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When the Russian President takes to the stage Friday at his showpiece conference, the St. Petersburg International Economic Forum, the Russian and foreign business leaders in the audience will have one big question: Will he signal a rapprochement with the West for the sake of the Russian economy or remain defiant?

There is no doubt that attempting to fix Russia's relationship with the West would help Russia's economic fortunes. That's because the North American and European sanctions imposed last year on Russian businesses and some of its top business executives, the result of annexation of Crimea and the conflict in eastern Ukraine, are deepening the recession. "We are in the eye of the storm," Alexey Kudrin, the former Russian finance minister, now a dean at St. Petersburg State University, said in a panel discussion Thursday.

If the sanctions were to be eased, Russian businesses and banks would regain access to the Western capital markets and the technology that is desperately needed for Arctic drilling and other industries.

Of course, the easing of sanctions alone would not turn Russia's economic fortunes around. Russia is a one-product wonder – oil – and oil prices, in spite of their recent gains, are still down more than 40 per cent in a year. Unless oil prices move up sharply, Russia is expected to loiter in the netherworld between recession and low growth for some time. "There is no economic bounce expected," Ian Colebourne, CEO of the Russian office of global consulting and financial advisory firm Deloitte, said on the sidelines of forum, known as SPIEF. "Russia is in recession and it'll be slow growth for the next two, three, potentially four years."

One of Russia's biggest oil traders, who did not want to be identified, said that "if oil goes back to $50 or $55, Russia will struggle and you'll guarantee that life will get tough for young people."

Mr. Putin is expected to use SPIEF, known as Russia's Davos, to signal that Russia is open for business to all foreign investors in spite of the political tensions between Russia and the West over the conflict in Ukraine. But as Mr. Colebourne said, "Russia may be open for business but politics and business are closely aligned."

That much was apparent on Thursday, the opening day of the three-day forum. While attendance was up over last year's event, which was almost entirely boycotted by foreign business leaders, it was still well below SPIEF's glory days in the years before the Ukraine crisis. The non-Russian CEOs either spotted on Wednesday or listed were almost entirely European. They included heads of French bank Societe Generale, Swiss engineering company ABB, accounting firm Ernst & Young, and beer giant Carlsberg. The CEOs of the European oil companies BP, Royal Dutch Shell and Total were also expected.

The only Canadian CEO to attend was Kinross Gold's Paul Rollinson, whose company has extensive mining operations in Russia's far east. No representative of the Canadian government, not even Canada's ambassador to Russia, was at SPIEF, presumably on boycott orders from the Prime Minister's Office.

Before Ukraine erupted, SPIEF attracted some of the world's top U.S. executives. Among the regular attendees were the CEOs of Goldman Sachs, Citigroup, Morgan Stanley, Pfizer, General Motors and Pepsi.

The Russian recession shows signs of bottoming out but it is still deep. Chris Weafer, senior partner of the Moscow consultancy Macro-Advisory Ltd., said in a recent note that gross domestic product probably fell 4.2 per cent, year on year, in April. The full-year forecast calls for a GDP contraction of 2.5 per cent to 3.5 per cent. Next year, growth should range from flat to 1 per cent, he said.

The recession, and high inflation rates – currently running at 16 per cent – are pushing millions of Russians into poverty. In April, the World Bank predicted that 14.2 per cent of Russians would be in poverty by the end the year, implying an increase of more than five million people, to 20.4 million (Russia's population in 2013 was 144 million).

The recession and increasing poverty has come as a blow to Mr. Putin, though his popularity ratings are still holding up. When he first became President in 2000, Russia was an economic mess and 42 million Russians, or 29 per cent of the population, was below the official poverty line, according to the state statistics agency Rosstat.

An era of strong economic growth, fuelled by soaring oil and natural gas prices, transformed Russia's economy, even if it made it overly dependent on energy. By 2012, the number of Russians below the poverty line was 15.4 million. Last year, as oil prices plunged and the economic sanctions hit, the number of Russians in poverty rose to 16.1 million.

With no expectation of a quick bounce back in oil prices, Russia is making a belated attempt to diversify its economy and open up Asian markets, the so-called pivot to the East. In a panel, Igor Shuvalov, First Deputy Prime Minister, denied that the pivot was the direct result of the Western-imposed sanctions and the waning investment from European and North American companies. He said the pivot to the East has been under way since 2005, when Russia realized that European energy demand could not keep growing (Russia is the single biggest supplier of gas to Europe). "We simply want to trade with the East as much as the West," he said.

SPIEF attendees on Wednesday said they doubted that Mr. Putin's message that Russia is open for business would trigger an investment surge. The sanctions remain in place and could be hardened, depending on the outcome of the Minsk II peace agreement in Ukraine, and the recession persists. "There is still a lot of anxiety about investing in Russia," said Mr. Colebourne.

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