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Assets which were left behind when Western countries left Russia at the start of the Ukraine war are proving to be beneficial for Putin. When it comes to Russia’s economy, two important trends are often overlooked: nationalisation and privatisation.
These trends could transform Russia’s social structure and strengthen Vladimir Putin’s political system in a blow to Western efforts to crush the Russian President’s regime.
Since Russia invaded Ukraine, many Western companies have left the country, leaving behind valuable assets.
President Putin made it harder for foreign investors to leave Russia and forced them to sell their assets at a significant discount.
At the same time, state-owned assets have become attractive for redistribution.
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The Kremlin is considering privatising some of these assets, while also acquiring discounted assets from foreign companies and Russian entrepreneurs who moved abroad.
The CEO of VTB bank, Andrei Kostin, supports privatisation and has acquired assets without following normal procedures. The government’s financial and economic bloc also backs limited privatisation.
Privatisation could attract investors and prevent capital outflow. Many individuals who wanted to move their money out of Russia did so in 2022. However, some wealthy Russians and government employees are unable to transfer their funds abroad and lack investment options.
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The authorities can acquire discounted assets and redistribute them among different sectors.
State banks and companies may absorb financial firms, natural resources, and energy companies, while non-strategic assets could go to the nouveau riche and the upper middle class.
These changes could strengthen Putin’s regime. By redistributing assets, the middle class could become more supportive of the government. However, the success of these trends depends on various factors, including the situation in Ukraine and Russia’s pivot to Asia.
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