Prime minister and presidential candidate Vladimir Putin turned up the heat on the oligarchs February 10, calling for them to pay compensation for 'dishonest' privatization in the 1990s. Putin, meeting with Russia's club of oligarchs, the Russian Union of Entrepreneurs and Industrialists (RSPP), discussed the relationship between business and society and said it was time to close the book on the 1990s privatization - and this could cost the oligarchs money.
Putin called the 1990s privatization "a simply divvying up of the state pie", and said it was necessary to "turn the page". He said to do this he agreed with the idea of political rival, liberal politician Grigory Yavlinsky, that those who benefited from the 1990s privatization should pay compensation.
"There are different options," he said, "it should be discussed with society and the expert community, so that society really accepted the closing of the problem of the 1990s, of the dishonest, speaking directly, privatization, of all the auctions. This should be either a one-off payment, or something like that, but we should consider it together."
We need to establish the social legitimacy of private property itself and social confidence in business, Putin added.
Putin, while referring to liberal Yavlinsky, seemed to be aiming mainly aiming at the Communist and nationalist vote supporting renationalization of Russia's main industries. The suggestion may also have been a shot across the bows for the oligarchs, in case they should move into political opposition.
There was no mention of specific sums, and Alexander Shokhin, the head of the RSPP hosting the meeting, told the Financial Times Putin was talking about a symbolic fee which would demonstrate the readiness of business to legitimise.
Putin also put rival presidential candidate Mikhail Prokhorov on the spot. Prokhorov, who was present at the meeting in his role as oligarch and whose fortune stems from the controversial loan-for-shares auctions in the 1990s, later defended them. Everything that was done then was legal even if it wasnt just, Prokhorov said, according to the Financial Times.
Predictably the suggestion enraged some investment analysts. "While the PM believes this will bring closure to the painful questions over the origin of Russian large private business, we believe this step may open a Pandoras box of new issues," writes Alfa Bank's Natalia Orlova in a research note. "In the present weak institutional environment, and with the weak legal system in particular, Putin would become the sole guarantor of cleaned property rights." adds Orlova.
"This highly populist measure is the heavy artillery in Putin's arsenal to win in the first round and was somewhat expected as a result of the so-called leftward lean in Russian politics, where liberals have lost popularity with the majority of Russians," writes Troika Capital's Chris Weafer. "The ideas aired by Putin are not new and were initially suggested by Mikhail Khodorkovsky prior to his arrest in 2003."
Turning up the heat on the oligarchs generally goes down well with voters. Underlining the point, state TV channels this week ran a documentary attacking the fortunes of the oligarchs. However, Putin may himself have become too closely associated with the oligarchs and unfair privatization for his stance to be credible. Former associates from St. Petersburg such as Arkady Rotenberg and Gennady Tymchenko have become oligarchs in their own right on the back of state-owned energy business.
Putin also made some business-friendly noises, calling for reform of the criminal code to ease harassment of business. In particular he mentioned the fact that an investigator may initiate criminal proceedings against a business without any formal complaint having been made.
Keywords: Russia, Economy, Business - Russia, Government, Politics - Russia News - Russia
Prime minister and presidential candidate Vladimir Putin turned up the heat on the oligarchs February 10, calling for them to pay compensation for 'dishonest' privatization in the 1990s.
Putin, meeting with Russia's club of oligarchs, the Russian Union of Entrepreneurs and Industrialists (RSPP), discussed the relationship between business and society and said it was time to close the book on the 1990s privatization - and this could cost the oligarchs money.
Putin called the 1990s privatization "a simply divvying up of the state pie", and said it was necessary to "turn the page". He said to do this he agreed with the idea of political rival, liberal politician Grigory Yavlinsky, that those who benefited from the 1990s privatization should pay compensation.
"There are different options," he said, "it should be discussed with society and the expert community, so that society really accepted the closing of the problem of the 1990s, of the dishonest, speaking directly, privatization, of all the auctions. This should be either a one-off payment, or something like that, but we should consider it together."
We need to establish the social legitimacy of private property itself and social confidence in business, Putin added.
Putin, while referring to liberal Yavlinsky, seemed to be aiming mainly aiming at the Communist and nationalist vote supporting renationalization of Russia's main industries. The suggestion may also have been a shot across the bows for the oligarchs, in case they should move into political opposition.
There was no mention of specific sums, and Alexander Shokhin, the head of the RSPP hosting the meeting, told the Financial Times Putin was talking about a symbolic fee which would demonstrate the readiness of business to legitimise.
Putin also put rival presidential candidate Mikhail Prokhorov on the spot. Prokhorov, who was present at the meeting in his role as oligarch and whose fortune stems from the controversial loan-for-shares auctions in the 1990s, later defended them. Everything that was done then was legal even if it wasnt just, Prokhorov said, according to the Financial Times.
Predictably the suggestion enraged some investment analysts. "While the PM believes this will bring closure to the painful questions over the origin of Russian large private business, we believe this step may open a Pandoras box of new issues," writes Alfa Bank's Natalia Orlova in a research note. "In the present weak institutional environment, and with the weak legal system in particular, Putin would become the sole guarantor of cleaned property rights." adds Orlova.
"This highly populist measure is the heavy artillery in Putin's arsenal to win in the first round and was somewhat expected as a result of the so-called leftward lean in Russian politics, where liberals have lost popularity with the majority of Russians," writes Troika Capital's Chris Weafer. "The ideas aired by Putin are not new and were initially suggested by Mikhail Khodorkovsky prior to his arrest in 2003."
Turning up the heat on the oligarchs generally goes down well with voters. Underlining the point, state TV channels this week ran a documentary attacking the fortunes of the oligarchs. However, Putin may himself have become too closely associated with the oligarchs and unfair privatization for his stance to be credible. Former associates from St. Petersburg such as Arkady Rotenberg and Gennady Tymchenko have become oligarchs in their own right on the back of state-owned energy business.
Putin also made some business-friendly noises, calling for reform of the criminal code to ease harassment of business. In particular he mentioned the fact that an investigator may initiate criminal proceedings against a business without any formal complaint having been made.