PRIVATISATION. The government has approved a privatisation plan for state-owned entities. Economic Development Minister Nabiullina hopes that it could raise US$33 billion over the next 3 years. Some big entities will be affected. But only United Grain Company is fully for sale; for all the others the government will retain the dominant share and, therefore, control. So it’s not clear how attractive small pieces of these companies will prove to be. The other problem of course is that the big privatisations of the 1990s were rigged, the government got little and well-connected individuals became super rich. But there are some important differences today – apart from better government control. The assets of Soviet-era monster companies of the 1990s were entwined with enormous debits owing to the Soviet custom of running social amenities out of factory complexes. Therefore it was difficult to work out what a fair price for something like, say, Norilsk Nikel would have be. While the buyer acquired some valuable plant and a big supply of the raw material, he also essentially had to take responsibility for the city, which in true Soviet style, was little more than an extension of the plant. So together with things a buyer actually wanted came polyclinics, rest houses, soccer teams, some incredibly obsolete plant (part of the “assets” was machinery put in Finland in the 1930s by Inco and shipped back to the USSR as war booty), egregious over-manning and so on. One assumes the companies now for sale are leaner and more efficient. To my mind the main significance of the privatisation is that it is another step in Medvedev’s mission of loosening control. It will also be a test of legality and transparency.
NATO-RUSSIA. More straws in the wind. The Russian Foreign Minister said Moscow was ready to cooperate with NATO on missile defence on condition that the security of all nations was taken into consideration (whatever that means). And the Air Force Commander says he’s ready too. A session of the NATO Parliamentary Assembly emphasised the importance of relations with Russia. It sounds more and more if the coming NATO summit will have some agreement on missile defence with Russia.
CASPIAN. At long last the various presidents met in Baku and, according to Medvedev, agreed to divide the Sea up along national lines. The obvious solution, now that most of them have found hydrocarbons in their own patch, but a long time coming.
THE THIRD TURN. Readers will recall I have been talking about a change in the West’s perception of Russia. The first – big brother helps little brother – didn’t come to much; the second – the Russia enemy meme – failed reality. I believe a third, calmer and more realistic, is underway. My argument is here.
LUZHKOVS. A spokesman for the Investigative Committee says a criminal case has been launched into the sale of land to companies connected to Yelena Baturina, Luzhkov’s wife. They might be nibbled to death by cases.
RUSSIA INC. RosStat informs us that fixed capital investment has begun to grow – up about 10% year-on-year.
FEDERATION COUNCIL. More mutterings that members of the Federation Council should be directly elected: this time from the Speaker. The system has been through several variations: if I remember aright they were first appointed by the President, then there was a period when the local heads were ex-officio members, and now they are selected by the ruling parties in the regions. I expect direct election for these (and governors) will come in the next five or so years.
AUDITS. The head of the Russian Audit Chamber has announced that the efficiency of the Ministry of Defence’s arms procurement practices will be examined next year. The Russian Audit Chamber now – and for some years – sees its job not just checking that money allocated for X actually was spent on X but also the more subtle assessment of whether X was the most effective way to spend the money.
SOUTH STREAM. Putin was in Bulgaria signing a deal to create a Russian-Bulgarian JV to oversee the construction of the Bulgarian section of the pipeline. The line will carry Russian gas under the Black Sea to Europe. If all the proposed lines are eventually built, there will be many routes from Russia to its customers. Which would be good for everyone.
BLUE LIGHTS. Yesterday the Interior Ministry hit Moscow; 86 car owners, including 18 police officials, were fined for misuse of flashing lights. A victory for the “blue buckets”. Traffic flow seems to be the new Mayor’s chief obsession. Not an easy problem, given the “dartboard” design of the city.
© Patrick Armstrong Analysis, Ottawa, Canada (see http://www.russiaotherpointsofview.com/)