After the autumn of Communism, Russia ushered in capitalism by promoting off billions of {dollars} in state property.
Now, 30 years later, the Russian authorities is stepping up a wartime marketing campaign to do the other: seizing non-public companies, this time within the title of nationwide safety.
Within the final month, courts have ordered Russia’s largest warehouse proprietor to be taken over by the state and likewise directed the nationalization of a significant grain exporter. And in probably the most beautiful case, prosecutors filed a lawsuit in January to grab Moscow’s second-largest airport.
The brand new spate of expropriation expands on the seizures of Western-owned businesses in Russia after President Vladimir V. Putin’s invasion of Ukraine started three years in the past. However in these newest circumstances, the house owners are Russian, an indication of how the Kremlin’s push to grab management of the financial system amid the conflict in Ukraine is reaching into ever extra industries.
Critics say the asset seizures are additionally undermining the final vestiges of Russia’s rule of regulation. They’ve change into “chaotic” and “uncontrolled,” stated Alexandra Prokopenko, a fellow on the Carnegie Russia Eurasia Heart in Berlin.
By seizing profitable non-public enterprises, the Kremlin can put massive sections of the financial system both in state fingers or underneath oblique management of Mr. Putin’s associates, permitting the federal government to tailor industrial output to the wants of the conflict effort and likewise be able to introduce value controls. It additionally aligns with the Russian chief’s purpose of tightening his grip on home coverage.
Researchers on the London College of Economics have identified greater than 200 Russian court docket rulings to nationalize non-public corporations for the reason that begin of the invasion of Ukraine in 2022. The courts, they stated, principally used claims that the businesses violated Nineties privatization legal guidelines to grab them from companies deemed “unfriendly to the Kremlin regime.”
Taken collectively, these seizures quantity to “the most important redistribution of property in Russia for the reason that privatization drive” within the Nineties, stated Alexander Kolyandr, a fellow on the Heart for European Coverage Evaluation.
In Tuesday’s talks with a U.S. delegation in Saudi Arabia, Russian officers appealed to the Trump administration’s desire to find economic opportunities, arguing that American corporations stand to make billions in the event that they re-enter Russia. The Russian official on the talks accountable for the enterprise ties, nonetheless, made no point out of court docket rulings which have eroded property rights in Russia.
In an indication that the Kremlin was anticipating an inflow of overseas companies as a part of the rapprochement with america, Mr. Putin on Friday ordered his authorities to put down guidelines for the return of Western corporations that left Russia after the 2022 invasion of Ukraine. Whereas Mr. Putin indicated that Moscow would welcome them again, he additionally made it clear that he needed Russian corporations to have “sure benefits” over the overseas rivals as a payback for the Western sanctions that spurred the 2022 exodus.
Mr. Putin personally spearheaded a marketing campaign to take over landmark property from overseas house owners within the first months of the conflict. He signed a number of decrees in 2022 and 2023, first barring the overseas house owners from promoting their property, then permitting the state to “quickly take over” Russian corporations owned by people from “hostile nations.” However he has since taken a again seat as property seizures grew to become widespread throughout totally different sectors of the financial system.
The try and seize the Moscow airport, Domodedovo, is the newest salvo in a long-running feud with the bulk proprietor, Dmitry Kamenshchik, a reclusive businessman who has not brazenly supported or opposed the federal government, and a sign that the Kremlin is severe about stepping up nationalization.
Domodedovo — which dealt with about as many passengers as Newark Liberty Worldwide Airport did in 2022 — is Russia’s largest airport nonetheless in non-public fingers. The Russian authorities has tried a number of instances over the previous 20 years to take management of the airport, however this time it appears decided to succeed.
The justification prosecutors are actually utilizing is that Mr. Kamenshchik can be a citizen of the United Arab Emirates and Turkey.
Russian regulation bars overseas traders in what are thought-about “strategic sectors” with out particular authorities permission.
Mr. Kamenshchik has managed the airport since privatizing it within the Nineties — lately via a Cypriot firm — and authorities didn’t beforehand elevate any concern about his citizenship.
Mr. Kamenshchik and an affiliate, prosecutors claimed, are “pursuing the aggressive insurance policies of Western nations geared toward inflicting a strategic defeat on the Russian Federation by damaging its financial system,” in line with an excerpt from final month’s lawsuit quoted by Russian enterprise day by day Vedomosti. It accused him of “sabotaging” efforts to modernize the airport. Prosecutors additionally claimed the 2 businessmen siphoned off greater than $180 million, on the present trade charge, from Domodedovo’s earnings between 2021 and 2023.
It was not instantly clear if authorities have been pursuing separate prices on these allegations.
Mr. Kamenshchik’s whereabouts have been unclear; he’s not reported to have left Russia. Efforts to achieve him for remark via intermediaries and the airport’s press workplace went unanswered.
The court docket shortly froze the Russian property of the corporate and of Mr. Kamenshchik and warned him and his accomplice in opposition to “destabilizing” the operations at Domodedovo.
The profitable airport has lengthy been within the cross hairs of regulation enforcement and highly effective enterprise pursuits with ties to the Kremlin. In 2011, Russian information media reported that Arkady Rotenberg, a childhood buddy of Mr. Putin, was eyeing Mr. Kamenshchik’s property.
No matter high-level patronage Domodedovo’s proprietor loved previously to stave off assaults from his rivals, the conflict in Ukraine clearly canceled it out, analysts stated.
“Domodedovo was too large to swallow — and now it’s not,” stated Mr. Kolyandr, the analyst. “Earlier than the conflict, there most likely have been individuals within the authorities or near the federal government who advocated in opposition to monopolizing the possession of airport infrastructure. Now, state pursuits trump all of it.”
The try and seize the airport is just probably the most distinguished instance of the nationalization effort. In a case that shook one other sector of the financial system, a Moscow court docket final month ordered that the property of Raven Russia, the nation’s largest warehouse proprietor, be handed over to the state.
It stated Raven’s $1 billion logistics terminals have been “strategic property” purchased with out particular authorities permission.
Russian prosecutors are required to say that the property they’re seizing are strategic, even when they have been by no means thought-about as such beforehand.
Raven Russia referred to as the ruling “illegal and unfounded” and pledged to attraction.
Final week, the court docket gave the inexperienced gentle to the seizure, citing the corporate proprietor’s overseas residency.
And in a 3rd latest case, a court docket within the southern metropolis of Rostov-on-Don seized considered one of Russia’s largest grain exporters, an organization referred to as Rodnye Polya, from its billionaire proprietor Pyotr Khodykin. The court docket stated that Mr. Khodykin’s residency within the United Arab Emirates positioned a “strategic enterprise” in overseas fingers.
Rodnye Polya, which posted some $3 billion in revenues in 2023, runs a port within the metropolis of Azov, on the Azov Sea, that includes 17 ships and a whole lot of freight practice automobiles. It was estimated to be price some $600 million on the finish of 2023.
Troubles began for Rodnye Polya a couple of months earlier: Within the spring, Russia’s agriculture oversight company began blocking the corporate’s shipments, saying they have been failing high quality management. Dozens of ships have been stranded in ports, and a few 80 p.c of Rodnye Polya’s exports have been halted, in line with the agency.
Mr. Khodykin, the corporate’s proprietor, didn’t reply to a request for remark. He stated the court docket had made a “political choice” to grab his firm in an interview with native information media.
“Is there any level investing in a rustic the place any asset might be expropriated years later?” Mr. Khodykin requested within the interview. “Then no different enterprise can really feel secure anymore.”
About The Author
