Russian President Vladimir Putin has outlined his plans for a new Eurasian union, as he slammed Western powers over sanctions.
The Eurasian Economic Union would comprise former Soviet states Belarus and Kazakhstan as well as Russia - and possibly also Armenia, Kyrgyzstan and Tajikistan, he told CNBC during a session Friday at the St. Petersburg International Economic Forum.
The Union would have closer ties between Russia and China at its heart, according to Putin, as Russia turns away from former Western allies after their dispute over Ukraine's borders. Russia is "going to focus on Eurasian investment" from now on, according to Putin.
Gazprom, the state-backed gas giant, just signed a $400 billion, 30-year deal to supply gas to China, which Putin called the country's "best result" in the last few years.
Russia is currently a big gas supplier to Europe, but this position has been threatened by the Ukrainian fallout.
Putin argued that the current stand-off with Ukraine, and its threat to European gas supply is "not due to Russia but to the situation in the Ukraine, which abuses its position."
"We have gathered here for economic discussions, but we cannot erase political discussions," Putin said, as he slammed the use of sanctions against Russian businesses and individuals and warned that they might have a boomerang effect.
"Economic sanctions as a tool of political pressure are eventually going to attack the economy of the countries who have initiated the sanctions," he said.
He also argued that Russia had only intervened to save lives in Ukraine.
Putin's remarks come at a time of uncertainty for the Russian economy. Investor nervousness about the consequences of Russian actions in Ukraine, combined with sanctions against a number of businesses and wealthy individuals, have contributed towards a likely recession in the first half of the year.
Inflation has soared to 7.3 percent in April, and the central bank has had to intervene to halt the slide of the rouble against the US dollar.
Putin's strong stance over Ukraine, parts of which have a substantial Russian ethnic minority, seems to have been met with popular approval at home.
Putin said earlier in the week Russian troops were moving from the border with Ukraine ahead of presidential elections there this weekend.
Written by CNBC's Catherine Boyle, with contributions from Geoff Cutmore.
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