Expert: New government powers give the Kremlin more control over the Russian economy

Russian leader Vladimir Putin on Monday authorized the government to take control of privately owned critical infrastructure if it is deemed inadequately protected against Ukrainian attacks and other threats.
The special powers introduced by Putin's order allow the state to take control of the physical assets, financial assets and legal rights of such facilities if they fail to provide adequate protection or are too slow to repair damage following attacks.
Putin's order covers a wide range of sectors, including fuel, energy and industrial facilities, communications and transportation infrastructure, as well as commercial logistics facilities considered essential to national security and economic stability.
The new powers were introduced a week after Putin ordered the government to help restore warehouses belonging to online retailers that had been damaged in Ukrainian attacks.
Since the beginning of the summer, Ukraine has stepped up attacks on Russian oil refineries and, increasingly, on warehouses and logistics centers belonging to major e-commerce companies Wildberries and Ozon.
According to Raivo Vare, an analyst who follows the Russian economy, Putin's decision has two important implications.
"First, the private owners operating in this sector can no longer keep things running purely on market principles, using loans that they can no longer afford to take out and that are no longer being offered to them, and they can no longer manage it from a technical standpoint either," Vare said.
Vare said the move was driven by necessity because the ownership structures of the companies include people with extremely close ties to the Kremlin who need assistance. He noted, for example, that Wildberries has been linked to Anton Vaino, chief of staff of the Presidential Executive Office, as well as Dagestani billionaire and Federation Council member Suleiman Kerimov.
Second, Vare said the situation also provides the Kremlin with a favorable opportunity to expand state control.
"Let's put it this way: In a situation where your hand is forced, you can resolve matters simply, cheaply and, so to speak, conveniently because the renationalization campaign in Russia has already been underway for quite some time and is now beginning to grow in scale," Vare said. "Previously, it targeted medium-sized companies, but now large companies are also in line — agricultural businesses, mining companies and so on."

Vare said very specific interest groups are behind the expansion of state control.
"Because Russia faces extensive restrictions abroad and businesses can no longer expand internationally or make money there, the stronger players are redistributing assets domestically in their own favor and that is actually being partly concealed by this renationalization," Vare said.
Since July 18, Kyiv has attacked at least 20 warehouses belonging to Wildberries, Russia's largest online retailer, destroying a large share of the company's warehousing capacity.
On Monday, Ozon, Russia's second-largest online retailer, said four of its facilities in southern Russia had been targeted in Ukrainian attacks.
Russian First Deputy Prime Minister Denis Manturov said the measure should not be viewed as a first step toward nationalization and would not be widely applied.
"This does not mean nationalization or a change in ownership. The decree allows the state to participate in a company's management in order to address specific security issues," Interfax quoted Manturov as saying.
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Editor: Mait Ots, Anett Peel, Marcus Turovski
Source: Reuters, The Moscow Times











