Europe News

Why Russia-US relations remain in deep freeze

Reporting by Keir Simmons for NBC, writing by Dhara Ranasinghe
West must stop telling leaders what to do: Putin Press Secretary

As Russia gets ready for Saturday's Victory Day parade to mark the 70th anniversary of the end of the Second World War, Moscow has expressed its anger at a Western boycott of the key event.

Dmitry Peskov, spokesman to Russian President Putin, told NBC News' Keir Simmons that Washington should not interfere with Russia's relations with other Western nations.

"We have to avoid situations when in different European capitals, American ambassadors are visiting presidents and telling them what to do and what not to do in terms of their relationship with the Russian Federation," Peskov told NBC in an interview aired Friday.

Read MoreRussia: Back from the brink

Some 160,000 troops, about 190 armoured vehicles and over 140 military aircraft are expected to take part in the Victory Day parade on Saturday.

The event, however, has been marred by a boycott of leaders from the U.S., U.K., Germany and France to the parade in response to Russia's military role in the war in neighbouring Ukraine.

Moscow has faced Western sanctions since annexing Ukraine's Crimea region in March 2014 and has been accused of supporting rebels in Ukraine's eastern Donetsk and Luhansk regions. This has soured relations between Russia and the West to their worst point since the end of the Cold War.

Sasha Mordovets | Getty Images

Russia has denied the claims that it has armed rebels in Ukraine and sent its regular armed forces across the border.

Hit by sanctions and a fall in the price of oil, a key export for Russia, the Russian economy faces recession this year. The International Monetary Fund forecasts the Russian economy to shrink 3.8 percent in 2015 and 1.1 percent in 2016.

Peskov told NBC that Western sanctions were not having a marked impact on Russia's economy.

"It [sanctions] hurts producers and farmers in the European Union," Peskov said. "During last year, a year of sanctions against Russia and a complete break in dialogue in different fields with the European Union and U.S., our volume of trade decreased about 30 percent with the EU and rose up to 7, 10 percent with the U.S., so it's tricky."

"So while European farmers are crying out at the disaster, American companies are enjoying a surplus. That is a question that will come for Washington and Brussels, not for us," Peskov added.

In contrast to the Western boycott of Russia's Victory Day parade, Chinese president Xi Jinping arrived in Moscow Friday to attend the event.

Read MoreRussia's economy shrinks 2-4% despite Putin's positive spin

"Russia's annexation of Crimea and its intervention in eastern Ukraine was a game-changer," Nicholas Spiro, managing director at Spiro Sovereign Strategy in London, told CNBC.

"Although the blood-letting may have diminished significantly over the past few months, the east-west stand-off over Ukraine endures - and could easily flare up again given that there's still no political solution to the conflict," he added. "While many European countries would like to see a normalisation of relations with Russia, sanctions remain in place and Germany is standing firm for the time being."

He joins a number of Asian leaders who are expected to stand alongside the Russian president at the celebrations and further entrench a growing political divide.

"This is a practical reset of the symbolic political button," Chris Weafer, a senior partner at Macro-Advisory, told CNBC in a phone interview.

"It's a formally marked shift in Russia's political direction towards the East and …. and will counter almost 25 years of trying to engage with the West," he said.

The Kremlin will take the opportunity of the celebrations to hold an informal summit for members of the Eurasian Economic Council (EEC) and the Russian-led Commonwealth of Independent States, according to a Russian state press release. Leaders will welcome Kygyzstan into the fold, ahead of the former Soviet's state's approved membership to the EEC.

Russia flexing military muscles

Pictures from rehearsals for Saturday's parade show new high-tech tanks and missile systems, including a BUK launcher which reports suggest was the same model that might have shot down MH17 in Ukraine last summer.

The event will also debut a new model AK-47 Kalashnikovs, currently developed by Russian industrial firm Rostec.

: Russian army soldiers in Soviet uniform of WWII march along Red Square during the final rehearsal of the Victory Day parade ahead of celebrations to mark the 70th anniversary of the 1945 victory over Nazi Germany.
Sasha Mordovets | Getty Images

But rather than showing the world its military might, Weafer said Russia is more concerned with impressing citizens at home.

Russian army tanks roll along Red Square during the final rehearsal of the Victory Day parade
Sasha Mordovets | Getty Images

"This year's message message about politics than military might."

"It's more for a domestic audience, in that the rhetoric from the Kremlin is that Russia is a strong country that can stand up for its rights and has ability to do it," Weafer added.

ussian jet fighters fly over Red Square during the final rehearsal of the Victory Day parade.
Sasha Mordovets | Getty Images

Not all citizens will be swayed. Some Muscovites are planning protests that could interrupt Saturday's parade, according to sources who spoke to CNBC.

But given increased security around Moscow in recent months, Weafer says unlikely they'll make waves.

Russian army soldiers march along Red Square during the final rehearsal of the Victory Day parade
Sasha Mordovets | Getty Images

"There undoubtedly will be some small groups that will protest, but they'll be very fringe. There's no possibility of a December 2011-style protests," he said, .

"The conditions and organization for that don't exist. We will see fewer people and police will work quickly to move and arrest those who don't have permission to gather."

Baltic Fleet vessels in ceremonial formation at a rehearsal of the navy parade to mark the 70th anniversary of WWII victory.
RIA Novosti | Getty Images

The Victory Day parade in Moscow is scheduled to begin at 03:00 am ET on Saturday.

– CNBC's Kalyeena Makortoff contributed to the reporting of this story