Putin boasts about Russia's economy despite recession fears
His optimistic account in a speech at the St Petersburg International Economic Forum contrasted with sombre statements by some members of his government, who warned at the same conference that Russia could face a recession.
Economic Minister Maxim Reshetnikov had said that the country is 'on the brink of going into a recession'.
Mr Putin mentioned the recession warnings, but emphasised that 'it mustn't be allowed'.
He pointed out that manufacturing industries have posted steady growth, allowing the country to reduce its reliance on oil and gas exports.
'The perception of Russian economy as based on raw materials and dependent on hydrocarbons exports have clearly become outdated,' Mr Putin said, adding that the economy grew by 1.5% in the first four months of 2025 and inflation has dropped from double digits to 9.6%.
Mr Putin has used the annual forum to highlight Russia's economic prowess and encourage foreign investment, but Western executives have shunned it after Moscow sent troops into Ukraine in 2022, leaving it to business leaders from Asia, Africa and Latin America.
The economy, hit with a slew of Western sanctions, has so far outperformed predictions.
High defence spending has propelled growth and kept unemployment low despite fuelling inflation.
Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country's poorer regions. But over the long term, inflation and a lack of foreign investments pose threats to the economy.
Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military.
Mr Putin said the growth of military industries helped develop new technologies that have become available to the civilian sector.
He vowed to continue military modernisation, relying on lessons learned during the fighting in Ukraine.
'We will raise the capability of the Russian armed forces, modernize military infrastructure and equip the troops with cutting-edge equipment,' Mr Putin said.
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I saw first-hand how Putin and Xi manipulate the naive British state
It has taken six months and the deaths of thousands of Ukrainians but now, at last, Donald Trump may have grasped the truth about Vladimir Putin. As he threatens new sanctions and denounces Putin as 'crazy', the president is finally working out that Russia's leader is implacably determined to conquer Ukraine and rebuild an empire, at whatever cost in blood. But Trump is not alone in having lessons to learn: so, in all honesty, does the Foreign Office. Ever since Putin launched his full-scale invasion in February 2022, our diplomats have been at the forefront of backing Ukraine and maximising the pressure on Russia. They saw the onslaught coming and their response has won immense goodwill for Britain among Ukraine's government and people. On Friday, the Foreign Office named and sanctioned 18 Russian spies accused of covert bombings or acts of sabotage in Britain and elsewhere, designed to prevent support for Ukraine. Yet before 2022, the truth is that British diplomacy was not always so clear and resolute about countering Putin's aggression. Now that we are re-engaging with China – by far the most powerful of our adversaries – it has never been more urgent to understand the dangers of dealing with hostile states. I spent nearly eight years in the Foreign Office and Downing Street writing speeches for three foreign secretaries and one prime minister. For much of that time my desk was in the Private Office, outside the great oak door of the foreign secretary's magnificently gilded room overlooking St James's Park. This was where all the papers arrived, the high officials gathered and everything that 'the boss' needed to see or do was filtered and prepared. Anyone who works in the controlled bedlam of this extraordinary room has a privileged window into the soul of British diplomacy. I found that our diplomats profoundly believe that 'engagement' is almost always the answer to any international problem. Engagement is what they do and they are convinced that it serves our national interest and makes the world a better place. For countries that are more or less friendly – thankfully the huge majority – the diplomats are right. But what about hostile states that strive to do us harm and will not abandon their threatening ambitions? As a minor cog in the engine room of British diplomacy, I saw how dealing with them involves cost, risk and moral compromise. And here is the problem: some of our diplomats, particularly at senior level, instinctively underestimate or overlook the price of engagement with hostile powers and this may, unwittingly, make the world even more dangerous. What exactly are the hazards? Dealing with hostile states can demean you, distort your analysis and lead you to constrain your own options. At worst, you may end up emboldening the adversary to go further and inflict more harm than he would have done anyway. The easiest and perhaps most demeaning compromise is self-censorship in the cause of maintaining engagement. One evening in late 2016, as darkness settled over the trees of St James's Park outside my window in Private Office, I finished drafting a newspaper comment piece about Russia for the foreign secretary, then Boris Johnson. Before submitting my work to him, I had to send it for clearance by some of our most senior diplomats. Back came the answer: all fine, just one thing, please delete the phrase 'Russian aggression'. I asked why? Putin had grabbed Crimea and invaded eastern Ukraine two years earlier; he was, at that moment, waging a war on Ukrainian soil which had already claimed 8,000 lives and driven two million people from their homes. For good measure, his air force was carpet-bombing Aleppo in Syria. Didn't all of that justify the phrase 'Russian aggression'. Of course, I was told. But our boss met Sergei Lavrov, the Russian foreign minister, in New York a few months ago and we're looking for more engagement. So best not to use that phrase. Just the prospect of dealing with Lavrov – apparently as an end in itself – was enough to produce a minor but demeaning act of self-censorship. As it happens, I had been in that meeting in New York and Lavrov's bristling mendacity had been so obvious as to be almost comical. Given that nothing he said could be relied upon, it wasn't clear to me why Lavrov was worth the foreign secretary's time at all, let alone if there was a moral price to be paid. How could experienced diplomats, who were surely not naive or credulous, see Lavrov differently? The answer is that if you start with a sincere belief in the power of engagement, then you more or less have to regard the person you will engage with as a worthy interlocutor, even when it's Lavrov. The same impulse may cause diplomats to go further and misread not just individuals but regimes. The Foreign Office's Russia department was generally composed of people with a grimly realistic view of Putin: most had no illusions about what we were facing. I sometimes thought we would be better off if they were in charge. But as late as 2019, I remember one of our leading Russia experts describing Putin's annexation of Crimea as not an 'imperialist' but a 'defensive' project. The irony was that Putin himself begged to differ. He was very clear about why he was dismembering Ukraine. He told anyone who would listen that he grabbed Crimea for the obviously imperial motive of restoring the territory annexed by Catherine the Great in the 18th century to the Russian motherland. Credit: Soon after achieving this in 2014, Putin made a triumphal progress through his new province, hailing the 'return' of Crimea to the 'native land' and describing this as a tribute to 'historical truth and the memory of our ancestors'. He did not trouble to pretend that his motives were defensive. How could a Civil Service expert suggest otherwise? The only plausible explanation is that this person genuinely believed in the necessity of engaging with Russia. If Putin's motives really were implacably imperialist and expansionist, then there would be nothing to talk about. So those must not be his motives. If your starting point is that engagement is the answer, then it becomes tempting to define the problem to suit the solution, rather than vice versa. The danger is that you trap yourself in a giant circular argument with the following stages. Engagement is the answer. But the leader of the hostile state says that he's determined to rebuild his empire, invade his neighbours and overturn the entire global security order. Yes it's very worrying but he may not mean it, and even if he does we can still dissuade him. How and why? With engagement, because that is always the answer. Diplomats caught up in this way of thinking may be the last to realise the truth about a hostile dictator, even if he is proclaiming it to the world. They will want to believe that his future course is still an open question and engagement might yet divert him from the path of bloodshed and folly. They will struggle to see when the dictator's mind is made up and all that remains is to oppose him and ensure that he fails. The West has the collective power to thwart any expansionist regime, provided that it uses its leverage hard and early. But some of our diplomats will always prefer to advise against this. They will caution that if we do get tough, then the hostile state will cancel our engagement, which we must of course seek to preserve. They will warn about jeopardising the next meeting and 'empowering the hardliners and marginalising the moderates' (an unfalsifiable and formulaic argument). They will say that the regime is not monolithic, that not everyone around the dictator agrees with him, that somehow the moderates could still prevail, and we should look for the cracks and widen them, rather than give the hostile government something to unite against. This might sound like a sophisticated analysis, but the problem is that our adversaries know exactly how our diplomats think because this approach goes back many years. So they play along and create the impression that they want nothing more than serious engagement. They will agree to dialogue and say conciliatory words simply to tie us down and lead us to constrain our own options, delaying the moment when the penny finally drops and we use our leverage. For hostile states, the purpose of engagement is seldom to reach an agreement, but rather to stop us from actually doing something against their interests. That is exactly how Putin has handled Donald Trump for the past six months. Iran has been doing the same for years, often successfully until the recent 12-day war. Some of our diplomats are vulnerable to this tactic because their belief in 'keeping channels open' really can lead them to recommend staying our hand and limiting our options. In March 2018 Russian intelligence tried to murder a former spy, Sergei Skripal, and his daughter, Yulia, at their adopted home in Salisbury using novichok nerve agent, which later killed an innocent British mother, Dawn Sturgess. The Foreign Office disclosed on Friday that two Russian spies had been hacking Yulia Skripal's mobile phone as early as 2013. Britain responded to the Salisbury poisoning by expelling 23 Russian diplomats and urging our allies to follow suit, mounting a highly effective campaign which caused the removal of another 130 Russian officials by 29 countries and international organisations. At the time, this was the biggest coordinated expulsion of Russian diplomats in history. Our officials were genuinely outraged by the recklessness of what the Russians had done and the danger of mass civilian casualties. They raised the ceiling on the counter-measures they were prepared to recommend against Russia by several feet. But I noticed how they remained careful to draw limits. This became clear to me when I asked whether we should arm Ukraine? It seems incredible now but after Russia's first invasion in 2014, Britain and most of our allies decided not to supply Ukraine with weapons, imposing a de-facto arms embargo on the target of aggression which lasted right up until Putin was massing his forces for the second onslaught in 2022. And in 2018, with Theresa May as prime minister, I was briskly told that arming Ukraine was out of the question. Why? Because we would be on our own and there was no telling how Russia might react. Any weapons we might supply would make little difference anyway. Besides – and this was the decisive point – we still needed to keep our channels with the Russians open and such a drastic step would risk closing them, perhaps literally in the case of our embassy in Moscow. The irony is that less than four years later, once the full-scale invasion loomed, there was enough political will to override these objections and turn arming Ukraine into a central priority of British foreign policy. In January 2022, barely a month before the second invasion, Boris Johnson as prime minister dispatched 2,000 anti-tank missiles which were soon vital in the defence of Kyiv and Kharkiv, littering the streets and boulevards with the blackened carcasses of Russian armour. That consignment, delivered when no other state was publicly sending weapons, established Britain as Ukraine's strongest supporter and generated goodwill and influence which persist to this day. But suppose we had been arming Ukraine not for four weeks before the onslaught, but four years? Wouldn't Ukraine have been able to resist even more strongly and save lives by holding back the Russian advance? Wouldn't Britain have amassed yet more goodwill and diplomatic access? And what exactly was achieved by keeping our channels to the Russians open after the Salisbury poisonings? What did we gain by not supplying weapons to Ukraine? If that was the price of preserving engagement, it was surely not worth paying. I came to the conclusion that if engagement with hostile states leads to self-censorship, wishful thinking and self-imposed constraints, then it may be worse than pointless. The danger is that our adversary might be emboldened to cause even more damage. Remember that the cumulative effect of all the West's engagement with Putin was that he concluded that he could get away with destroying Europe's biggest country. In fairness, Britain was probably least culpable for this outcome. Our prime ministers and foreign secretaries had far less contact with Putin than some of their European counterparts. Angela Merkel, who clocked up 101 meetings or phone calls with Putin during her time as German Chancellor, must carry the greatest share of blame. After she left office, Emmanuel Macron became the European leader in most frequent contact with Putin, once hosting him at the French President's summer residence by the Mediterranean. Even before 2022, our diplomats were towards the hawkish end of Europe's spectrum on Russia. Whatever mistakes they made were committed on a greater scale by their colleagues from other European countries and by the US under President Obama's administration. But there is no avoiding the tragic reality that the West's collective effort to engage with Russia and 'keep channels open' ended in Europe's bloodiest war for 80 years. Surely it would have been better if we had all worried a lot less about engagement and got on with arming Ukraine straight after the first invasion in 2014? The results could hardly have been worse. Primary responsibility must of course rest with the politicians who were in charge and whose decisions the diplomats merely enacted. David Cameron and William Hague, the prime minister and foreign secretary respectively during the first invasion, must answer for Britain's response. But the politicians inevitably depend on expert advice from the professionals, particularly at moments of history when hostile states are amassing their power and becoming steadily more dangerous. Now, as we engage with China, we should learn from the searing experience of dealing with Putin's Russia. The main lesson is: never allow engagement to come at a price. If China poses a threat to Britain, then say so. If President Xi Jinping's rhetoric hardens and he escalates the pressure on Taiwan, then resist any temptation to refrain from drawing the obvious conclusion. If there is a list of Chinese companies that deserve to be sanctioned for supplying the invasion of Ukraine, go ahead and sanction them even if that might jeopardise the next 'dialogue' with China. But I can already spot warning signs. Turn to page 28 of this year's Defence Review and you will see Russia described as an 'immediate and pressing threat', while China is a 'sophisticated and persistent challenge'. The same passage describes Chinese technology as a 'leading challenge for the UK'. Why 'challenge'? Back in Private Office, I would try to keep that word out of the foreign secretary's speeches for the simple reason that 'challenge' is usually a euphemism for either 'problem' or 'threat'. Like other hostile states, China is anxious to police the language in which they are described. Have Xi's officials privately warned our diplomats against describing China as a 'threat'? Have they said that doing so would risk engagement and make it harder to improve bilateral relations? I don't know the answer. But it would be entirely in character for Chinese diplomats to threaten us about the consequences of calling them a threat. If so, we should reply that they have no right to try to dictate what we say in public, particularly as China self-evidently does pose a threat. Every Russian drone and ballistic missile that smashes into Kyiv is stuffed with Chinese systems and components, revealing how Putin's campaign to destroy Ukraine has always been underwritten by China. Those killer drones all have Chinese-made engines. In fact, just about every advanced conventional weapon in Putin's arsenal depends at some level on Chinese technology and industrial prowess. Russia's war machine is, in good measure, a creation of China. If Russia poses a threat to Britain, then China must too. Our ministers and officials should not allow their wish to engage to inhibit them from stating the obvious. In fairness, David Lammy, the Foreign Secretary, described China as a 'sophisticated and persistent threat' in the Commons in June. But why did the Defence Review settle for the euphemism 'challenge'? None of this rules out engagement with hostile states. If there is a clear objective, backed by collective leverage, then we should go ahead. But we must do it without repeating the old mistakes. And self-censorship is where the error begins. Solve the daily Crossword
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2 hours ago
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Russia launches attack on Ukraine after Trump threatens sanctions
Russia launched another large-scale overnight attack against Ukraine on Wednesday, as the clock ticks on President Trump's 50-day deadline for more sweeping sanctions if Moscow doesn't end its aggression. Ukrainian President Volodymyr Zelensky said in an update on social platform X that the latest barrage targeted his country's energy infrastructure. Fifteen people, including one child, were injured, he said. 'Russia is not changing its strategy — and to counter this terror effectively, we need to systematically strengthen our defenses: more air defense systems, more interceptors, and more determination — so that Russia feels our response,' Zelensky wrote. Trump warned Monday that Moscow would face tougher sanctions if Russian President Vladimir Putin doesn't end his country's attacks on Ukraine in the coming weeks. 'We're very, very unhappy with [Russia], and we're going to be doing very severe tariffs if we don't have a deal in about 50 days,' Trump said during a meeting with NATO Secretary-General Mark Rutte. 'We are very unhappy — I am — with Russia.' Russian leaders largely blew off the threat, though. 'Trump issued a theatrical ultimatum to the Kremlin. The world shuddered, expecting the consequences,' Dmitry Medvedev, deputy chair of the Security Council of the Russian Federation, wrote in a post on X on Tuesday. 'Belligerent Europe was didn't care.' Zelensky said Wednesday that Ukraine's military managed to shoot down nearly 200 Russian drones and more than 140 didn't reach their targets. Trump, who campaigned on settling the Russia-Ukraine conflict that has stretched more than three years, has ramped up pressure on Russia in recent days, publicly voicing frustrations with Putin and backing plans for additional weapons for Ukraine. 'I always hang up and say, 'Well that was a nice phone call,' and then missiles launch into Kyiv or some other city,' Trump told reporters Monday. 'That happens three or four times, you realize the talk doesn't mean anything.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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2 hours ago
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Russia hammers Ukraine port in overnight attack days after Trump sanctions threat
Russia, in the face of President Trump's recent sanctions threat, attacked Ukraine with over 300 drones overnight, hammering the port city of Odesa. The attacks targeted about 10 regions in the war-torn nation late Friday, with Russia launching 344 drones, of which around 200 were Shahed drones and 45 missiles, according to Ukraine's Air Force. Ukraine intercepted about 185 drones and 23 missiles. Ukrainian President Volodymyr Zelensky said in an online update Saturday morning that six people were injured, including a child in the strike on Odesa, a port city on the Black Sea. One person was killed in the attack. In Sumy, a city located in the northeast, 'critical' infrastructure was damaged in the overnight attack that left 'several thousand' families without electricity. 'My condolences to their family and loved ones. Missiles and drones also struck Pavlohrad, damaging a residential building and vital infrastructure,' Zelensky wrote on social platform X. 'All relevant services are now on the ground wherever needed, restoring affected areas and assisting people after the attack.' Russia has been bombarding Ukraine in recent weeks with drone attacks, firing as many as 700 in a single night. On Wednesday, the Kremlin's military launched another large-scale attack, with Ukraine able to shoot down nearly 200 drones. The latest attack comes less than a week after Trump threatened to impose 'severe' sanctions on Moscow if Russian President Vladimir Putin does not end the military offensive against Ukraine within a certain timeframe. 'We're very, very unhappy with [Russia], and we're going to be doing very severe tariffs if we don't have a deal in about 50 days,' Trump said on Monday during a meeting at the White House with NATO Secretary-General Mark Rutte. 'We are very unhappy — I am — with Russia.' During Rutte's visit to Washington, Trump also announced that more weapons would be supplied to Ukraine, but that the U.S. would not bear the brunt of the cost. As part of the deal, weapons would be sourced from various NATO allies in Europe. Trump, who campaigned on ending the largest land conflict in Europe since World War II, has recently taken a tougher stance against Russia, criticizing its leader after the two spoke over the phone earlier this month. Following that conversation, he signaled Putin was not prepared to end the more than three-year-long war and conceded that they had made 'no progress' on peace talks. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
