Putin sees Russian recovery taking at least two years

MOSCOW—Russian President Vladimir Putin vowed Thursday to fix Russia’s economic woes within two years, voicing confidence that the plummeting ruble will recover and promising to diversify Russia’s gas-dependent economy.

Speaking with strong emotion and looking confident, Putin also displayed a defiant stance toward the West, which he insisted was still trying to destroy Russia.

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Putin seeks to calm Russian fears

Putin acknowledged that Western economic sanctions over Russia’s actions in Ukraine was just one factor behind Russia’s economic crisis, accounting for roughly 25 to 30 per cent of the ruble’s troubles. He said a key reason for the currency’s recent fall was the nation’s failure to ease its overwhelming dependence on oil and gas exports.

As Putin spoke, the Russian currency was trading at 61 rubles to the dollar. That was slightly lower than last night but up 12 per cent from the historic low of 80 to the dollar that it hit earlier this week. Russia’s benchmark MICEX index rallied by 5.5 per cent by midday Thursday.

The Russian leader sought to soothe market fears that the government could use administrative controls, such as obliging exporters to sell their currency earnings, to help stabilize the ruble.

Putin said the nation’s currency reserves are sufficient to keep the economy in stable condition, adding that the Central Bank shouldn’t aimlessly “burn” its $419 billion in reserves.

“Our economy will overcome the current situation. How much time will be needed for that? Under the most unfavourable circumstances I think it will take about two years,” he said.

Putin struck a defiant note against America and the European Union, saying that sanctions slapped against Russia after it seized the Black Sea region of Crimea in March were part of a historical campaign to weaken Russia. He accused the West of trying to infringe on Russia’s sovereignty, adding that the Ukrainian crisis was just a pretext for Western action.

“Sometimes I think, maybe they’ll let the bear eat berries and honey in the forest, maybe they will leave it in peace,” said Putin, referring to Russia’s famed symbol. “They will not. Because they will always try to put him on a chain, and as soon as they succeed in doing so they tear out his fangs and his claws.”

He said by fangs and claws he meant Russia’s nuclear weapons, adding that the West wants to weaken Russia to win control over its rich natural resources.

“Once they’ve taken out his claws and his fangs, then the bear is no longer necessary. He’ll become a stuffed animal,” he said. “The issue is not Crimea, the issue is that we are protecting our sovereignty and our right to exist.”

Putin defended Russia’s increased military activities, including Baltic flights that NATO said put civilian flights at risk, as a necessary response to what he described as aggressive Western action.

Despite his anti-Western rhetoric, Putin urged a political solution for the crisis in Ukraine, where pro-Russian insurgents have been battling Ukrainian government troops since April, leaving 4,700 people dead.

He said Ukraine must remain one political entity, meaning that its pro-Russian, rebellious eastern regions should not break away. He also suggested the Ukrainian government and rebels in eastern Ukraine should conduct a quick “all for all” prisoners swap before Christmas.

Putin said he feels sure that Ukrainian President Petro Poroshenko sincerely wants a peaceful solution to the crisis but other forces in Ukraine don’t. He urged the Ukrainian government to fulfill its end of a peace deal reached in September and grant amnesty to the rebels and offer broad rights to eastern residents.

Putin also held out hope for normalizing ties with the West, saying that Russia still hopes to expand its gas supplies to southern Europe using a prospective gas hub on Turkey’s border with Greece.

Turning to the ruble’s collapse, he said the government should work with exporters to help stabilize the plummeting currency, but added that it shouldn’t be done through formal orders.

He said he had talked to the heads of some of Russia’s major companies to encourage them to sell more rubles — and said one promised to sell $3 billion to help stabilize the currency.

But he rejected proposals to fix the ruble rate, saying it would not achieve positive results — a statement that likely will help soothe market fears the government could use administrative means to stabilize the ruble — measures that could add to panic on the market.

Putin said the government and the Central Bank are generally working correctly to deal with the current economic woes, albeit some of their action was belated.

“The current situation has been provoked by external factors, but it’s worth noting that we haven’t done what we planned to do to diversify our economy,” Putin said.

Putin toned down his accusations against his foes, who he has branded as agents for the West bent on undermining Russia.

Hours before the press conference, a Russian tycoon placed under house arrest in September, Vladimir Yevtushenkov, was released. Shares in Sistema, a company that Yevtushenkov controls and manages, surged by more than 30 per cent in the early hours of trading on Moscow’s MICEX stock exchange.

One of Sistema’s most lucrative assets — the oil company Bashneft — was transferred to the government this month. Yevtushenkov in September was charged with money-laundering in relation to Bashneft.