Ukraine: friend or foe?
Climate change: real, or imagined?
And what about the European Union? Are they on their way to becoming the liberal, latte with almond milk peace-and-love version of the Soviet Union, or not?
Last week, Russian president Vladimir Putin entertained questions from dozens of people from investment houses like DuPont Capital in Delaware, BlackRock in New York, to executives of varying levels out of China, Italy and France during VTB Capital’s Russia Calling! investment forum.
Putin’s Q&A with foreign investors is why everyone comes to the VTB Capital event. Two years ago, he gave his spiel on the economy – a mostly boring rundown of economic data he got from his Finance Ministry and Central Bank – and then left the room. The standing room only crowd followed him out the door.
This year, Putin gave his two cents and more on the economy, praising his economic team because economics is not his strong suit, and then sat down in white, leather club seats with executives from Eni and elsewhere, manspreading and slouching in that commanding-the-room presence for which Putin is known.
Most of the questions are strictly business related. They almost seem boring to Putin. Budget matters for bond lords doesn’t really get him going. When the questions turn to geopolitics, Putin can talk a horse off a meat wagon.
Putin Sheds Doubts On Ukraine’s Domestic Crisis
On Ukraine’s new president Volodymyr Zelensky, Putin was asked for his impression of the comedic actor-turned-president.
“He seems very nice. He seems sincere,” Putin says, on his usual best behavior in public forums like this.
Russia and Ukraine have been at loggerheads since 2014. That’s when Russia annexed Crimea following a decision by the autonomous government there to put up a Brexit-style vote. Crimeans largely voted to leave Ukraine. The Russian government swept in within two weeks of that referendum and took it over, keeping their only warm water naval port, a port they would have surely lost in the eventuality of a Ukraine-NATO membership.
Things got worse in the relationship when ethnic Russia militias in the region of Ukraine known as the Donbass decided to build a separatist movement with tacit support from the Kremlin. An estimated 13,000 people have died in what many have referred to as a civil war between official Ukraine and the pro-Russian separatists. It led to harsher sanctions on Russia, further isolating the country from the West.
Now that Zelensky is in power, maybe things will change, one questioner speculated out loud.
Putin said, “I believe Zelensky when he says he wants to change the situation for the better in the Donbass. But can he do that? I don’t know. If the nationalist battalion forces return, there will be an immediate reaction from the (Luhansk and Donetsk) militias. We see issues that are being raised now on law changes and on the Minsk agreement that are counter-productive.”
Ukraine sentiment indicators? Headwinds. Score ‘status quo stalemate’ for the win.
“The Dark Ages”
Russia is the world’s leading natural gas producer, and one of the largest oil producers in the world, too. Their government budget depends on oil and gas exports. Their biggest market – the European Union – is embarking on a policy to eradicate fossil fuel use within a few years though these policies keep changing.
Russia is a signatory to the Paris Climate Accord and the Kyoto Protocol on CO2 emissions. “We’re do everything we can to make Russia’s economy cleaner and greener,” he said, adding that a large portion of that is improved environmental practices in a country that, under the Soviet Union, had no real environmental standards.
Regarding pressure to get with the climate change program, Putin said that they had no money to make adjustments to factories to make them less polluting. Plus, following at least two major economic crises since the collapse of the economy since 1992, “we had other priorities. But now we have the money and the growth to do it. We’ll implement fines and penalties on polluters first in the big cities,” he said.
Putin also didn’t seem too worried about Europe ditching Russian gas in favor of windmills and solar panels.
“They’ll need to have a base load of something. Maybe it can be nuclear power. If it’s not going to be nuclear power, it will be natural gas,” he said. “If their demand falls, China and India are growing faster than Europe and they will buy it. Getting rid of fossil fuels, unless you’re replacing it with new nuclear reactors, you’re at risk of returning Europe to the dark ages.”
EU as USSR?
One of the more unusual questions at last week’s event came from a U.S. fund manager who asked if the EU was dangerously similar to the USSR. “The European Central Bank is creating money out of pixie dust,” the questioner said. “Everything is pushed on people for ‘the greater good’. It sounds like the Soviet Union to me,” he said.
(He really said that. You’ll have to trust me on this one. I was there.)
“The EU has more obligatory rules than the Soviet Union had and the EU is more centralized, but beyond that I don’t think they are similar,” he said.
Putin said what he always says about the EU, that it is a reliable and important trading partner and they don’t want to see it fall apart.
At times jovial, he took the EU question seriously as opposed to another one on shale oil where he joked that maybe Russia can buy used shale drilling equipment from the Americans. He cannot and he knows that. They are sanctioned from buying such things.
“I think the EU understands its challenges,” Putin said. An estimated 2,500 people were in attendance at the forum. “They are not going to collapse like the Soviet Union collapsed. The Soviet Union didn’t collapse because of a few revolts in the Baltics. It was because the economy was a failure and it had no one it was really trading with beyond its political borders. That’s not the case with Europe.”