West wants to rip fangs out of Russian bear, warns Putin

A defiant Vladimir Putinsaid Russia should brace itself for two years of recession, as he blamed the country’s economic woes on a western plot to defang the Russian bear.

The president was speaking at a three-hour press conference that saw him address this week’s market turmoil in public for the first time.

He claimed that a period of economic hardship was the price Russia would have to pay to maintain its independence in the face of western aggression, repeatedly blaming the rouble’s plunge and a looming recession on “external factors”.

In a metaphor that summed up his performance, he compared Russia with a bear that the west was trying to weaken by stripping it of its nuclear weapons and taking its natural resources.

“They will always try to put it on a chain,” he said. “As soon as they succeed in doing so they will tear out its fangs and claws.” That, he said, would leave it nothing but a “stuffed animal”.

Mr Putin was speaking after a week of high drama in Moscow, as the rouble slid 16 per cent against the dollar in the space of two days, evoking memories of the 1998 financial crisis when Russia defaulted on its domestic debt. The currency, which is 45 per cent lower than at the start of the year, has been dragged down by plunging oil prices and western sanctions imposed since Moscow’s annexation of Crimea and its intervention in eastern Ukraine.

The central bank’s shock 6.5 percentage point increase in interest rates to 17 per cent on Tuesday failed to tame markets. The bank forecasts that Russia’s economy could shrink by almost 5 per cent next year if oil prices stay at $60 a barrel.

As Mr Putin spoke, the ripple effects of the rouble’s volatility on the Russian economy became clearer, with interbank rates jumping to their highest level in nine years and foreign manufacturers freezing sales in Russia.

Yet, Mr Putin appeared in control and relaxed, responding to questions with his characteristic mix of folksy humour, obfuscation and biting criticism of the west. Asked by a Ukrainian journalist how many Russian troops had died in Ukraine, Mr Putin did not give a direct answer.

A Putin tradition for more than a decade, the annual press conference usually serves as an arena for the president’s populist showmanship, with the hall filled with state media and correspondents from obscure regional news outlets.

While this year saw its share of soft questions, including one about his romantic status (the president demurred), Mr Putin faced some hard-hitting questioning from the usually loyal crowd, particularly on the economy.

Grilled about the actions of the central bank, Mr Putin gave qualified support to its governor Elvira Nabiullina, who has been criticised by some Russian banks and companies for not doing more to stem the rouble’s fall earlier this year. Mr Putin stressed that the Russian government also bore responsibility for the currency’s slide, fuelling rumours over the future of Dmitry Medvedev, prime minister, or of a shake-up in the cabinet.