The St Petersburg International Economic Forum, now in its eighteenth year, was less well attended than usual. The absence of various American and West European CEOs, responding to pressure from their governments following sanctions on Russia, was heavily commented upon in the West.
Less widely noticed was one of the most important pieces of news to emerge from Russia since the Soviet collapse of the early-1990s – namely the $400bn deal struck between Moscow and Beijing, under which Russia supplies 38bn cubic metres (bcm) of gas to China over 30 years from 2018.
“The unipolar model of the world is over,” declared Vladimir Putin last week. “The global picture has completely changed”.
The St Petersburg International Economic Forum was less well-attended than usual. During previous visits to this annual “Russian Davos”, now in its eighteenth year, I’ve regularly been mown-down by American and West European CEOs, as they’ve purposefully stomped down carpet-tiled corridors, their retinue of aides and cameras in tow.
This year, while plenty of Western executives did make the annual trek to Russia’s beautiful second city, keen to sell more cars, soap powder and financial services in Europe’s most valuable consumer market, the corridors were safer. Many of the top business names stayed away. The sanctions imposed on Russia in response to events in Ukraine put Western business leaders under pressure. Fearing unsavory headlines, and often responding to specific government requests, some of our best-known corporate pole-climbers gave “Putin’s vanity summit” a miss.
William Hague was on rather shaky ground when he argued this week that Moscow has chosen “the route to isolation” by recognizing Crimea’s referendum. On the contrary, it is the European Union and the United States who look as if they have seriously overplayed their respective hands in Ukraine. Across Asia, Africa and Latin America, the cry of “Western hypocrisy” has been heard much louder than complaints about Vladimir Putin.
Even in the UK, mainstream opinion is steadily becoming more critical of Western interventionism and our “New Cold War” posturing – despite some pretty one-sided media coverage and much establishment “tut-tutting”. Independent thought is still viewed with suspicion, and even disgust, by some – and I should know, having consistently argued we should negotiate with Moscow, not threaten tough sanctions we’ll never impose.
This Crimean crisis is, perhaps, reaching its apogee. As a referendum is held on the Black Sea peninsula, a territory 25pc bigger than Wales and home to 2m people, the stand-off between Russia and the West continues, dominating the global news-cycle.
Talk of a new Cold War is deeply alarmist. Politicians on both sides are posturing in front of each other and their respective electorates. Be in no doubt, though, relations between Russia and the US are now at their lowest ebb since the Soviet Union collapsed over 22 years ago.
UK car sales are now the second-highest in Europe. I know that’s true because I repeatedly heard it on a variety of national news bulletins last week and read it on the front page of several respected business newspapers. Yet it’s only true up to a point.
No-one is denying that 2.3m new cars were sold in Britain in 2013, according to the Society of Motor Manufacturers and Traders. That compares to 2.9m cars bought in Germany and marks a 10.8pc increase on UK car sales the year before.
Last week was busy on the economic news front. From Labour’s revised views on welfare spending to an uptick in American job growth, the developments came thick and fast.
To me, though, the most important economic news of recent days concerns the plight of a neighbor of mine called Robert. What Robert is experiencing didn’t generate many headlines, but could mark the start of an economic shock wave that reverberates around the world.
Over in China, the two-week annual plenary session of the National People’s Congress is in full swing. The world’s most populous country is in the midst of a rare leadership change, involving the appointment of a new Premier and other top ministers too.
After a decade at the top, Wen Jiabao is bowing out, to be replaced by Li Keqiang. While most foreign coverage of the succession has focused on corruption claims linked to Wen’s family, we should also consider what lies in store for the second-largest economy on earth.
Two pieces of economic news emerged last week that I can’t avoid mentioning in this weekend’s column. The first is that China’s economy grew by 7.6pc during the second quarter, its weakest rate since 2009. This GDP growth slow-down, albeit to what remains an enviably buoyant pace, has caused some angst on global markets. China, after all, is the second-largest economy on earth.
With the US still sluggish, the emerging markets, China the powerhouse among them, have replaced America as the world’s economic locomotive. The “non-West” now accounts for half of all commerce and a massive four-fifths of global growth. If China tanks, we’re in for another world-wide slump.
The US, Eurozone and China are the three largest economies on earth. Each has been hoping the other two would help pull the global economy out of its seemingly never-ending malaise. Last week brought worrying signs, though, that while the eurozone’s woes aren’t easing, on-going concerns about monetary union are now impacting alternative growth centres too, imposing real damage on commercial activity in other parts of the globe.
For most of the past year, of course, the eurozone has been on the verge of a fully-blown economic collapse. Investor angst has further intensified in recent weeks, since inconclusive Greek elections on 6th May. It is now widely accepted that Greece could be thrown out of the euro, if it keeps thumbing its nose at the austerity measures imposed by member states bank-rolling Athens’ continued sovereign bail-out.
A serious global slowdown looks likely in 2012 – or, at least, that’s the way conventional wisdom is shifting. The eurozone, of course, remains the epicentre of world-wide angst, its debt crisis threatening to cause havoc across an economy about the same size as that of America. Eurozone sovereign yields eased slightly last week, but massive questions remain.
Will the “Merkozy” plan work? Will Germany print money? Will monetary union be slimmed-down in a relatively ordered manner, with some smaller countries leaving? Or will the entire structure collapse, the Pan-European edifice crashing down amidst chaos and recrimination? No-one knows. But the stakes are now so high, and the doubts so acute, that just the threat of a “euroquake” has brought the global economy, in the eyes of some, to the brink of recession.