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Monday, December 4, 2023
NewsThe State Duma has not seen a law on the priority right to buy Western stocks for the state....

The State Duma has not seen a law on the priority right to buy Western stocks for the state. It can hurt the economy

Russian President Vladimir Putin has instructed the government to prepare measures that will give the state the priority right to buy the assets of “disobedient” Western companies at “bargain prices”, writes the Financial Times. The publication believes that this is how the Russian authorities want to punish foreign companies and replenish the budget.

The State Duma has not yet seen such a document, but they agree with the need for “privatization”, and economists doubt the effectiveness of the measure for receiving funds from the Treasury.

First Deputy Chairman of the State Duma Committee on Economic Policy Nikolai Arefyev in a conversation with Russian media stressed that he had not yet seen the text of the bill that would give the state the right to buy Western assets at a “significant discount”, but there is talk in parliament of the need to introduce such measures.

“I haven’t seen such a law yet, I don’t know who is preparing it – either in government or in our committees. There was a conversation about it, but I didn’t see any specific document,” he told Russian media.

The parliamentarian added that he thought it right “not to make a show of it” with Western companies, because hostile countries “take whatever they want without trial or investigation” – from embassy buildings to the assets of billionaires.

“So why should we be ashamed of doing something? All you have to do is requisition or confiscate these assets and spit on their objections. We have long talked about the need for a nationalization law. Last year, our law on nationalization was not passed, apparently there is no political will. But in general there is a precedent for nationalization, there are laws in some countries on nationalization,” Arefiev said.

According to economist Nikolai Kulbaki, it is theoretically quite likely that the Russian authorities could indeed issue such a bill, which would help buy Western assets at bargain prices.

“I don’t see anything surprising in that. It’s not even the defense of their market, it’s the actions that, in principle, the Russian authorities have, and they can take them,” Kulbaka believes.

At the same time, such measures are more likely to become a punishment for Western companies than an important source of replenishment of the Russian budget, the economist is sure. The reason for this is that a significant part of Western companies are closely linked to parent organizations that provide resources to the “daughter”. Without this support, the company will not be able to exist.

“Overall, this is a rather ineffective measure, as it is more of a measure to punish foreign companies than a measure to try to take control of this company. Typically, in most cases, isolated from their parent companies, the business won’t turn into anything, so it’s more of an attempt to punish than an attempt to make money,” Kulbaka told Russian media.

Alexei Portansky, a professor at the Faculty of Global Economics and Global Politics at the National Research University’s Graduate School of Economics, senior researcher at IMEMO RAS, added in an interview with Russian media that such authorities’ decision could be unfavorable to the Russian economy.

“It would be very desirable if such a story did not exist at all. But we have entered into extraordinary circumstances, and in these extraordinary circumstances, things are happening that we had not thought of before,” he said.

For the state, according to Portansky, it is more profitable for companies to stay in the country. However, in the current circumstances, the authorities want “to make clear to the so-called Western partners that if they confiscate the Russian assets, in particular 300 billion dollars, then very harsh measures can be taken here too, because here the rules don’t play”. a role.”

“For the Russian economy, this is a big problem, our income is falling, huge holes are forming in the budget, the authorities are somehow trying to stop this process. Hence these They are hardly in the traditions of the market, but we are in an emergency situation, so the top management is just trying to do something to stop the economic deterioration of the country. of course, this looks very negative for the position of the Russian economy in the world,” Portansky stressed.

At the same time, the expert believes that if such a document is being prepared, the measures may actually not be so severe and Western companies will be offered favorable terms to stay in the country.

“I think senior management should carefully weigh the extent to which harsh action can be taken. Yet I think foreign companies will always have a choice, the carrot and the stick. They will somehow try to sweeten the gingerbread to show that if you stay you will be fine, and if you leave you will suffer the corresponding losses. Our government will think about it very seriously,” concluded the economist.

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Russia Desk
Russia Desk
The Eastern Herald’s Russia Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

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