MOSCOW: President Vladimir Putin said on Thursday that Russia would expand trade cooperation with new partners, including by sharply increasing gas exports to China, to combat Western sanctions.

When spending on the war in Ukraine is squeezing funds for health and education, Putin promised Russians in a major televised speech on the economy that pensions and the minimum wage would keep rising.

He said Russia would develop its economic relations with partners in Asia, Africa and Latin America to thwart Western efforts to isolate it economically.

“We will remove restrictions in logistics and finance. Let me remind you that by introducing sanctions, Western countries were trying to push Russia to the periphery of world development. But we will never take the route of self-isolation,” he said.

“On the contrary, we are broadening, and will broaden, cooperation with all who have an interest in that.” Russia’s energy sales to the European Union have sharply fallen since the start of its war in Ukraine, as the EU moved to cut dependence on Moscow and mystery explosions shut down Russia’s gas pipelines under the Baltic Sea.

Putin said Russia would increase gas sales to “the east” and reiterated his plan to build a new “gas hub” in Turkey. He said it would define prices for gas sales to Europe using an “electronic platform”.

Russia started selling natural gas to China at the end of 2019 via the Power of Siberia Pipeline, which supplied about 10 billion cubic metres (bcm) of gas in 2021 and is due to reach its full capacity of 38 bcm in 2025. It plans a second such pipeline via Mongolia.

Putin said the projects would allow Russia to boost its gas sales to China to 48 bcm annually by 2025 and to 88 bcm by 2030.

Russia’s economy is expected to shrink by 2.5% in 2022, Putin said, acknowledging certain “difficulties” but repeating his familiar line that Western economies have suffered a boomerang effect in the form of surging inflation resulting from their own sanctions.

With no end in sight to the Ukraine war, Russia has outlined plans to spend nearly a third of next year’s budget on defence and domestic security while cutting funding for schools, hospitals and roads. But Putin, who is expected to seek re-election in 2024, was at pains to emphasise he would protect the poorest and most vulnerable in society.

“Despite the objective difficulties of the current year, we will achieve positive results in reducing poverty, and next year we need to reinforce this positive dynamic,” he said.

He set a priority for the government to achieve a tangible real-terms increase in salaries next year, and said the minimum wage must be increased faster than inflation.

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