Embargoed by the West, Russia finds new business partners at its annual investment forum

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• The war in Ukraine has left Russia economically cut off from the West, forcing it to look elsewhere for financial partnership.
• Russia has increased economic cooperation with the likes of China, Saudi Arabia and Zimbabwe at its premier investment forum, the St. Petersburg International Economic Forum (SPIEF).
• Many forum attendees from across South America, Africa and the Middle East praised Russia and the event. No major Western companies were present.

Cut off from the West, Russia is pitching its $2 trillion economy to giants like China and Saudi Arabia and longer-term prospects like Zimbabwe and Afghanistan at its premier investment forum in St. Petersburg, which was founded by the tsars as a window to Europe.

The war in Ukraine has led to the biggest upheaval in Russia’s relations with the West since the 1962 Cuban Missile Crisis, and Western sanctions have forced a once-in-a-century revolution in Russia’s economic relations.

Since Peter the Great laid the foundations of the modern Russian state and made St. Petersburg the capital in the early 18th Century, Russia’s rulers have looked to the West as a source of technology, investment and ideas.

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The 2022 invasion of Ukraine, though, has forced President Vladimir Putin to pivot towards Asia and the rest of the non-Western world amid what the Kremlin says amounts to an economic blockade by the United States and its European allies.

Western sanctions have not torpedoed Russia’s economy, however, and Moscow has nurtured ties with China, major regional powers in the Middle East and across Africa and Latin America.

It is less clear, though, how much cash these countries are prepared to invest in Russia’s economy, and at what price. No blockbuster deals have been announced so far.

Russia’s President Vladimir Putin shakes hands with Zimbabwe’s President Emmerson Mnangagwa during a meeting on the sidelines of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, on June 6, 2024.  (Reuters/Anton Vaganov/Pool)

But Russian officials say it is just beginning – and that relations with the West are ruined for a generation.

Bolivian President Luis Arce, who will join Putin at the main session of the St Petersburg International Economic Forum, said he wanted to share the experience of Bolivia’s new economic model – with a big state – since 2006.

“We have our own economic model, which we have been implementing since 2006, and we want to share this experience,” Arce told Putin.

Zimbabwean President Emmerson Mnangagwa is attending, as are 45 other foreign officials including the Saudi energy minister, Oman’s minister of trade and commerce, and a senior Taliban official.

Russian trade with Zimbabwe is tiny though – just $168 million in 2023 versus Russian-European Union trade of $300 billion in the year before Russia invaded Ukraine.

Gone from the forum are the Western investors and investment bankers who once flocked to secure a slice of Russia’s vast mineral wealth and one of Europe’s biggest consumer markets. Reuters saw no major Western companies at the forum.

Largely gone too are the 1990s oligarchs who made fortunes wheeling and dealing in the chaos of a collapsing superpower.

In Putin’s Russia, the main arbiter is the state, controlled by the former Cold War spies and technocrats in his entourage.

CHINESE DRAGON

State-controlled banks such as Sberbank, VTB <VTB and VEB have massive stands, as do Russian regions and ministries along with resource giants such as Gazprom Neft and Novatek.

In a sign of the times, Alfa Bank’s stand was a vast Chinese inflated dragon adorned with Chinese characters and an assertion that Alfa was “the best bank for business with China.”

Chinese luxury car brand Hongqi featured armored vehicles.

A delegation from the Taliban, still officially banned in Russia, toured the stands. The Taliban originally drew members from fighters who, with U.S. support, repelled Soviet forces in the 1980s.

The theme of the forum is the statement: “The foundation of a multipolar world is the formation of new points of growth.”

While Russia’s economy has shown resilience in the face of stringent Western sanctions, prices are rising as defense spending balloons.

In dollar terms, the economy is about the same size it was a decade ago, and Putin is locked into an economic war with the West whose financial might is at least 25 times bigger than Russia’s on a nominal GDP basis.

From many foreign attendees there was praise for Russia.

“This year’s event has grown in size… There are a lot of opportunities,” Nebeolisa Anako, an official from Nigeria, told Reuters.

“The West may be actually isolating themselves as they are a minority in the world, although a very important part of the world. It is always better to cooperate with other parts of the world.”

Other officials from Africa and the Middle East echoed those words.

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Saudi Energy Minister Prince Abdulaziz bin Salman met Putin’s energy point man, Deputy Prime Minister Alexander Novak, at the forum.

Novak said “friendly countries” took the vast majority of its oil exports and that about 70% of it was paid for in national currencies.

“We already supply 95% of oil and petroleum products to friendly countries this year in four months,” Novak said.