June 7, 2019 / 10:06 AM / 2 months ago

Breakingviews - Sanctions victims compare scars in St Petersburg

Russian President Vladimir Putin and his Chinese counterpart Xi Jinping shake hands as they pose after signing ceremony in Moscow, Russia, June 5, 2019. REUTERS/Evgenia Novozhenina

ST PETERSBURG (Reuters Breakingviews) - St Petersburg this week became a haven for the victims of U.S. sanctions. Shunned by Western leaders and executives, Russian President Vladimir Putin recast his annual economic conference in the Russian city as a forum for the expanding club of countries and companies in Washington’s bad books.

Igor Sechin, chief executive of oil giant Rosneft, laid out the case on Thursday. Speaking to a packed hall, he accused the United States of using energy as a political weapon – a charge often levelled at Russia. American sanctions against oil producers such as Iran and Venezuela meant Washington was vacating the moral high ground as a proponent of free markets, he argued.

The St Petersburg International Economic Forum has long been a misnomer. Attendees are overwhelmingly Russian and veteran delegates speak of the increasing representation of state-owned companies. Oil companies aside, hardly any Western chief executives made it to the city once known as Petrograd.

Instead, the forum has become an opportunity for Russian regions to promote themselves. Some served local cheese – a winner from Russia’s decision to retaliate against European sanctions by blocking food imports from the continent.

Russia’s isolation has unnerved businessmen and their advisers. While aluminium company Rusal managed to negotiate a deal with the U.S. Treasury to escape sanctions, the saga cost shareholder Oleg Deripaska billions of dollars. One oligarch complained of his grandchild being identified as a politically exposed person by a bank in Britain.

Several older billionaires have helped protect their companies from future sanctions by transferring shares to their offspring. Others were more fatalistic about future penalties from President Donald Trump’s administration. Using a quintessentially Russian expression, one investor relations director remarked it was a case of “one step to the left, one step to right, fire!”.

The challenge of dealing with an unpredictable America is shared in Beijing as it grapples with an intensifying trade war.  China sent 1,000 representatives to the conference led by President Xi Jinping. The Chinese leader will on Friday share the stage with Putin, who he called his “best friend” this week.

Despite the bromance, any alliance remains in its infancy. One prominent attendee was Chinese telecom company Huawei, currently a U.S. target for its alleged role in enabling espionage. As Washington urges its allies to bar the company from next-generation 5G networks, Moscow is cosying up to it: Huawei and local mobile provider MTS signed an agreement to develop the technology in Russia. Barring a change of direction from the United States, more delegates may find reason to come to St Petersburg in future years.

Breakingviews

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