Putin Defiant, Lashes Out At West, Tells Russians Economy May Stay Weak For Two Years

Having started at noon Moscow time (4am Eastern), Putin's annual Q&A run for a massive three and a half hours, during which the Russian leader took numerous questions from the public and as expected, reiterated the key "rally around the flag" talking points that have permeated Russian rhetoric over the past few weeks as the economic situation in Russia deteriorated.

As Bloomberg notes, the conference was attended by hundreds of reporters and carried live on television around the world, the event took on heightened importance this year as the president sought to reassure a Russian public unnerved by the ruble’s plummet.

While he did acknowledge the difficult economic reality, Putin sought to reassure his countrymen that the current weakness "would last no longer than two years." Putin promptly pivoted against the west and accused the U.S. and European Union of trying to undermine his country and blaming external factors for the sharp plunge in the ruble, notably the drop in oil saying that “the economy will naturally adapt to the new conditions of low oil prices.”

As caught by the WSJ, when he was asked by a Russian television reporter about the sense that new divisions in Europe have emerged since the Ukraine crisis, Putin blamed the tensions on the West, saying “they didn’t stop building walls” after the end of the Cold War. He accused the West of building up the North Atlantic Treaty Organization toward Russia’s borders and expanding an antimissile systems.

“It’s not a matter of Crimea. We are defending our independence, our sovereignty and our right to exist, we should all understand this,” he said later in response to a question about whether the current economic troubles were “payment for Crimea.”

In tough language, Mr. Putin returned to an analogy he’d used earlier this fall, comparing Russia to a bear in the Siberian Taiga wilderness, saying it was naive to hope that the West would leave Russia alone.

“They will always try to put it in chains and once they have it in chains, they will take out its teeth and claws, which in this case means our strategic nuclear deterrent,” he said. “Once they’ve got the Taiga, they won’t need the bear,” he said, accusing Western leaders of saying publicly that Russia should be deprived of its vast natural resources.

Asked about tensions with the West, Putin struck a harsh tone, accusing it of seeking to subdue and disarm Russia. Acknowledging that Western sanctions over the country’s role in Ukraine were biting, he said the current economic troubles “are payment for our independence, our sovereignty.”

Putin did reserve some blame for his Russian peers, criticizing the central bank for not responding faster and halting the Ruble collapse. He vowed to guide the country through the current situation in the same way he steered Russia through the 2008 financial crisis, and warned citizens to brace for a recession. Somewhat ironically, Putin said that Russia shouldn’t waste currency reserves protecting the ruble as the country prepares for a downturn brought on by the collapse of the oil price and sanctions over the Ukraine conflict, he said.

“Under the most negative external economic scenario, this situation can last two years,” Putin said. “If the situation is very bad, we will have to change our plans, cut some things.”

Some of the other notable highlights: "Putin sparred with a Ukrainian journalist, reeled off statistics on the fall harvest and spoke about guiding gifted children. He even told reporters that he has a good relationship with his ex-wife and is in love with someone new. The tone of the back-and-forth was captured in an answer about the freeing from prison of former oil tycoon and political opponent Mikhail Khodorkovsky: “I don’t regret anything. I did everything absolutely correctly.”

So will the presser do anything to change the status quo? Hardly: Putin will continue to be viewed as a pariah by the west, certainly for as long as he continues to challenge the US state department-imposed regime in the Ukraine. Meanwhile in Russia Putin is still enjoying popular support because the simple equation is that for the vast majority the recent territorial expansion courtesy of the full Crimean annexation is seen as worth the hardship and the soaring prices. Which is why Putin again accused the U.S. and European Union of using the Ukraine conflict as way to contain Russia as they have done since the end of the Cold War through the expansion of NATO, comparing the current situation to a new division akin to the Berlin Wall.

“This is payback for our natural desire to preserve ourselves as a nation, as a civilization and state,” Putin said. “The crisis in Ukraine should make our partners understand that it’s time to stop building walls.”

Finally, Putin said he’s firmly in control of the country and is not in any way worried about a coup from within his ranks. “People in their hearts and souls feel that we, and I in particular, are acting in the interests of the vast majority,” he said. Judging by his record high popularity numbers, the people appear to believe him.