0715GMT//Business very gloomy at StP Econ Forum; 'Fake' Russian robot
ISRAEL-IRAN CONFLICT: Vladimir Putin held a telephone call with Chinese Pres. Xi Jinping to discuss the Israel-Iran conflict. The Kremlin said the conversion lasted around an hour. Unsurprisingly, Putin and Xi "condemned" Israel's bombing of Iran and called for dialogue. (COMMENT: This may have been the first time that Putin and Xi have spoken since the Israel-Iran conflict exploded last week.) (NOTE: Kremlin spokesman Dmitry Peskov also said on Thursday that regime change in Iran was "unacceptable".)
ECONOMIC CRISIS: The CEO of VTB, one of Russia's biggest banks, called the current strong rouble exchange rate harmful to the economy. Andrey Kostin was talking at the St Petersburg Economic Forum when he made the comparison. (COMMENT: The rouble is currently valued at around 78.7/$1. Last year it fell to as low as 114/$1, triggering a surge in interest rates by the Russian Central Bank. Kostin wants the rouble at around 90/$1. Some Russian government ministers have called for 100/$1.)
The Kremlin is drawing up plans to support construction companies to stop them going bankrupt, Irek Faizullin, Russia's construction minister, said on Thursday. (COMMENT: This is a reflection of just how bad economic conditions are in Russia. High interest rates have hit the mortgage and construction sectors hard. All the data points to a roughly 40% drop in new residential property purchases this year.)
Alexander Shevelev, the CEO of Severstal, told delegates at the St Petersburg Economic Forum that the steel industry faced having to make thousands of people redundant unless the value of the Russian rouble fell and exports increased. He said that sales were likely to be around 10% less this year than last year and called for policymakers to target a rouble value of around 100/$1. (COMMENT: This is yet another high-level warning about the dire state of Russia's civilian economy. And Russia's steel sector is a vital pillar of the economy. It employs roughly 600,000 people, although it supports hundreds of thousands more people, and accounts for roughly 10% of Russia's export revenues.)
As well as complaining about the high value of the rouble, Russian business leaders at the St Petersburg Economic Forum also called for the Kremlin to set up schemes to train and employ from South America, the Middle East and India. (COMMENT: Russia is facing a sharp labour shortage because of the heavy recruitment for its war in Ukraine and the exodus of Russians fleeing the country. This has pushed up wages and inflation.)
German Gref, chairman of Sberbank, said that it had not been asked to lend cash to a single new business investment project this year. He told the St Petersburg Economic Forum that Sberbank's only investment projects this year are older legacy projects. "Business has stopped the investment cycle," he said. "For the first time in a long time, since the beginning of this year, we have not financed a single new investment project." (COMMENT: Sberbank is Russia's largest lender. If it starts talking in these terms, it is worth listening to.)
FAKE 'SOVEREIGN' ROBOT: A domestic worker robot called "Volodya" presented at the St Petersburg Economic Forum as a wonder of Russian engineering was actually made in China, Russian Telegram channels reported. The robot was videoed walking around the forum and interacting with participants.
HUNGARY IN RUSSIA: Hungary's foreign minister, Peter Szijjarto, met with Russian deputy PM Denis Manturov on the sidelines of the St Petersburg Economic Forum on Thursday. He is a semi-regular visitor to Russia. (COMMENT: This highlights Hungary's decent relations with the Kremlin. With the exception of Slovakia, this is in contrast to the rest of the EU.)
TALKS WITH INDONESIA: Vladimir Putin held talks with Indonesian President Prabowo Subianto on Thursday in St Petersburg. Media reported that the talks focused on trade and a "strategic alliance". (COMMENT: The only eye-catching detail here is that Subianto is in St Petersburg and will sit next to Putin today for his marathon Q&A session at the end of the Economic Forum. Putin likes to have a foreign leader next to him as a foil.)
DEPUTY GOVERNOR FOUND DEAD: The deputy governor of the Leningrad region was found dead on Thursday with a gunshot wound to the head. Russian media said that Igor Petrov's body was found in a country house. There were no signs of a break-in. Officials claimed that the 66-year-old accidentally shot himself as he was cleaning a gun but some media outlets said that he probably killed himself.
PROPAGANDA: Zahar Prilepin, a hardcore Russian nationalist writer who survived a Ukrainian car bomb assassination attempt in 2023, will become the head of Putin's new Theatre of Modern Patriotic Drama in Moscow, it was announced on Thursday. Putin ordered the creation of the theatre earlier this year as the centre of another propaganda push.
NEWS MATRIX:
There was a slew of stories from the St Petersburg Economic Forum on Thursday reporting dire economic predictions. I've highlighted two in the News Matrix. Both Severstal's warning of a crisis in the steel industry and Sberbank's admission that it hasn't funded any new business projects this year are rated as 'important'. But, whereas warnings of a steel industry crisis are not a surprise, the lack of any new investment projects by Russian business in any part of the economy is.