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Putin claims Russia has weathered sanctions better than Europe

Vladimir Putin claimed Friday that his country has weathered the worst sanctions imposed by the US and Europe as the Russian president pledged to achieve the goals of his military aggression against Ukraine.

Putin told a business conference in St. Petersburg that “some predictions about the future of the Russian economy have not come true” and that the sanctions had hit European companies harder – a claim not supported by estimates published so far.

“The economic blitzkrieg. † † never had any chance of success,” he said. “The weaponry of sanctions is a double-edged sword . . . European countries single-handedly dealt a severe blow to their own economies.”

Since Russia’s invasion of Ukraine in late February, Western countries have imposed sanctions that have frozen $300 billion in Russian foreign exchange reserves, closed its businesses from global markets and disrupted its supply chains.

Putin was adamant that Russia would achieve its military goals, indicating it could annex occupied or Moscow-backed separatist areas in the eastern Donbas region. “We will defend the interests of the people whose interests our boys fight, get injured and die for,” Putin said. “There is no other way. What else are the victims for?”

Moscow-backed separatist authorities in the Donbas, whose leaders attended the conference, and officials appointed by the Kremlin to govern Ukraine’s southern regions have said they want to become part of Russia. Putin said Russia would “respect any choice they make”. He stressed that he saw the entire former Soviet Union as ‘historic Russia’.

While he claimed the US provoked the war by making Ukraine an “anti-Russian stronghold,” Putin said Moscow did not object to Kiev’s attempts to join the EU because it was not a military alliance. The European Commission on Friday called for an official candidate for Ukraine to join the bloc.

Putin’s comments that Russia has taken a smaller blow than European economies contradict predictions made by international organizations.

Eurostat, the commission’s statistics office, will not publish growth figures for the second quarter until the end of July, which will cover most of the period after Russia’s invasion.

But the surge in oil and gas prices has seriously lowered estimates. The OECD recently lowered its forecast for the expansion of the eurozone this year from the 4.3 percent it had forecast in December to 2.6 percent, and from 2.5 percent to 1.6 percent by 2023.

For Russia, the write-downs were much steeper. According to the OECD, the economy is expected to contract by 10 percent this year, down from the 1.9 percent growth expected in December. The forecast for 2023 was lowered from 1.6 percent growth to 4.1 percent contraction.

Putin said Russia had inflation under control at 17.6 percent and boasted that it was below levels in some European countries. This is only true for Estonia and Lithuania, where energy prices rose after the Baltic states moved to cut off Russian energy supplies when the war started. At 8.1 percent, the average for the eurozone is less than half the Russian rate.

Western central banks have blamed the conflict for exacerbating inflationary pressures by triggering sharp increases in the cost of energy and food. Putin rejected the claim, saying the west was using the conflict as a “life buoy to blame Russia for their own mistakes”. Western countries paid the price for years of ultra-easy monetary policy and high government debt, he said.

He accused the EU, traditionally Russia’s largest trading partner, of bowing to US pressure. “The EU has lost its political sovereignty. The elites dance to someone else’s tune and harm their own population. The real interests of Europeans and European companies are totally ignored and pushed aside,” Putin said.

While Putin downplayed the economic damage of the sanctions, Russian economic officials present were visibly upset. Herman Gref, chief executive of state lender Sberbank and a longtime confidant of Putin, said the export-driven economic model was now “poison” because it made the ruble too strong against the dollar.

Putin also dismissed Western accusations that Russia has exacerbated the global food shortage by blocking Ukraine’s Black Sea ports and hindering grain exports.

Instead, he said the sanctions had curtailed Russia’s own grain exports. “Famine in the poorest countries will be on the conscience of the US administration and the Eurocrats,” Putin said.

The sanctions, which wiped out millions of dollars of wealth from wealthy Russians, had confirmed his warnings that Russian oligarchs and executives were taking too much risk by seizing assets in the west. “True success is only possible if you link your future and the future of your children to the motherland,” he said.

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