Putin is unfazed, reassures his people

An employee adjusts a TV set during the annual end-of-year news conference of Russian President Vladimir Putin at the "Pozitronika" electronic store in Russia's Siberian town of Divnogorsk, near Krasnoyarsk, December 18, 2014. Putin said on Thursday all his actions were aimed at consolidating the Russian society. REUTERS/Ilya Naymushin (RUSSIA - Tags: BUSINESS POLITICS SOCIETY)

An employee adjusts a TV set during the annual end-of-year news conference of Russian President Vladimir Putin at the "Pozitronika" electronic store in Russia's Siberian town of Divnogorsk, near Krasnoyarsk, December 18, 2014. Putin said on Thursday all his actions were aimed at consolidating the Russian society. REUTERS/Ilya Naymushin (RUSSIA - Tags: BUSINESS POLITICS SOCIETY)

Published Dec 19, 2014

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Henry Meyer and Ilya Arkhipov Moscow

President Vladimir Putin struck an uncompromising stance over the crisis gripping Russia, accusing the US and EU of trying to undermine his country and blaming external factors for the sharp plunge in the rouble.

“They won’t give up because they will always try to chain” the country, Putin said during his annual press conference in Moscow, comparing Russia to a bear protecting its territory. “As soon as they chain it, they’ll rip out its teeth and claws.”

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 rouble’s plummet.

Putin, vowing to guide the country through the current situation in the same way he steered Russia through the 2008 financial crisis, warned citizens to brace for a recession and criticised the central bank for not responding faster. Russia should not waste currency reserves protecting the rouble 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.”

Putin spoke in the middle of Russia’s worst financial crisis since the 1998 default after a 16 percent slide in the rouble over two days this week. Yesterday, markets whipsawed through Putin’s press conference. The currency fell 1.2 percent to 61 roubles to the dollar, even as oil headed for its biggest gain in more than two weeks in New York.

Putin, during his wide-ranging press conference yesterday, 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.”

The country’s currency reserves have declined by a fifth to $416 billion (R4.85 trillion) over the past year as the central bank tried in vain to defend the currency, which has dropped more than 40 percent since June as oil trades near a five-year low. Russia would not force exporters to exchange revenue earned in foreign currency to prop up the rouble, he said. – Bloomberg

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