By The Government And For The Government

The Washington Post has an article about the growing trend in Russia of the government seizing control of private industries through strongarm tactics. It amounts to a redistribution of wealth to the bureaucrats who run the government and to political cronies. And it is happening more and more all the time.

What happened next has become a common occurrence for companies that are too successful in Vladimir Putin's Russia: VSMPO-Avisma was taken over by the state.

In industries such as energy, aviation, engineering, mining and car manufacturing, private companies that emerged after the collapse of the Soviet Union are being brought back under state control or consolidated in the hands of businessmen loyal to the authorities. Government ministers and Kremlin insiders now sit on the boards of the country's largest companies.

And Kremlin Inc.'s appetite for control shows no sign of abating. According to Tatyana Stanovaya, a senior analyst at the Center for Political Technologies in Moscow, the Kremlin is also eyeing new stakes in energy as well as diamond extraction, metallurgy and machine building.

The Kremlin defends the swelling economic role of the state as an essential element in the creation of powerful companies that can compete in the global economy. The takeovers are also officially called a necessary reversal of dubious privatizations in the 1990s that deprived the state of income and strategic assets crucial to Russia's security.

But the emergence of the government as a preeminent business player has also led to charges that the Kremlin is using its vast powers to force itself on unwilling partners, and is wielding its new economic clout as a foreign policy weapon while enriching political insiders.

This effective renationalization of key industries is also a retreat from the goals of privatization, a pillar of Russia's efforts to become a market economy after the collapse of the Soviet Union. The drive to put property in private hands stemmed from a belief that such companies would be more efficient, and more attractive to investors, than the industrial dinosaurs of Soviet times.

Read it all, it is a very scary scene right now. The Russian government is also going after foreign companies with the strongarm tactics. Oil companies in particular are at risk as the government uses investigations as a way to force their will on these companies. Hmmm. Where have I heard that tactic being discussed before?

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