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Monday, April 24, 2006

The Rise of Neo-Soviet Socialism: Kremlin Inc.

The New York Times reports on the conslidation of industry in Russia, Neo-Soviet Socialism:

Mr. Putin's Kremlin . . . is not renationalizing industries sold off in the 1990's as much as redistributing the assets to a new group of tycoons, enriching favored investors and even, critics say, members of his own administration, while ensuring that the Kremlin itself has influence over the most important parts of Russia's economy.

The Kremlin uses Gazprom as the driving force:

Gazprom is not just a lucrative state-owned monopoly, but also a powerful instrument of Kremlin policy at home and abroad. It has undertaken an array of projects that have little to do with its stated corporate interests, but much to do with politics — from bidding for the Olympics to buying up independent media, from sustaining unprofitable farms to subsidizing Russian industries with cheap energy. It has also been at the center of Russia's foreign policy, used as a cudgel in recent disputes over gas prices with Ukraine and other neighbors. Its chief executive, Aleksei B. Miller, recently warned Europe not to block its further expansion into European markets, lest it decide to sell its natural gas elsewhere.

Welcome to the Neo-Soviet Union!

"Instead of properly regulating the economy, the state owns the economy," said Aleksandr Y. Lebedev, a billionaire whose own investments, he said, are now under pressure from the state. Andrei N. Illarionov, a former economic adviser to Mr. Putin who has become an increasingly outspoken critic since being dismissed last December, called Russia's economy today a form of "corporate state." He described a coterie of highly placed officials who control big business through their government posts, using those posts to make not just policy, but profit. Some have dual hats: Gazprom's chairman is Dmitri A. Medvedev, the former Kremlin chief of staff, the current first deputy prime minister and a man widely viewed as a possible successor to Mr. Putin. "They look not like state business," he said of Gazprom's projects and those of other state-controlled companies, "but the business part of the state."

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