Russian folklore villain ‘Koshchei the Deathless’ performed magic tricks at the St Petersburg International Economic Forum (SPIEF) 2026. He produced coins from thin air and shocked passers-by with puffs of smoke from his fingers.

Unexpected Events at the Forum

The unexpected was delivered by Ukraine. A huge plume of thick black smoke dominated the St Petersburg skyline on Wednesday. Local officials admitted that drones had damaged ‘infrastructure’ without specifying what was hit.

Volodymyr Zelensky published an open letter to Vladimir Putin. He taunted Russia’s leader about his age and Russian setbacks in the war. Zelensky proposed a meeting in a neutral country to talk peace.

Putin’s Response to Zelensky

President Putin’s response was predictable. ‘It’s not the author of the letter I need to respond to,’ he said. ‘But our soldiers on the frontline… keep at it, brothers!’

Vladimir Putin is not ready to end Russia’s war on Ukraine unless it’s on his terms. At the forum’s plenary session, the Putin we saw was uncompromising, unrepentant, and determined to project an image of strength and unwavering conviction.

Putin claimed, ‘There are wars and sanctions. But the economy is developing. Everything is stable.’ He tried to appear confident about the war and about Russia’s economy. Applauded by entrepreneurs, friendly foreign dignitaries, and officials, inside the congress hall the Russian president could style himself as a super strong leader.

Economic Pressures and Battlefield Losses

His problem is what’s happening outside. The massive battlefield losses that Russia has suffered in its war on Ukraine. The long-range Ukrainian drones now penetrating deep inside the country.

When asked about the war, senior officials quoted the Kremlin. ‘The war is in its fifth year,’ I pointed out to Alexander Zhukov, deputy speaker of the Duma. ‘Do you think it will end soon?’

‘I can only respond in the words of our president,’ replied the MP. ‘He said this situation must be resolved soon.’

‘Drones targeted St Petersburg this week,’ I reminded Vasily Anokhin, the governor of Smolensk region. ‘And your region too has in the past come under drone attack.’

‘As our president says,’ the governor began, ‘our enemies, unfortunately, are trying to hurt us.’

The Russian economy is hurting. There are no signs of imminent collapse, but war and sanctions are creating considerable pressure. Growth has stalled in most sectors. Russian economists speak of ‘stagnation’ and, in some areas, ‘decline’. The ongoing conflict is sucking massive resources, both human and financial.

On a recent trip to Lipetsk region, small business owners told me they were struggling to stay afloat. With its shiny stands and big-budget presentation, the St Petersburg forum presented a more rose-tinted view of Russia’s economy.

‘Interest rates are a bit too high,’ conceded Kirill Dmitriev, President Putin’s special envoy on foreign investment. ‘We believe rates should be lower for more investments. But Russia’s economy has proved resilient over the last five years: something that many Western analysts believed was impossible.’

Even in a challenging economic environment, some businesses here spy an opportunity. ‘A few years ago, Russians flocked abroad on holiday,’ businessman German Galperin told me. ‘But the situation doesn’t always allow that now due to sanctions and because attitudes to Russians abroad have changed. That’s prompting the development of modern tourist centres in Russia.’

Unlike sorcerer ‘Koshchei the Deathless’, the Kremlin cannot abracadabra coins out of thin air. It did, though, magic up some attention-grabbing guests for the forum.

‘I do give a good hello from your friend President Trump,’ Rodney Mims Cook Jr told President Putin. As chair of the US Commission of Fine Arts, Mr Mims Cook Jr is overseeing the controversial White House ballroom project.

Russia trumpeted his presence and claimed he was heading the first official US delegation at the St Petersburg forum in a decade. But there was no fanfare from the US State Department. ‘I am not aware of the delegation that went,’ US Secretary of State Marco Rubio said this week. ‘I’m aware of the event. I know they were hosting one, but I don’t think it would have been a high-level official.’

Walking round the exhibition halls at this year’s SPIEF, I noticed an eclectic mix: everything from boxing robots to singing, dancing grannies. One of the most eye-catching installations was a ginormous Russian ‘nevalyashka’, or tumbler doll. As generations of Russian children know, the roly-poly ‘nevalyashka’ wobbles a lot but never falls down.

I often think that’s how the Russian authorities want the world to view their country: as a giant tumbler doll that cannot be knocked down or defeated, no matter how hard you push it. Despite more than four years of war and battered by sanctions, Russia is still standing. A defiant image? Certainly. But perhaps not the best advert for attracting long term foreign investment. For that, the fewer wobbles the better.