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Putin promises economic recovery, digs in on Ukraine

President Vladimir Putin on Thursday tried to quell fears of economic collapse and vowed rapid recovery from the worst financial crisis of his rule but stressed that his position on Ukraine has not shifted.

[MOSCOW] President Vladimir Putin on Thursday tried to quell fears of economic collapse and vowed rapid recovery from the worst financial crisis of his rule but stressed that his position on Ukraine has not shifted.

Speaking at an annual news conference, the Russian leader said that the economic downturn will last two years at most and promised to support the poorest section of the population.

However he indicated that the economic gloom has not swayed his stance on Ukraine, accusing the West of behaving like an "empire" and even comparing Russia to a bear who is under attack and fighting for survival.

Following the ruble's record fall in value this week, reaching 60 per cent since the beginning of the year, Putin assured Russians that the economic downturn would last two years at most.

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"It goes without saying that a way out of this situation is inevitable," he said, promising to "focus attention on helping people who need it most."

He added that efforts by the central bank and government - including a record hike of the key interest rate and spending billions to stabilise the ruble - have been "absolutely reasonable and in the right direction," although they could have come quicker.

The Russian president had remained silent earlier this week on the ruble crash, which led Russians to rush to exchange their savings and splurge at stores to dump their devaluing national currency ahead of expected price hikes.

The marathon news conference, held in a trade centre in central Moscow, saw Mr Putin face hundreds of journalists from all over Russia. Over 1,200 had signed up to attend, according to the Kremlin.

Mr Putin admitted that Western sanctions over Moscow's involvement in the conflict in Ukraine - where 4,700 people have died so far in fighting between Kiev's forces and pro-Moscow separatists - contributed "25-30 per cent" to the current economic situation.

But he made clear that his position on Ukraine has not changed, branding Kiev's military campaign against Russian-backed rebels in the east a "punitive operation".

He said the West is targeting Moscow not because of the annexation of Crimea and support for the rebels, but because of its "wish to survive as a nation, as a civilisation, as a state." He compared the situation to attackers trying to capture a bear.

"As soon as he is chained, they will pull his teeth and claws," Mr Putin said, referring to Russia's need to retain a nuclear deterrent.

"Then the bear won't be needed at all - they will make a stuffed dummy out of it." "Do we want to remain intact and fight... or do we want our hide to be put on the wall?" Mr Putin asked in the lengthy bear metaphor.

He compared NATO to an "empire" that treats other countries as "vassals who need to be vanquished." Putin's ratings so far remain sky-high. They hit 80 per cent after Crimea held a controversial referendum on becoming part of Russia and stayed up there despite Western accusations that the Kremlin has poured troops into regions of eastern Ukraine.

Mr Putin avoided answering a question about the troop deployments, which Moscow denies, saying that only "people whose conscience calls them" were involved in the insurgency.

However, it is unclear how much support for Mr Putin - built on years of growing oil revenues and relative prosperity, as well the total dominance of the well-oiled state media machine - will ebb once people see their purchasing power erode.

Asked whether he could lose the support of the elites and be ousted in a so-called palace coup, Mr Putin said "calm down." "We don't have palaces therefore we cannot have a palace coup. We have the Kremlin official residence, it's well-protected, and this is also a factor of our state stability," he said.

Western sanctions over Moscow's interference in eastern Ukraine are getting harsher.

The European Union voted in new measures on Thursday aimed at isolating Crimea, while President Barack Obama is set to sign in to law fresh Russia sanctions and authorisation for weapons deliveries to Ukraine.

German Chancellor Angela Merkel said on Thursday that sanctions are "unavoidable" until Russia changes its position.

In Moscow, the state statistics agency said Wednesday that real wages have declined in the first 11 months of the year for the first time in years.

Both the economy ministry and the central bank have warned of recession next year, with the latter saying the contraction could be up to 4.8 per cent at current oil prices, with a recovery not expected until 2017.

Economy minister Alexei Ulyukayev told Vedomosti daily in an interview published Thursday that Russia's economy was going through a "crisis" and conceded that there was no coherent plan on how to tackle it if oil prices do not rebound.

"I guess we found ourselves in a perfect storm, and I guess it's not an accident. Because in some way we prepared this storm ourselves," he said in an interview conducted on Monday.