Russia to partially privatize major industries, austerity budgeting

[Hannah Bell]

Finance Minister Aleksei Kudrin outlined the privatization plans on July 26. The sale includes energy giants Rosneft and Transneft, banks Rosselkhozbank and Sberbank, hydroelectricity generator RusHydro, and the country’s electrical grid. The shares are due to be issued between 2011 and 2013, though there is speculation the sale will be delayed.

The privatizations would be the biggest since the mid-1990s, when many former Soviet industries were sold off in the “loans-for-shares” scheme that saw a tiny layer of politically connected individuals vastly enrich themselves through the looting of state property. During this period living standards for millions of workers in Russia, as across the former USSR, plummeted... Russia’s economy shrank enormously in the decade following the liquidation of the Soviet Union and the reintroduction of capitalism.

With the Putin presidency, beginning in 2000, the Russian ruling class employed a policy of nationalization in order to prevent the collapse of key industries and protect its general class interests against foreign capital...Particularly in the energy sector, the Russian elite used nationalization and the renegotiation of contracts with foreign companies to take full advantage of the profits to be made from the sharp rise in oil and natural gas prices. This provided a major source of revenue for the Russian government and the narrow ruling layer around it.

The return to a policy of privatization by the Russian elite is a highly provocative step, given the bitter experiences of Russian workers over the past two decades. It is aimed at further enriching the oligarchs and senior state officials, as well as international finance and transnational corporations. To deflect public opposition to privatization, the selloff was initially packaged as a measure to reduce Russia’s budget deficit...Like other countries around the world, Russia took extraordinary measures to bail out its financial system and major companies following the 2008 international financial crisis. Russia’s central bank spent over $200 billion of its foreign currency reserves in late 2008 propping up the economy, which was hit hard by the crisis and the ensuing global recession... The common aim of all factions of the Russian elite and the international financial aristocracy is to push the burden of the crisis of capitalism onto the working class. The Kremlin has made proposals to cut public spending in order to balance the state budget by 2015, and impose rigid austerity after that...

http://www.wsws.org/articles/2010/aug2010/russ-a30.shtml

[HEyHEY]

1. When will people learn privatizing energy doesn't work?