U.S.-Russian Business Blog

Wednesday, 19 of February of 2020

Russian nationalizations pick up steam amid economic crisis: for better for worse

Nickel and potash mining are the latest key industries targeted by the nationalization efforts of the Russian government. Moscow has recently nationalized some private holdings that have put extreme levels of concentrated wealth in the hands of the country’s new oligarchs.

In the immediate aftermath of the socialist Soviet Union’s overthrow in 1991, there was a frenzy of unbridled privatization of all the former Soviet republics’ tremendous natural wealth, especially in the Russian republic.

Under socialism, the huge oil, natural gas, mineral, forest and other natural resources had been owned and shared in common by the people. But in capitalist Russia, modern-day robber barons have amassed huge fortunes while poverty has risen to record levels.

Much of the motivation for state intervention is the collapsing economy that has severely affected Russian companies. More than $74 billion worth of foreign investments has left the country since August, and the Russian stock market has lost more than 60 percent of its value since May.

The international capitalist financial collapse and plummeting prices for oil and other raw materials exports have pushed Moscow to act more forcefully to recapture some of the wealth stolen by the oligarchs. The government and state cannot function without sufficient income and resources.

From 2003 to 2006, the government took action against Yukos Oil, Russia’s largest private oil company, and its principal billionaire owner, Mikhail Khodorkovsky, because of massive tax evasion and siphoning of profits. Rosneft, Russia’s state-owned oil company, took over the assets. Last month, the government intervened in the nickel industry. Russia is the world’s largest producer of this strategic metal.

The government’s possible future takeovers are an attempt to keep vital industries operating by reclaiming them from the obscenely wealthy billionaires who have stolen resources that were once used for the benefit of all. So far, Dmitri Rybolovlev, the mining oligarch who owns almost all of Russia’s potash industry, has not resisted steps by the Kremlin to sanction and perhaps reclaim the industry.

In an online forum accompanying the New York Times article of Nov. 11, many Russians supported the nationalization, recognizing that “Mineral resources are a national wealth, and as such should belong to the state,” and that “[o]ligarchy sprang up thanks to the ‘liberal’ reforms imposed on us by Washington.”

One participant observed: “The financial crisis is an excellent way to review the results of the criminal privatization. … I can only praise it. And these measures will be very popular among people.”


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