ST. PETERSBURG, Russia — Russian President Vladimir Putin is set to deliver a speech at a flagship annual economic forum Friday, days after Ukrainian drone strikes rocked the host city St. Petersburg.

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Putin has previously used the International Economic Forum, in Russia’s cultural capital, to showcase his country’s economy and encourage foreign investment.

But if he had hoped to minimize the impact of the four-year-old conflict at this year’s event, Wednesday’s attack likely ended those hopes.

An oil terminal was set ablaze, flights at the city’s airport were delayed or diverted, and authorities cut cellphone internet service in a bid to prevent further drone strikes.

Putin’s speech also comes at a time when Russia’s $3-trillion economy appears to be stagnating.

As the initial boost from massive military spending fizzles, his government has raised taxes and increased domestic borrowing to try and keep its budget deficit under control.

Ahead of his speech, Putin vowed to strengthen his country’s air defenses to counter the long-range Ukrainian attacks. “To our regret, some of them break through,” Putin said of the drones. “Russia has an air defense system, we need to improve it, strengthen it, and we will do that.”

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Speaking to a small group of foreign media editors on the sidelines of the forum, Putin said that Russia would defeat Ukraine on the battlefield if necessary, but was ready to end the war via diplomacy.

“We ‌are certainly prepared and willing to reach an agreement with Ukraine through peaceful means,” he said, adding that Russia agreed to compromises agreed with President Donald Trump at their August summit in Anchorage, Alaska.

He did not specify what those compromises were but said Ukraine should also agree with them. “Then the conflict will quickly come to a natural conclusion,” he said.

Ukrainian President Volodymyr Zelenskyy proposed face-to-face negotiations Thursday in a public letter addressed directly to his Kremlin counterpart. Kremlin spokesman Dmitry Peskov said Putin hadn’t seen the letter yet and reiterated that Zelenskyy could come to Moscow if he wants talks, an idea Kyiv has dismissed.

Trump said it “would be great” if Putin and Zelenskyy meet, though both warring sides acknowledge the U.S. focus has shifted to the Middle East since the war with Iran.

Instead, with battlefield progress stalled, Moscow and Kyiv have been locked in an escalating exchange of aerial attacks.

That reality was inescapable in St. Petersburg, where smoke billowed above the historic city Wednesday.

At the event often styled as the “Russian Davos,” drones manufactured in Russia were on prominent display.

Organizers say more than 24,000 people from around the world will attend this year’s event in Putin’s hometown, though Western officials and business leaders have largely stayed away since Russia’s full-scale invasion of Ukraine in February 2022.

This year there is a small American delegation, the first official U.S. presence in years. It’s led by Rodney Mims Cook Jr., head of the U.S. Commission of Fine Arts and the man in charge of overseeing Trump’s controversial White House ballroom extension.

Ahead of the forum, Cook, who spoke at a session on U.S.-Russian cultural dialogue, told Russian state news agency TASS that he was representing his country as a minister of culture and as a Christian, not as a politician.

Far-right influencer Candace Owens was also in attendance, along with movie star Steven Seagal.

U.S. ally Saudi Arabia, which is a special guest this year, also sent a large and high-level business delegation while the presidents of Uzbekistan and Tanzania and China’s vice president also attended.

Senior officials from Iran and other countries also attended.

Keir Simmons and Natasha Lebedeva reported from St. Petersburg, and Henry Austin from London.