Vladimir Putin: 'If Pussy Riot had not broken the law, they would be at home doing their housework'

Mary Dejevsky is granted a rare audience with Vladimir Putin over dinner at the Russian President's official residence near Moscow

Russia's President, Vladimir Putin, dashed any hope of mercy for members of the Pussy Riot protest rock group yesterday, reiterating his view that, by performing in Moscow's main Orthodox cathedral, the group had broken the law and insulted the country's believers. "Whether the sentence was too much or too little is not for me to judge," he said. "That is a matter for the court." But he was characteristically firm: "If they had not broken the law, they would now be at home, doing the housework, or back at their jobs."

Two of the three young women –Maria Alyokhina and Nadezhda Tolokonnikova, convicted of hooliganism motivated by religious hatred – started two-year sentences at separate prison camps far from Moscow earlier this week. The third, Yekaterina Samutsevich, had earlier been released on appeal, on the grounds that police stopped her before she was able to get her guitar out.

Speaking at what has become an annual meeting with members of the Valdai group of international Russia specialists, Mr Putin denied that their conviction had anything to do with their condemnation of him, insisting that the group had never come to his notice before, and that their political song was not actually sung in the cathedral, but dubbed on to the video they posted on the internet. Dismissing the group essentially as attention-seekers out to shock, he said: "Thousands of priests were shot for their faith and died in the camps," he said. "We have a duty to defend them, and the morality of the country."

Mr Putin's uncompromising comments on Pussy Riot came towards the end of a two-hour meeting, over lunch, at his official residence in Novo-Ogaryova, on the western fringe of Moscow.

A refined Russian menu, which started with salad and baked mushrooms, continued with roast goose and concluded with cloudberry tart and ice-cream, was served after Mr Putin welcomed the group's continued interest in Russia, proposed a toast (in white wine, which he appeared not to drink), and cheerfully steeled himself to receive the volleys of questions.

The meeting followed a three-day conference, focusing on the Russian economy, which took place in St Petersburg and Moscow. Unlike in previous years, however, where the question and answer session with Mr Putin had been free-ranging and often random, there was strong encouragement this year to stick to economic questions.

With economics as hard to separate from politics and business in Russia as anywhere else, and perhaps even harder, the recommended border proved permeable, and Mr Putin showed himself just as much in command of the big picture and the small detail as ever, switching from the fine print of the Russian budget, to the eurozone crisis and relations with the EU, to military spending and Russia's brain drain with barely a pause.

Like the 50 or so guests, the President had three glasses – mineral water, white wine and red wine – at his place, but drank so far as I could observe, sitting to his left, only tea. He ate little, except the sorbet which came between the fish soup and the main course, and the ice cream that came with dessert, preferring to nibble from a little pot of sunflower seeds positioned beside his bread rolls.

While many of his answers were predictable, others offered glimpses into the considerations that may be uppermost in Mr Putin's mind, five months into his new, six-year, term as President. One of these slipped out when he spoke about this week's deal in which the Russian state oil company, Rosneft, bought out BP-TNK, to form the world's largest oil company, by production.

Asked about the agreement, several months in negotiation, Mr Putin said that personally, he had had misgivings about the buy-out. Mainly, he said, because an already massive state-owned company was increasing its presence on the Russian market "at a time when the trend is to restrain the growth of the state sector". That, he said, was a big argument against it. But in his thinking, the pluses had outweighed the minuses.

And the pluses were the continual squabbling within BP-TNK, which had, as he put it, sometimes "descended, literally, into fisticuffs"; "several requests from BP" to collaborate with Rosneft, that were complicated by the tie-up with TNK, but most of all the fact that the agreement entailed BP taking a stake in Rosneft, with seats on the board. This, he said, set a precedent for foreign investment in Russian state companies and, he hoped, could have a positive influence in terms of "additional transparency for our state company, Rosneft".

If Mr Putin is saying what he appeared to be saying, Russia is so concerned to encourage foreign investment – which leading Russian economists say it needs for major infrastructure projects and for access to new technology – that it will accept arrangements that might have been unacceptable before. Nor can it be assumed that the Russian government intends to make Rosneft its state national champion for oil, an equivalent to the giant gas conglomerate Gazprom. The trend seems to be rather the other way, towards – as Mr Putin said – trying to reduce the role of the state, which may leave open the prospect of a sell-off of at least part of both Rosneft and Gazprom in the future.

The shrinking market for gas and prices that are falling in the US, thanks largely to the development of shale gas, also seems to have changed Russian thinking on its resource-led economy. This time last year, Mr Putin seemed little worried by any future market changes.

This year, he – along with a large section of the Russian economic establishment – had clearly absorbed the message preached by foreign analysts for years, that Russia needs to "diversify" its economy, quite as much as "modernise" it. Pharmaceuticals, aviation, shipbuilding were all mentioned as potential areas for development and attracting foreign investment.

Western critics argue that without the institutions to support greater foreign involvement in the economy – which would include more competent and objective courts and a sharp drop in corruption and bureaucracy at all levels – foreign investment is likely to be sluggish. While Mr Putin acknowledged that improvements were needed in these areas, he had little specific to offer in the short term.

What did emerge loud and clear from yesterday's encounter, however, was that Russia's President is well aware that the global energy market is on the verge of a sharp change, and it is one that Russia will find painful if it fails to adapt.

Putin's views: What he said about...

Energy

"It is true that Russia's huge natural resources gave it less of a stimulus to develop its economy, but only in part. Partly, too, it was because of the lack of competition in the Soviet economy, and the fact our natural resources were cheap ... Now our challenge is to diversify the economy."

The eurozone crisis

"Our European colleagues have a hugely complicated problem, and I don't want to seem to be putting on additional pressure ... But our position, which is well known, is that it is a systemic crisis that goes deeper than indebtedness, and is partly political in character, partly technological and partly results from the process of integration ... The EU went too fast in very many ways, including in accepting new members which weren't developed enough."

Trade with China

"Of course, we would like to sell more, but China is right to try to slow the growth rate to avoid bubbles in the economy."

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