s letter and offer for face to face talks, saying, “I don’t see the point right now.” The correspondent assessed that the tone was very defiant and the message was abundantly clear: war still comes first, no matter the cost.
The Kremlin clearly does not want to admit that things are not going to plan. Behind closed doors, there are reports of divisions and of officials warning Putin the cost of war is too high. Voicing that out loud remains risky business and no one is willing to break ranks just yet.
Footage for this report was obtained by Sky News at the St. Petersburg International Economic Forum in St. Petersburg, Leningrad Oblast.