Anders Åslund - Russia’s Neo-Feudal Capitalism
Vladimir Putin’s
Russia is looking more and more like the sclerotic and stagnant Soviet Union of
the Leonid Brezhnev era. But in one area, Putin’s regime remains an innovator:
corruption. Indeed, in this, the 18th year of Putin’s rule, a new form of crony
capitalism has been taking hold.
Over the last decade,
Putin has overseen a major renationalization of the Russian economy. The state
sector expanded from
35% of GDP in 2005 to 70% in 2015. It would seem that, in Lenin’s words, the
state had regained control of the “commanding heights” of the economy. And yet it would also
seem that state-owned firms like the energy giants Gazprom and Rosneft operate
like modern businesses. After all, they have corporate-governance rules and
policies, supervisory and management boards, and annual shareholders’ meetings.
They undergo independent international audits, publish annual reports, and
maintain boards with independent directors. But appearances can
deceive.
Major state-owned companies’ rules and policies are mere formalities.
They are not even really run by the state. Instead, they are controlled by a
small group of cronies – former KGB officers, ministers, and senior officials in
the president’s administration – who act as Putin’s personal representatives. The system carries the
hallmarks of the ancient feudal model described by Harvard’s Richard Pipes in
his classic Russia
under the Old Regime: it affords a maximum of freedom to the ruler, who
delegates tasks to the feudal lords.
In effect, Russia’s state-owned companies
have transformed public property into a new model of czarist ownership. International
investors have caught on. They buy Russian stocks, but only for the sizeable
dividend yields – not for shareholder influence. No surprise, then, that
Gazprom’s market capitalization has collapsed from a peak of $369 billion in
May 2008 to some $55 billion today. The operations of the
so-called state corporations are particularly problematic.. read more:
