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Putin predicts economy recover in two years Putin predicts economic recovery but warns West against pressuring Russian ‘bear’
(35 minutes later)
MOSCOW —Russian President Vladimir Putin, under pressure to show how to pull Russia out of its economic crisis, predicted Thursday the country will recover in two years at the most, despite a looming recession, a severely weakened ruble and growing fears about the country’s financial instability. MOSCOW —Russian President Vladimir Putin, under pressure to show a path out of the country’s economic crisis, predicted Thursday recovery in two years at the most despite mounting bad news: a looming recession, a severely weakened ruble and growing fears about the country’s financial instability.
Speaking at his annual year-end news conference, during which he took questions directly from the national and foreign press, Putin said the Russian central bank and the government were taking adequate measures to support the ruble. Putin’s news conference came as Russia suffers through its worst economic challenges since Putin came to power 15 years ago. Speaking at his annual year-end news conference taking questions directly from the national and foreign media Putin said the Russian central bank and government were taking adequate measures to support the ruble, which has plunged in value against the U.S. dollar.
Putin’s news conference came as Russia suffers through its most serious economic challenges since a 1998 fiscal meltdown shortly before Putin’s rise to political power. The current crisis is also a major test for Putin, whose reputation is largely built on safeguarding Russia’s strength and stability.
“Rates of growth may be slowing down, but the economy will still grow and our economy will overcome the current situation,” Putin said at the televised news conference. “I believe about two years is the worst case scenario. After that, I believe growth is imminent.”“Rates of growth may be slowing down, but the economy will still grow and our economy will overcome the current situation,” Putin said at the televised news conference. “I believe about two years is the worst case scenario. After that, I believe growth is imminent.”
A steady depreciation of the ruble has been underway for the last several months, fueled by falling oil prices and Western economic sanctions over Russia’s involvement in Ukraine. But it turned into wild swings in the exchange rate over the past few days, with rates peaking at almost 80 rubles to the dollar Tuesday after the central bank dramatically raised interest rates. A steady depreciation of the ruble has been underway for the last several months, fueled by falling oil prices Russia’s main export and Western economic sanctions over Russia’s involvement in Ukraine.
The ruble lost more ground against the dollar Thursday, more than 2 percent weaker on the day, despite central bank action to shore up the currency, which is around 45 percent down against the dollar this year. But it turned into wild swings in the exchange rate over the past few days, with rates peaking at almost 80 rubles to the dollar Tuesday after the central bank dramatically raised interest rates.
Putin had been silent as the currency collapsed this week before recovering some ground. The ruble lost more ground against the dollar Thursday despite central bank action to shore up the currency, which is around 45 percent down against the dollar this year.
He acknowledged partly that Russia had helped to lay the groundwork for the current crisis, by having an economy that was not as diverse as it could have been. A weakened currency drives up prices, makes it harder for companies to repay loans that were taken out in dollars or euros, and waters down Russians’ savings.
But in general, he blamed “external factors, first and foremost” for creating Russia’s situation and continued to be defiant, blaming the West for intentionally trying to weaken Russia and foment problems, economic and otherwise, in the country. Putin had been silent as the currency collapsed this week.
He acknowledged partly that Russia had helped to lay the groundwork for the current crisis by not have more diversity in the economy.
But in general, he blamed “external factors, first and foremost” for creating Russia’s situation — and continued to be defiant, blaming the West for intentionally trying to weaken Russia and foment problems, economic and otherwise, in the country.
“No matter what we do they are always against us,” Putin said, one of a series of observations directed at how he said the West has been treating Russia.“No matter what we do they are always against us,” Putin said, one of a series of observations directed at how he said the West has been treating Russia.
Russia’s leaders took drastic action Wednesday to combat the worst threat to financial stability in Putin’s time in power, calling in the nation’s economic and security elite and by day’s end erasing the ruble’s losses for the week. Putin attributed Western sanctions that have targeted Russia’s defense, oil and gas and banking sectors for about “25 percent” of Russia’s current difficulties.
The efforts eased the most immediate dangers to Russia’s economy. But the nation still appeared to be heading into uncharted territory, with the rising living standards that have formed the backbone of Putin’s rule receding into memory. Even if the ruble holds steady, Russia faces a recession, steep inflation and a constrained economic future, officials say a perilous combination that Putin has long been able to avoid. But Putin remained defiant about the actions that brought on the Western backlash, including Russia’s annexation of the Crimea peninsula after pro-Moscow rebels in eastern Ukraine began an uprising earlier this year. Putin repeated Moscow’s claim that Russia has not directly aided the rebels.
“Taking Texas from Mexico is fair, but whatever we are doing is not fair?” he said, in comments seemingly directed at the United States.
Putin also suggested that the West was demanding too many concessions from Russia, including further nuclear disarmament. Likening Russia to a bear — a longtime symbol of the country — he chided the West for insisting the Russian bear “just eat honey instead of hunting animals.”
“They are trying to chain the bear. And when they manage to chair the bear, they will take out his fangs and claws,” Putin said. “This is how nuclear deterrence is working at the moment.”
The news conference was heavily promoted on Russian state television Wednesday in a 40-second trailer with images of Russian triumph against the perils of the world.The news conference was heavily promoted on Russian state television Wednesday in a 40-second trailer with images of Russian triumph against the perils of the world.
Despite the economic woes buffeting his nation, an Associated Press-NORC Center for Public Affairs Research poll released Thursday found that some 80 percent of Russians still support him.Despite the economic woes buffeting his nation, an Associated Press-NORC Center for Public Affairs Research poll released Thursday found that some 80 percent of Russians still support him.
In a sign that the Kremlin viewed the crisis not just as an economic threat but as a danger to Russia’s fundamental security, the Russian Security Council said Wednesday that it had drawn up a response plan and given it to Putin to review. The head of the council, Nikolai Patrushev, a former head of the successor agency to the KGB, did not disclose details. The body usually focuses on matters of war and peace, and it is highly unusual for it to become involved in economic policymaking. In a sign that the Kremlin viewed the crisis not just as an economic threat but as a danger to Russia’s fundamental security, the Russian Security Council said Wednesday it had drawn up a response plan and given it to Putin to review. The head of the council, Nikolai Patrushev, a former head of the successor agency to the KGB, did not disclose details. The body usually focuses on matters of war and peace, and it is highly unusual for it to become involved in economic policymaking.
“The government and central bank have begun working seriously on stopping this bacchanalia on the currency market,” Putin aide Andrei Belousov told Russian news agencies after Prime Minister Dmitry Medvedev convened an emergency meeting of top economic officials and the heads of major energy companies.“The government and central bank have begun working seriously on stopping this bacchanalia on the currency market,” Putin aide Andrei Belousov told Russian news agencies after Prime Minister Dmitry Medvedev convened an emergency meeting of top economic officials and the heads of major energy companies.
Putin’s press secretary on Wednesday promised “a number of measures” in coming days to fight the crisis.Putin’s press secretary on Wednesday promised “a number of measures” in coming days to fight the crisis.
“In 2008, if you remember, Putin came out and said, ‘This is a crisis, I am assuming responsibility, and everything will turn out right,’ ” spokesman Dmitry Peskov told the state-run Rossiya 24 television channel, referring to the global economic crisis that began in 2008.
Russian leaders also have sounded somewhat more conciliatory toward Ukraine in recent days, perhaps in a bid to ease sanctions. The measures were imposed after the Kremlin annexed Crimea in March and then helped to fuel a pro-Russian rebellion in eastern Ukraine.Russian leaders also have sounded somewhat more conciliatory toward Ukraine in recent days, perhaps in a bid to ease sanctions. The measures were imposed after the Kremlin annexed Crimea in March and then helped to fuel a pro-Russian rebellion in eastern Ukraine.
A weakened currency drives up prices, makes it harder for companies to repay loans that were taken out in dollars or euros, and waters down Russians’ savings.
The rapid depreciation of the ruble stirred bad memories of Russia’s 1998 default. Putin took office in the aftermath and solidified his control of the nation with the promise that such a crisis would never occur again.