(Reuters) – Hackers delayed the start of President Vladimir Putin’s speech to Russia’s flagship economic forum on Friday, deprived of strong Western attendance as Russia adjusts to the “new reality” of life under Western sanctions.
State-owned enterprises have made it a point to publicly sign deals and many companies had booths with floor-to-ceiling display screens and glamorous attendants at the 25th St. Petersburg International Economic Forum, which aims to compete with the World Economic Forum in Davos.
But the Western investors and investment bankers who had shown up in previous years were conspicuously absent.
“New business on the Italian side is just frozen,” Italian businessman Vincenzo Trani told Reuters on the sidelines of a session titled “Western investors in Russia: new realities.”
“New investments are just not possible and people are not increasing their investments.”
Kremlin spokesman Dmitry Peskov said a denial of service attack, which works by flooding servers with fake traffic, hit the forum’s accreditation and admissions systems. He did not blame but the situation in Ukraine weighed heavily.
As Russian forces entered Ukraine on February 24, Kyiv called in “hacktivists” to help them. There was no immediate response from Ukraine to so-called “distributed denial of service”, a grassroots form of digital disruption that has been widely used by both sides in the Russian-Ukrainian conflict. .
Internet connectivity and speeds suffered at the forum, and Putin’s speech, in which he accused the West of trying to crush his country with an economic ‘blitzkrieg’, was delayed by just over 100 minutes.
Western sanctions against Russia for its actions in Ukraine, combined with related supply chain issues, have radically changed the dynamics of Russia’s exports and imports, with the country now turning to China and India and turning away from the West.
Major banks have lost access to the SWIFT global payment system, Western brands are avoiding the country and hastily selling off, writing off billions of dollars in assets – and the European Union has promised an embargo on Russian oil.
Deputy Prime Minister Dmitry Chernychenko lamented Russia’s technological backwardness and said the “painful process” of Russia transitioning to its own technology was underway.
“You are competing with global companies that have passed you by entire generations,” he told an audience of Russian business representatives.
DARK BUSINESS OUTLOOK
The CEO of major Russian lender Sberbank summed up the situation with dark irony.
“They say everything is fine with business in Russia, there are just small problems: there is no one to buy from and no one to sell to, it’s impossible to pay and impossible to supply”, German Gref said on Friday. “It’s a joke, but it reflects reality.”
Tadzio Schilling, head of the European Business Association, which brings together hundreds of companies inside and outside Russia, said the losses for those doing business in Russia “can be colossal These days”.
“The near-term outlook for business is bleak,” he said.
Leonid Mikhelson, chief executive of Russian energy giant Novatek, called for more state support.
A global gas price squeeze created a window of opportunity that Russia, heavily dependent on its vast fossil fuel exports, needed to seize before it shut down, he said.
But his company could not commission a compression line – a key part of its industry – without components whose sale to Russia is now restricted by sanctions.
“We need to create home liquefaction technology for this,” he said. “A fully-fledged localization program is needed, with full funding.”
“KEEP SILENT HIGHLY”
Russian companies typically offer interviews and make big announcements at the forum, the main event on the Russian business calendar, but this year speakers were scarce on the ground.
Many Russian companies are wondering how to handle their communications, said Ksenia Kasyanova, R&D director at PR firm CROS.
She said they were torn between wanting to reinstate the claim and fearing that any comments wouldn’t be made public with as much context as they would like.
“Faced with this dilemma, businessmen end up resolving to the complicated task of ‘silence out loud,'” Kasyanova said – placing the business in the public domain but minimizing communications and publicity.
Italian investor Trani, who founded one of Russia’s biggest car-sharing companies, Delimobil, said Russian and international companies are hungry for stability.
“No company can have aggressive development during this period,” he said. “We must wait for peace.”
(Reporting by Reuters; Editing by Kevin Liffey and Philippa Fletcher)