The Kremlin has announced plans to unwind around $30 billion worth of its stakes in Russian businesses in order to plug its budget deficit. Good news, you would think, for those who have campaigned against the government’s stranglehold on so-called “strategic industries” in the country. Also good news, potentially, for investors.
Reaction to the news, however, has stopped short of elation. Some are already posing the perennial question, “Should we beware of Russians bearing gifts?”
It is worth noting that the divestment of $30 billion, while a hefty sum in absolute terms, is tiny compared to the total holdings of the state, and even smaller when compared with assets held privately by those in government. After the sale has been completed, the government still intends to retain at least a 51 per cent stake in all of the businesses. This is not a wholesale removal of the Kremlin from the market.
Whoever decides to snap up the goodies will have to reconcile themselves with going into business as the junior partners of Medvedev, Putin et al, irrespective of what it may say on the share contracts. Indeed, as Gazprom demonstrated with its offer of discount gas supplies to Ukraine in April, and as the bizarre decision by Sberbank, Russia’s state-owned bank, to purchase a 50 per cent stake in carmaker Opel last year showed, shareholders are often treated as a nuisance that are best ignored.