| Vladimir Putin will take charge of privatization Vladimir Putin signed a decree “On approval of the list of strategic enterprises and strategic joint-stock companies.” Enterprises included in this list are considered to be of “strategic importance for ensuring the defense capability and security of the state, protecting morality, health, rights and legitimate interests of citizens” and cannot be privatized by government decision. However, the inclusion of an enterprise in the list of strategic ones does not mean a ban on its privatization. The President, by decree, has the right to authorize the sale of any enterprise from this list. It seems to be the same privatization. But in reality, this means that decisions on the sale of all more or less significant pieces of property that still remain with the state will be made primarily in the Kremlin.
The fact that the list of strategic enterprises will be revised became known at the last government meeting, when the issue of the privatization plan for 2005 was considered. True, the Minister of Economic Development German Gref, who is responsible for this issue, was counting on a radical reduction in the list. In his opinion, about 200 enterprises should be considered strategic. While before the signing of yesterday’s document, 18 presidential decrees and more than 60 government resolutions prohibited the alienation of more than three thousand enterprises. According to the minister, “the appropriateness of the Russian Federation’s participation in most of the public sector is questionable.”
But such radicalism did not find approval. Of the 9,222 unitary enterprises and 3,905 joint-stock companies that are now state-owned, the list included 518 unitary enterprises and 546 joint-stock companies (that is, more than 1,000, not the 200 that Mr. Gref had in mind). However, some reduction did occur. For example, all enterprises where the state owns less than 25% of the shares are now excluded from the list of strategic ones (for example, according to this principle, the Magnitogorsk Iron and Steel Works, where the state share is 17.8%, has dropped out of the list of “strategic” ones). However, it is clear that without a controlling stake, a serious impact on the company’s activities is impossible. So it’s strange to even call such enterprises strategic.
The list approved by presidential decree had not yet been published yesterday. According to our information, well-known names on the list include, for example, Vneshtorgbank, Svyazinvest, Aeroflot and Center named after. Khrunicheva. With the exception of the last one, all these enterprises are included by the government in the privatization plan for 2005. At the same time, the listed enterprises have their own privatization “history”. The idea of selling the government's 51.17% stake in Aeroflot was publicly expressed on July 28 by Evgeniy Dietrich, Deputy Head of the Department of Property Relations, Economics and Natural Resources Management of the Ministry of Economic Development and Trade. He said that the issue of including Aeroflot in the draft privatization program was decided the day before at a meeting chaired by Deputy Prime Minister Alexander Zhukov. For the management of the airline itself, this turn of events turned out to be an unpleasant surprise.
General Director Valery Okulov said that the privatization of Aeroflot at the moment would be untimely. At the same time, he publicly quarreled with State Duma deputy Alexander Lebedev, who expressed the same point of view, whose structures control about 30% of Aeroflot shares. Lebedev said that the airline is not ready for privatization due to ineffective management. The general manager of Aeroflot regarded this opinion as an attack.
At the government meeting that considered the 2005 privatization program, the idea of selling Aeroflot into private hands was not rejected, but was not approved either. The Cabinet decided to further study this issue before October 1 (despite the fact that, according to German Gref, a much shorter period was allotted for finalizing the draft program as a whole - 2 weeks).
The issue of privatization of VTB was raised at the end of 2001-2002. -- then first the European Bank for Reconstruction and Development (EBRD) and then the International Finance Corporation (IFC) announced their desire to participate in this process. Each of the structures was ready to invest $150-300 million in the second bank of Russia (it was assumed that they could receive blocks of 10-20% of its shares in Vneshtorgbank). Much has changed since then: 99.9% of VTB shares were transferred from the Central Bank to the government, on whose order JP Morgan and Ernst & Young assessed the state bank’s business (it was valued at approximately $3 billion), and negotiations with international investors actually stopped . And although the EBRD sent its investment proposal to VTB at the beginning of the year, bank president Andrei Kostin said at the end of July that the international organization would not yet enter the bank’s capital: “There were a number of unresolved issues in negotiations with the EBRD, and, frankly speaking, in the last six months we We weren’t actively working on them.” However, the search for foreign shareholders for the state bank did not stop, and government consultants, at the initiative of the bank itself, re-evaluated it. Its results have not yet been announced, but they may become known very soon. Thus, according to Mr. Kostin, in August the names of new private shareholders of VTB may be announced (and the government will sell shares to them based on a new assessment). “I know these organizations, but until there is a decision from the supervisory board, I cannot name them,” says Mr. Kostin.
With regard to Svyazinvest, it has not yet been finally determined which block of shares will be put up for sale (currently the state owns 75% minus one share). It is possible that after such a decision the state will retain a controlling stake in the company and, thus, will put up for sale only 25% minus two shares.
However, the approved list is far from final and is subject to appeal. In the near future, the government should develop criteria for classifying enterprises as strategic. The list will be adjusted based on them. Moreover, most likely in the direction of increase. The presidential press service explained that the list will be supplemented by large research and production integrated structures created in the military-industrial complex in accordance with the decisions of the president. The Kremlin cites the Almaz-Antey concern as one example of the creation of such structures included in the list of strategic joint-stock companies.
The importance of the list of strategic enterprises was commented on by the head of the Presidential Expert Directorate, Arkady DVORKOVICH:
-- The signing of the decree on the list of strategic enterprises does not mean a change in state policy in the field of privatization. The inclusion of certain enterprises in this list does not mean that they will remain federal property forever. Enterprises from the list can also be privatized; moreover, a significant part of them is planned for sale. But for these enterprises, due to their special importance for the Russian economy, a different procedure for privatization is provided - they can be included in the privatization plan only with the sanction of the president himself. The issue of the possible sale of enterprises that are strategically important for the state should be discussed not only in the government, but also in the presidential administration and the Security Council. Vera SITNINA, Ivan GORDEEV |
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