Russia’s annual investment conference in St Petersburg was created by president Vladimir Putin to showcase the country’s businesses and lure global investors to Russia. But with Russia mired in an economic crisis sparked by western sanctions, this year’s forum looks more like a morale-boosting exercise.

“The events that are happening now, the way the state, business and people are reacting to economic events, shows we’ve got through it, we’re a strong country,” Maxim Oreshkin, Putin’s economic adviser, told a panel discussion on Thursday.

Others were even more upbeat. “This is the best economic year for Russia since the collapse of the Soviet Union,” Kremlin-linked businessman Konstantin Malofeyev insisted.

Despite the bold front, the conference, which runs until Saturday, was noticeably more muted than the previous affairs. Then, oligarchs and state-run companies signed major business deals and held lavish parties for a host of global industry and political leaders.

This year, western delegates and their allies have largely stayed away as international tensions escalate amid the Ukraine war.

“Every year I would sign something with the Italians or the Japanese or whomever. Now there’s nothing to sign and nobody to sign it with,” said an oligarch who is under western sanctions.

Instead, organisers have turned to allies such as China’s Xi Jinping and Egypt’s Abdel-Fattah al-Sisi for Friday’s keynote event. But both will send video messages instead of taking the stage alongside Putin. The Russian leader will speak alongside the leaders of the Donetsk and Luhansk People’s Republics, the Moscow-backed Ukrainian separatist enclaves.

Other foreign dignitaries attending include the presidents of Kazakhstan and Armenia, the prime minister of the Central African Republic and officials from Cuba, Venezuela and Myanmar, as well as representatives of Afghanistan’s ruling Taliban.

Officials at Thursday’s main economics panel did not mention Ukraine or the war, instead outlining ways Russia could muddle through the economic fallout.

Western sanctions have cut off capital markets access for most Russian companies, battered import supply chains, prompted an exodus of foreign businesses from the country and forced the government to limit Russians’ access to hard currency.

Addressing Thursday’s main economic session, central bank governor Elvira Nabiullina warned that “external conditions have changed for a long time, if not forever”, calling on businesses to abandon their export-focused approach and concentrate on the domestic market.

Elvira Nabiullina
Russia’s central bank chief Elvira Nabiullina urged businesses to abandon their export-focused approach and focus on the domestic market © Olga Maltseva/AFP/Getty Images

Meanwhile, Russia’s oligarchs are reluctant to criticise Putin’s invasion for fear of domestic reprisals and are keeping a low profile. Some have stayed away entirely, including sanctioned industrial magnate Oleg Deripaska, who last week posted a video online of a cherry orchard and wrote that it was “time to collect the harvest” instead.

Others tried to attend the forum incognito and asked organisers not to print their names on their badges.

“There aren’t that many people, noticeably fewer this year. Everyone is going up to everyone and asking: ‘How are you doing under sanctions?’” said an executive at a leading Russian industrial firm. “It’s a sad sight.”

Western executives who did attend said they were worried the sanctions were hurting the west more than Russia by encouraging countries in the global south to do business with Moscow on improved terms, even as the US and Europe struggled with spiralling inflation as energy prices soared because of the war.

“If you’re losing an export market and you’re going to be paying 30 per cent more for energy, and energy’s half the unit manufacturing costs of your product, you know, you’re going to get screwed,” a western businessman attending the forum said. “Your Chinese competitor is getting a 40 per cent discount on energy. That’s a shift in the terms of trade.”

Others said they feared leaving money behind amid the corporate stampede to exit Russia in the weeks after the Ukraine invasion.

“Why should I hand over a billion-turnover business to Russia as a gift?” Vincenzo Trani, president of the Italian-Russian chamber of commerce, told a panel while discussing UniCredit’s plans to divest its Russian subsidiary. “Is this definitely in Italy’s interests?”

Russia has vowed to find new international partners even if more western companies leave.

Sergei Chemezov, a close associate of Putin’s who leads the Rostec state industrial conglomerate, told Russian newspaper RBC: “The west’s treachery isn’t a reason to slam the windows and doors shut. We will go [our] separate ways with the proponents of sanctions, but we have partners in other regions of the world who are behaving in a consistent and principled manner.”

Malofeyev said the economic pain to Russia caused by western sanctions was outweighed by their effects on the west.

“Western businesses and countries are suffering from rising energy prices,” he said. “And Russian businesses are winning because they’re taking over market niches they never could have dreamed of,” he added. “The only shame is [officials] waited for the west to cut them off instead of doing it themselves first.”

However, not all foreign delegates shared Russia’s confidence, with one senior western businessman saying: “How convincing is it when you replaced the biggest global corporates with a delegation from the Taliban?”

Additional reporting by Polina Ivanova in London

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