Russia’s end-game in Syria unclear: VTB Head

Russia's involvement in the Syrian conflict could still either exacerbate or strengthen its relationship with Western powers, one of the country's most influential business figures told CNBC.

"Syria might become an area for co-operation or conflict," Andrey Kostin, president and chairman of Russian bank VTB, told CNBC Thursday.

"Putin is very much trying to find a political situation."

Russian President Vladimir Putin entertained controversial Syrian president Bashar Assad in Moscow this week, despite Assad's status as a pariah to many Western governments. Russian forces, despite Moscow's insistences that they are only targeting terrorists, have been criticised by the U.S. for backing the embattled regime's military campaign in the war-torn country.

"It's very important that Assad goes to Russia, because unless you talk you won't find a solution," Kostin said.

He acknowledged the effect the cooling of relationships with the West was having on Russia's economy, which has been battered by plummeting oil prices. American credit ratings agency Moody's recently warned of the danger of challenges to the Russian government's much-prized creditworthiness posed by propping up a struggling economy while increasing defence spending.

"Never before, at least since the collapse of Soviet Union, has Russian business been so affected by the geopolitical situation," Kostin said.

"We are very against the use of economic instruments in political conflicts, but that's what we have."

Kostin warned about the potential to broaden the sanctions, imposed on various Russian individuals and businesses following the downing of flight MH17 by Russian-backed separatists in Ukraine.

"We don't think there will be new sanctions, but the EC (European Commission) has the opportunity to broaden the connotation of sanctions," he said, citing as an example that banks could not give advice on Russian investments.

He was upbeat about the prospects for both VTB, Russia's second-largest bank, and the Russian economy for next year, and called for substantial interest rate cuts in coming months.

"We don't have crisis, we have stagnation and recession. This is not another 2008," Kostin said.

"The problem is adjusting to the new reality."

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