The article bellow was published in Nezavisimaya Gazeta, and translated by A. Ignatkin. It describes one aspect of Russia’s backwards march. Russia demands its government owned Gazprom be given unfettered access to Western markets while blocking the access of Western corporations such as Exxon access to its own resources. History demonstrates repeatedly the ultimate failings of such a system. In other words, Russia will probably fall quickly behind other emerging powers such as India and China. In the meantime, of course, richest man in the world, Putin (40 billion) and company will continue to accumulate personal wealth and place it securely outside the reach of their fellow bureaucratic robber barons, in Switzerland.
TRIUMPH OF STATE CAPITALISM The Russian state kept advancing into national economy all year and this is probably what 2007 will be remembered for. The regime spared neither time nor effort in merging strategic enterprises into state corporation. This progression is quite uncertain. On the one hand, the state is known as the least efficient owner, particularly when competition is absent as it will inevitably be when whole sectors of economy become consolidated into state corporations. On the other, some enterprises may fail to survive without becoming elements of larger structures and the integrity Russia’s industrial process may be compromised. There is no saying at this point if the state has found the juste milieu or if the process keeps gaining momentum just by inertia.
The United Ship-Building Corporation founded this summer became the ship-building analogous to a structure established in the aviation industry last year (the United Aircraft Corporation). That was just a curtain-raiser. The process of establishing state corporations kicked into high gear. The Vneshekonombank became the Bank of Development. Olympic Construction Corporation was founded for the Winter Olympics’2014 in Sochi, and Russian Nanotechnologies for development of nanotechnologies. Assistance to Housing and Communal Service Foundation, Russian Technologies, Rosatom became other new state corporations. State corporations for fishery and road construction now await their turn.
All these state corporations have different objectives but all share one thing in common - they are non-profit agencies each set up by a special law. The state heavily invests in each and not one state corporation may be subject to bankruptcy.
Experts argue economic expediency of state corporations because the billions (in cash or assets) invested in them by the Russian Federation are often used with appalling inefficiency. Rosatom is the only exception: the optimization of management of this particular sector of national economy is universally viewed as suitable.
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