After the autumn of Communism, Russia ushered in capitalism by promoting off billions of {dollars} in state belongings.
Now, 30 years later, the Russian authorities is stepping up a wartime marketing campaign to do the other: seizing personal companies, this time within the identify of nationwide safety.
Within the final month, courts have ordered Russia’s largest warehouse proprietor to be taken over by the state and in addition directed the nationalization of a serious grain exporter. And in essentially the most gorgeous case, prosecutors filed a lawsuit in January to grab Moscow’s second-largest airport.
The brand new spate of expropriation expands on the seizures of Western-owned businesses in Russia after President Vladimir V. Putin’s invasion of Ukraine started three years in the past. However in these newest instances, the house owners are Russian, an indication of how the Kremlin’s push to grab management of the financial system amid the conflict in Ukraine is reaching into ever extra industries.
Critics say the asset seizures are additionally undermining the final vestiges of Russia’s rule of regulation. They’ve change into “chaotic” and “uncontrolled,” mentioned Alexandra Prokopenko, a fellow on the Carnegie Russia Eurasia Heart in Berlin.
By seizing profitable personal enterprises, the Kremlin can put giant sections of the financial system both in state arms or underneath oblique management of Mr. Putin’s associates, permitting the federal government to tailor industrial output to the wants of the conflict effort and in addition be ready to introduce worth controls. It additionally aligns with the Russian chief’s aim of tightening his grip on home coverage.
Researchers on the London College of Economics have identified greater than 200 Russian court docket rulings to nationalize personal corporations because the begin of the invasion of Ukraine in 2022. The courts, they mentioned, largely used claims that the businesses violated Nineties privatization legal guidelines to grab them from companies deemed “unfriendly to the Kremlin regime.”
Taken collectively, these seizures quantity to “the biggest redistribution of property in Russia because the privatization drive” within the Nineties, mentioned Alexander Kolyandr, a fellow on the Heart for European Coverage Evaluation.
In Tuesday’s talks with a U.S. delegation in Saudi Arabia, Russian officers appealed to the Trump administration’s desire to find economic opportunities, arguing that American corporations stand to make billions in the event that they re-enter Russia. The Russian official on the talks accountable for the enterprise ties, nonetheless, made no point out of court docket rulings which have eroded property rights in Russia.
In an indication that the Kremlin was anticipating an inflow of overseas companies as a part of the rapprochement with the USA, Mr. Putin on Friday ordered his authorities to put down guidelines for the return of Western corporations that left Russia after the 2022 invasion of Ukraine. Whereas Mr. Putin indicated that Moscow would welcome them again, he additionally made it clear that he needed Russian corporations to have “sure benefits” over the overseas opponents as a payback for the Western sanctions that spurred the 2022 exodus.
Mr. Putin personally spearheaded a marketing campaign to take over landmark belongings from overseas house owners within the first months of the conflict. He signed a number of decrees in 2022 and 2023, first barring the overseas house owners from promoting their belongings, then permitting the state to “briefly take over” Russian corporations owned by people from “hostile nations.” However he has since taken a again seat as property seizures turned widespread throughout totally different sectors of the financial system.
The try to seize the Moscow airport, Domodedovo, is the newest salvo in a long-running feud with the bulk proprietor, Dmitry Kamenshchik, a reclusive businessman who has not brazenly supported or opposed the federal government, and a sign that the Kremlin is severe about stepping up nationalization.
Domodedovo — which dealt with about as many passengers as Newark Liberty Worldwide Airport did in 2022 — is Russia’s largest airport nonetheless in personal arms. The Russian authorities has tried a number of occasions over the previous twenty years to take management of the airport, however this time it appears decided to succeed.
The justification prosecutors are actually utilizing is that Mr. Kamenshchik can also be a citizen of the United Arab Emirates and Turkey.
Russian regulation bars overseas buyers in what are thought of “strategic sectors” with out particular authorities permission.
Mr. Kamenshchik has managed the airport since privatizing it within the Nineties — lately by a Cypriot firm — and authorities didn’t beforehand increase any concern about his citizenship.
Mr. Kamenshchik and an affiliate, prosecutors claimed, are “pursuing the aggressive insurance policies of Western international locations geared toward inflicting a strategic defeat on the Russian Federation by damaging its financial system,” based on an excerpt from final month’s lawsuit quoted by Russian enterprise every day Vedomosti. It accused him of “sabotaging” efforts to modernize the airport. Prosecutors additionally claimed the 2 businessmen siphoned off greater than $180 million, on the present alternate price, from Domodedovo’s income between 2021 and 2023.
It was not instantly clear if authorities had been pursuing separate expenses on these allegations.
Mr. Kamenshchik’s whereabouts had been unclear; he’s not reported to have left Russia. Efforts to succeed in him for remark by intermediaries and the airport’s press workplace went unanswered.
The court docket rapidly froze the Russian belongings of the corporate and of Mr. Kamenshchik and warned him and his companion in opposition to “destabilizing” the operations at Domodedovo.
The profitable airport has lengthy been within the cross hairs of regulation enforcement and highly effective enterprise pursuits with ties to the Kremlin. In 2011, Russian information media reported that Arkady Rotenberg, a childhood buddy of Mr. Putin, was eyeing Mr. Kamenshchik’s belongings.
No matter high-level patronage Domodedovo’s proprietor loved up to now to stave off assaults from his opponents, the conflict in Ukraine clearly canceled it out, analysts mentioned.
“Domodedovo was once too huge to swallow — and now it’s not,” mentioned Mr. Kolyandr, the analyst. “Earlier than the conflict, there in all probability had been folks within the authorities or near the federal government who advocated in opposition to monopolizing the possession of airport infrastructure. Now, state pursuits trump all of it.”
The try to seize the airport is just essentially the most distinguished instance of the nationalization effort. In a case that shook one other sector of the financial system, a Moscow court docket final month ordered that the belongings of Raven Russia, the nation’s largest warehouse proprietor, be handed over to the state.
It mentioned Raven’s $1 billion logistics terminals had been “strategic belongings” purchased with out particular authorities permission.
Russian prosecutors are required to say that the belongings they’re seizing are strategic, even when they had been by no means thought of as such beforehand.
Raven Russia known as the ruling “illegal and unfounded” and pledged to attraction.
Final week, the court docket gave the inexperienced gentle to the seizure, citing the corporate proprietor’s overseas residency.
And in a 3rd current case, a court docket within the southern metropolis of Rostov-on-Don seized one in all Russia’s greatest grain exporters, an organization known as Rodnye Polya, from its billionaire proprietor Pyotr Khodykin. The court docket mentioned that Mr. Khodykin’s residency within the United Arab Emirates positioned a “strategic enterprise” in overseas arms.
Rodnye Polya, which posted some $3 billion in revenues in 2023, runs a port within the metropolis of Azov, on the Azov Sea, that includes 17 ships and a whole bunch of freight prepare vehicles. It was estimated to be value some $600 million on the finish of 2023.
Troubles began for Rodnye Polya a couple of months earlier: Within the spring, Russia’s agriculture oversight company began blocking the corporate’s shipments, saying they had been failing high quality management. Dozens of ships had been stranded in ports, and a few 80 p.c of Rodnye Polya’s exports had been halted, based on the agency.
Mr. Khodykin, the corporate’s proprietor, didn’t reply to a request for remark. He mentioned the court docket had made a “political determination” to grab his firm in an interview with native information media.
“Is there any level investing in a rustic the place any asset might be expropriated years later?” Mr. Khodykin requested within the interview. “Then no different enterprise can really feel protected anymore.”
