Putin threatens to expropriate companies in Russia - is a new class of oligarchs emerging now?
Created: 03/23/2022, 17:24
By: Jonas Raab
More than just acquaintances: Russia's President Vladimir Putin (left) and Roman Abramovich in 2005. © picture-alliance/ dpa/dpaweb |
epa Vladimir Rodionov
Most international companies left their locations in Russia with the outbreak of the Ukraine war.
Putin's plan with the factories could create new oligarchs.
Moscow - When the Ukraine conflict turned into a war, almost all international companies left Russia.
What remained were empty halls, offices and branches.
Kremlin ruler Vladimir Putin made no secret of what should happen to these assets: expropriation.
While the Russian army is making slow progress in Ukraine, the Kremlin wants to “set up external management” and then “hand over abandoned companies to those who actually want to work,” the Associated Press news agency recently quoted Putin as saying.
In other words, the Kremlin wants to confiscate the locations of foreign companies in Russia.
Ukraine War: Expropriations in Russia could create 'client capitalists or oligarchs'
Such expropriation could create a new class of "clientist capitalists or oligarchs," warns Hassan Malik, senior government bond analyst at investment firm Loomis Sayles, in
Business Insider
.
His thesis: Wealthy people - Russians, but also opportunistic investors from China, India or countries in the Middle East - could buy the confiscated assets at state auctions at bargain prices.
Malik suspects that Putin's plan could attract people from countries that are relatively safe from Western sanctions.
Interest can be particularly high in China.
In fact, according to Business Insider
, the People's Republic already seems
to be eyeing Russia.
According to this, the Chinese Ambassador to Russia, Zhang Hanhui, called last week to use the "emptiness" in the country as an opportunity.
Ukraine war: Putin monetizes foreign companies as a result of sanctions against Russia?
Malik believes the Kremlin now wants to monetize confiscated assets from "preferred investors" because of the harsh sanctions imposed by the West.
"I think that's a real risk given Russia's history," the analyst tells
Business Insider
, referring to former Russian President Boris Yeltsin's controversial "loans-for-shares" program in the 1990s.
Through Yeltsin's program, the Kremlin received money from Russian businessmen and banks before the turn of the millennium.
In return, shares in state-owned industrial companies were sold.
Malik explains that this is how a whole generation of oligarchs was born.
Because: When the Russian state could no longer service the loans - and according to Malik that was foreseeable - the creditors are said to have simply confiscated their shares again.
Ukraine war: Putin may revive Yeltsin's 'loans-for-shares' scheme
Yeltsin's "loans-for-shares" scheme made Russian oligarchs "outrageously rich," Malik tells
Business Insider
.
The online portal reports that not only ex-Chelsea owner Roman Abramowitsch obtained his majority stake in the oil company Sibneft in this way;
Even the richest man in Russia, Vladimir Potanin, laid the foundation for his fortune by acquiring the metal giant Nornickel.
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