Skip to main content
Part of complete coverage on

Russia's Davos: Where Vladimir Putin has gone from powerhouse to pariah

By John Defterios, CNN
May 22, 2014 -- Updated 1829 GMT (0229 HKT)
  • St Petersburg, dreamt up by Tsar Peter the Great, is now best known as president Vladimir Putin's hometown
  • Last year Putin used SPIEF -- Russia's Davos -- to showcase his international links and political influence
  • This year, the Ukraine crisis is overshadowing the forum, and many executives are staying away from Putin
  • The president's ambitions to foster investment and raise living standards has been stymied by the crisis

Editor's note: John Defterios is CNN's Emerging Markets Editor and anchor of Global Exchange, CNN's business show focused on the emerging and BRIC markets. Follow John on Twitter.

St Petersburg (CNN) -- St Petersburg has been a city of splendor for more than three centuries, and bears the name of the man who dreamt it all up: Tsar Peter the Great.

But since Vladimir Putin took power in 2000, this city has been best known as the hometown of the president, and those in his inner circle who call the shots within the Kremlin and in business.

Anna Scherbakova, bureau chief for the financial daily Vedomosti, said the power structure of "Team Putin," is woven through with the city's elite.

"There are a lot of St Petersburg-born people in the Russian cabinet," she said. "Also the CEOs of the Russian big monopolies like Gazprom, like Rosneft, like Sberbank."

In a symbol of the city's rising prominence, the state-run energy giant Gazprom will move its headquarters here next year at a cost of nearly $2 billion.

It is obvious, with a long, long list of no shows from corporate America and Europe, the tone has changed dramatically
John Defterios

The St Petersburg International Economic Forum, or SPIEF, is Putin's version of Davos. It is a showcase event for his administration and a chance for CEOs of the Global 100 to rub shoulders with those who matter most in this near $2 trillion economy.

But it is obvious, with a long, long list of no shows from corporate America and Europe, the tone has changed dramatically for the worse at SPIEF 2014.

According to Scherbakova, "it could painful for the president's self esteem."

A year ago, the forum kicked off what was designed to be a smooth agenda of orchestrated events.

German Chancellor Angela Merkel shared the stage with the president in a panel that I chaired. Tensions between them were obvious, but so too were overriding bilateral trade interests.

A few months later, Putin talked of re-igniting growth as he hosted the G20 Summit in St Petersburg. In December, he moved to rescue Ukraine with a $15 billion bailout for his old ally, the now ousted Ukrainian President Viktor Yanukovich.

Shortly thereafter, he was hosting the high-priced Sochi Winter Olympics.

But it is Putin's annexation of Crimea and unrest in Eastern Ukraine which will define 2014 and very likely his legacy. Putin's popularity has skyrocketed at home, but that is weighed against economic isolation abroad.

During the height of the Western-led banking crisis, Putin chided co-members of the G8 for their careless ways and lack of corporate governance. Today, the economic tide of growth has moved out on Russia.

And that, according to Peter Truscott, former UK Energy Minister and Putin biographer, will force the Kremlin to take measured steps going forward.

It is Putin's annexation of Crimea and unrest in Eastern Ukraine which will define 2014 and very likely his legacy
John Defterios

"If a military conflict were to spread into Ukraine, against the background of further economic and trade sanctions, then I think Putin might lose support," Truscott said. "That's why I think Russia is very wary of full military intervention in eastern and southern Ukraine at the moment."

In the spring of 2013, the Russian president promised protestors he would raise their standards of living by fostering investment.

Having most U.S. and many European corporate leaders staying away from his annual gathering on the Neva River will not assist in the effort.

And the event that was scheduled to round off the president's calendar on the global stage -- the G8 summit, due to be held during St Petersburg's long white nights -- has been canceled. Instead, there will only be the G7 in Brussels.

READ MORE: The European Union needs a new vision

WATCH MORE: Is the EU out of its economic crisis?

EXPLORE: Protest parties shake up Europe election

Part of complete coverage on
October 9, 2014 -- Updated 0804 GMT (1604 HKT)
Liberia, Sierra Leone and Guinea -- the three countries facing the biggest health crisis -- are also facing huge bills to try and contain the virus.
September 22, 2014 -- Updated 1316 GMT (2116 HKT)
Twitter has lost its position in the top 20 coolest brands for the first time in three years.
September 25, 2014 -- Updated 1554 GMT (2354 HKT)
As the crisis in Iraq escalates, CNN looks at how Iraq could crack down on ISIS' oil riches under the guidance of its new oil minister, Adel Abdul Mahdi.
August 29, 2014 -- Updated 0842 GMT (1642 HKT)
Recep Tayyip Erdogan is Turkey's new president . So can he revitalize its economic fortunes?
September 19, 2014 -- Updated 1724 GMT (0124 HKT)
Experts share their tips on cities they see as emerging financial hubs...they're not where you think.
October 9, 2014 -- Updated 1511 GMT (2311 HKT)
Growing numbers of us are willing to serve as bank, teacher or travel agent to people we have never met, and entrust them to serve us in turn.
August 28, 2014 -- Updated 1244 GMT (2044 HKT)
The European Union is stepping in to save its dairy from going sour.
August 18, 2014 -- Updated 1236 GMT (2036 HKT)
Europe's deteriorating relationship with Russia has hit the region's growth, even before new food sanctions begin to bite.
July 16, 2014 -- Updated 1634 GMT (0034 HKT)
With cyberattacks on the rise and here to stay, it's a modern-day challenge for people and businesses to get smarter about preventing them.
August 14, 2014 -- Updated 1324 GMT (2124 HKT)
Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
September 19, 2014 -- Updated 1124 GMT (1924 HKT)
Peer-to-peer finance lets businesses bypass bank loans. Creative companies with quirky ideas find new lending models advantageous.
July 20, 2014 -- Updated 1524 GMT (2324 HKT)
Evidence points to pro-Russian separatists as perpetrators of the attack and Vladimir Putin is facing questions, David Clark writes.
September 3, 2014 -- Updated 0952 GMT (1752 HKT)
CNN's Jim Boulden looks on the future of online shopping.
August 5, 2014 -- Updated 1440 GMT (2240 HKT)
The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.