Russian Leaders Order the Privatization of Industry – Will Punish Bureaucrats Who Hamper Investment

This is a very encouraging sign. As Obama moves to to take control of large slices of the U.S. economy (health insurance; banks; automobiles), Russia is going in the opposite direction. Clearly, however, the Russian selloff is designed to shore up their budget at a time of financial difficulty -- rather than any new ideology. Many governments worldwide are doing the same

President Dmitry Medvedev on Thursday ordered the Cabinet to sell off more government stakes in successful companies to private investors over the next two years. The Cabinet must submit proposals for increasing the number of “major … strategic companies that are attractive for investment” in its privatization plan by March 15, the Kremlin said on its web site.

The current plan, which Prime Minister Vladimir Putin signed in November, already seeks the sale of stakes in several strategic companies, such as shipper Sovkomflot. Medvedev has the responsibility of striking these companies off the list of strategic assets for the stakes to change hands. He hasn’t approved their exclusion as yet.

Medvedev’s order for a greater sale of key assets comes after he conferred with officials last week about ways to encourage investment — and as the government is facing a budget deficit for a second straight year.

Medvedev also instructed the Cabinet to come up with a proposal to punish more severely those bureaucrats that hamper investment, probably targeting those engaged in corruption. The Kremlin didn’t elaborate on the measure.

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Posted by John Ray (M.A.; Ph.D.).