I have taken my time preparing a commentary on Putin’s speech to the Plenary Session of the St Petersburg Economic Forum last Friday, and I am well satisfied that this was the right decision. Others have written about the content and delivery of the speech. Still others have written about the Forum itself in its twenty-fifth anniversary, with a particular emphasis placed on the absence of foreign government leaders and of high level contingents of Western businessmen.
What I intend to do here is to go beyond these narrow constraints and to put the event in the broader context of several other important international developments that have occurred in the past few days, many of which are interrelated. They have barely received the attention they deserve in global media and I intend to make amends here.
The slogan of this year’s Forum was “A New World. New Possibilities.” Put another way, in terms well familiar to the Western business community, the logic here is not to let a good crisis go to waste but to react in a constructive manner that takes the economy and standard of living to new heights previously unattainable through import substitution, which is just another name for reindustrialization.
Both in the specialized sessions which were broadcast live and in the plenary session to which Putin spoke, the challenges posed by current, draconian Western sanctions on Russia were spelled out in great detail without any self-deception or gloss. The same was true of businessmen speaking truth to Power when commenting on the Government’s proposed programs to help the economy during the transition period to new logistical solutions, new trade flows and new local manufacturing: “don’t do the usual thing and build a bridge to the middle of the river; go all the way with radical new solutions and in particular with a very cheap credit policy to provide working capital to where it is needed most.” This kind of talk which I heard in the session chaired by Sberbank general director Gref, is both responsible and bold.
Indeed, the most relevant adjective to describe the proceedings would be “frank.” Political correctness was no longer being practiced. Interlocutors in the West were no longer called “partners.” In his speech, Putin led the way, criticizing the American administration and the European bureaucratic elites setting policy in Brussels for economic illiteracy.
For his part, the most honored international guest at the Forum, Kazakhstan’s president Kasym-Zhomart Tokaev, did not mince words either when answering a question put to him by the moderator, RT editor-in-chief Margarita Simonyan during Q&A following the keynote speech: whether he recognizes the Donbas republics of Donetsk and Lugansk as independent states? “No,” he said, without hesitation though he was seated on stage just a couple of meters from Vladimir Putin.
Tokaev explained that the United Nations Charter contains two contradictory principles: the territorial integrity of Member States and the right of populations within any State to self-determination, meaning declaration of their independence without asking or receiving the permission of the Government of the Member State. In this context, Tokaev added, if the right of secession were to take the upper hand, the present membership of the UN at 200 or so countries would balloon out to over 500 and this would create chaos. Accordingly, Kazakhstan does not recognize the independence of Kosovo, which Russia has used as a precedent for its own actions with respect to various ‘frozen conflicts’ in Former Soviet Republics, such as South Ossetia and Abkhazia. This being said, it was also clear by his presence at the Forum that Tokaev supports Russia economically and politically in its ongoing proxy war with the United States on Ukrainian territory.
Vladimir Putin’s speech to the Forum lasted an hour. The most interesting remarks were in the first 15 minutes, when he argued the case that the present grave challenges to the global economic, financial and political systems have their source in wrong-headed policies of the Collective West.
The West’s abuse of the printing presses to keep state institutions and business afloat during the Covid pandemic through emissions of currency not covered by ongoing supply of goods and services started an inflationary process that long preceded the conflict in Ukraine. It drove up energy and food costs dramatically, and the inflation was then further aggravated by the “thoughtless” sanctions imposed on Russian hydrocarbons, fertilizer and agricultural products as from 24 February.
To be specific, Putin remarked that in the past two years, the money supply in the United States had expanded by 38%, an amount that normally would take decades. In Europe, the money supply was increased over this period by 20%. Then Putin matched these facts with the trade figures for the United States. Before the excess emissions, import into the United States had been running at 250 billion dollars a month. By February 2022, monthly imports were at 350 billion. That is to say, they tracked precisely the increases in the amount of money in circulation.
From this Putin made the concluding argument that the United States and Europe were now practicing an updated version of colonialism. Like a ‘vacuum cleaner’ they are buying up goods and services from the rest of the world in exchange for their own currency which is depreciating in value with uncovered emissions. This, he said, explains the near doubling in the price of food products globally over the past year.
There were other points in Putin’s economics lesson, but these give a good idea of the contempt in which he holds Western politicians and elites, who, in his view, have not absorbed the lessons handed down in elementary school and are now trying, in the global Information War, to put the blame on Russia for “Putin’s inflation.”
Traditionally there has been a Master of Ceremonies or moderator to oversee the Q&A that follows the presidential address to the Plenary Session of the Forum. Traditionally this role was given to celebrities from Western mainstream media – presenters from CNN, MSNBC and the like. Generally they were given their lines by their employers and would ask once, twice and repeatedly the same offensive questions while ignoring completely the detailed answers given by Vladimir Vladimirovich. This show of collegiality and jollity by the Russians is something I never quite understood, but then I never understood why so many of the American academics that the Kremlin invited year after year to the annual Valdai gatherings were incorrigible Putin and Russia haters.
Under present circumstances, the Forum organizers had to fall back on domestic candidates for the role of MC and the assignment was given to RT’s Margarita Simonyan.
In the past I have been critical of Simonyan’s stewardship at RT, which presented all too many shows run by failed or overaged journalists from Western mainstream, by people with no knowledge of or feel for Russia. In what I saw of Simonyan’s performance last Friday, I will freely admit that whatever her competence as a news station manager, she is an outstanding journalist.
This very point was highlighted at the outset of Sunday evening’s premier talk show with Vladimir Solovyov. His opening remarks were to the effect that Simonyan had been given the rare assignment to moderate for the country’s President and had performed this journalistic task at the level of Olympian gold. Having tossed to her this bouquet of roses, he asked her to comment on her experience of working hand in glove with Putin for nearly two hours of Q&A.
Simonyan’s remarks are worth repeating here. She expressed her surprise that Putin showed up in such a good mood, fully confident that he had been making the right decisions with respect to the start and the prosecution of the ‘special military operation’ in Ukraine. And she shared her impression of his being in excellent physical and mental form. Not only did he perform on stage with her for three hours, but later in the evening she saw him at one gathering, in which he maintained the same high energy level. And still later, after leaving her group, she knew that he went on to yet other meetings. Her conclusion was that all talk of his suffering from some illness is belied by this evident vigor.
Simonyan noted that she saw it as her obligation not only to ask the questions that are the talk of Russia’s expert community but also the number one question being asked by ‘simple people,’ as those experts would condescendingly call the mass of the population. That question was: why has Russia not responded to the daily rocket and artillery attacks on the civilian population in Donetsk, to the attacks across the border on towns within the Russian Federation, by doing what Putin had threatened weeks ago, namely to bomb the ‘decision making centers’ of Ukraine, starting with the Ministry of Defense.
She said that Putin offered a comprehensive answer to the question. First, an all-out assault on the Ukrainian positions from which the artillery and rocket firings were hitting the DNR would lead to a great number of civilian casualties since the Ukrainian forces intentionally positioned themselves in residential areas so as to invite ‘indiscriminate’ shelling by Russian return fire. Moreover, the Russian objective was to keep civilian casualties to a minimum since these were their future citizens. Secondly, a blitzkrieg assault would be very costly in casualties among Russian military and had to be avoided whenever possible. Therefore the preferred method was encirclement of the Ukrainian positions and a calm wait for them to run out of provisions and surrender. When asked what were Russia’s red lines that would trigger a more forceful response, Putin refused to be drawn.
There are indications that not only friends of Russia but also its most fierce enemies were paying close attention to the proceedings of the Petersburg Economic Forum.
Today the Ukrainian armed forces struck and did great damage to an offshore Crimean oil drilling platform in the Black Sea on which more than a hundred workers were stationed. More than 90 were evacuated but at least seven are unaccounted for. This dramatic and highly provocative attack by Ukrainian fighter planes and vessels is said to be Zelensky’s response to a Russian missile strike a day earlier that destroyed the main refinery supplying fuel to the Ukrainian military. It is also a clear attempt to test Putin’s red lines and continued restraint in pursuing the military operation.
But this is not all. Among the various governors of Russia’s constituent federal units attending the Forum, state television journalists broadcast an interview on Friday morning with the governor of Kaliningrad, Anton Alikhanov, a vigorous 37 year old who spoke fluently and confidently about the situation of his oblast. When asked about relations with the neighboring Baltic States, he commented that all mutual obligations were being respected and that transportation of freight to and from the rest of the RF via the corridor passing through Lithuania was operating normally.
However, on Friday evening Lithuania announced a partial blockade on rail traffic to Kaliningrad. Specifically, all goods subject to EU sanctions would no longer be allowed to transit their country. This would amount to about half of all railway freight, and would present Kaliningrad with a host of problems to resolve if alternate, sea transportation has to be put in place.
By Saturday morning, Russian news channels were discussing the counter-leverage Russia may exert in response to the Lithuanian move. They claim that the free transit of goods between the Russian Federation and its outpost, Kaliningrad, was a precondition agreed by all parties at the start of the 1990s when Russia accepted the line of its international border with Lithuania. If free transit was now being withheld, Russia might cancel its acceptance of the borders. As regards leverage of a non-legal variety, threats were being made to cut the supply of Russian electricity to Lithuania, which is a major element in the country’s energy balance.
This spat over borders comes in the context of tensions between Russia and Finland. As Minister of Foreign Affairs Lavrov mentioned a couple of weeks ago, Finland’s possibly joining NATO would compel Russia to reopen an old issue of property rights over an important canal in Finnish Karelia. This could pose a serious security risk for Finland.
In short, the whole question of Russia’s relations with its Baltic neighbors is heating up. In this context, it is necessary to recall Vladimir Putin’s public remarks in the past week or so that Russia has no ambition of territorial expansion but will only reabsorb and consolidate what has been Russia’s in the past. This statement immediately set off alarm bells in Helsinki. After all, Finland had for a hundred years until WWI been a constituent if separately administered and privileged part of the Russian Empire.
What we are witnessing is a potential vector of escalation in America’s proxy war with Russia on Ukrainian territory. While many commentators in Washington speculate on the possibility of Russia resorting to nuclear weapons if it should fear that it is losing the fight in Ukraine, I believe that is a phony issue, given that Russia is very unlikely to fail in its Ukrainian campaign and given that it has barely begun to implement the conventional weapons systems at its disposal and to destroy the infrastructure and major cities of Ukraine as it can and may yet do. However, Russia’s success in withstanding the full weight of NATO in Ukraine is probably changing its calculus on how to deal with the Baltics now that they are using their exaggerated sense of security from NATO’s Article 5 provisions to bait and provoke Russia. A more muscular if still reactive Russian posture is clearly emerging.
©Gilbert Doctorow, 2022