[nasional_list] [ppiindia] Privatizing Problems Away
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- Date: Sun, 12 Feb 2006 00:42:09 +0100
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**http://www.themoscowtimes.com/stories/2006/02/09/008.html
Thursday, February 9, 2006. Issue 3349. Page 9.
Privatizing Problems Away
By Boris Kagarlitsky
The biggest event on the small screen these days is the mini-series based on
Alexander Solzhenitsyn's novel "The First Circle," which concludes Thursday
evening on state-owned Rossia television. The novel covers three days in the
life of the Mavrino sharashka, a secret scientific research facility within the
gulag labor camp system that is staffed with convicts including Gleb Nerzhin,
Solzhenitsyn's alter ego.
While we have been focused on the secrets of our past, few of us have paid much
attention to reports that the government plans to privatize one former
sharashka -- the Kaskad scientific research complex -- along with hundreds of
other facilities. Many of these are defense-related enterprises that were
classified as top secret until quite recently.
The full list of federal government assets slated for privatization in 2006
boggles the mind. Buyers will be offered stock and property in the energy
sector, construction, agriculture, health care, aviation, machine building,
geology, the oil and gas sector, housing, the nuclear industry, transportation,
road works and much, much more. The list of assets put up for sale in a single
government publication in mid-2005 ran to 65 pages of fine print.
The government is planning to sell off just about everything it still owns
apart from its stock in the oil and gas sector and a number of enterprises that
directly support the operations of the government and the presidential
administration. The big-ticket items in the aviation industry are clearly the
pick of the crop.
The privatization program also contains a number of curious deals. The
government plans to sell off its stock in the country's largest truckmaker,
KamAZ, while simultaneously creating a new state-controlled holding by merging
KamAZ and the country's largest carmaker, AvtoVAZ. In other words, the
government is going to buy the KamAZ stock from itself.
Although the state will increase its holdings in selected sectors of the
economy, the general trend toward off-loading assets is unmistakable. In fact,
the current wave of privatization is on pace with the heyday of Yegor Gaidar
and Boris Yeltsin in the early 1990s.
How does this jibe with the Kremlin's calls to strengthen the state's role in
the economy? Very simple. The government and the presidential administration
are convinced that the manufacturing sector in Russia is down for the count.
The regime's current economic policy gives manufacturing no chance to survive
in any case. It follows that the state has no interest in hanging on to its
assets in this sector. A few factories might be preserved and even expanded,
but the rest will be liquidated.
Selling off all these assets will be extremely profitable for those who are
directly involved. The land beneath many factories is already worth far more
than the factories themselves. Modernizing the economy now amounts to shutting
down the plants, tearing down the buildings and cutting the workers loose.
No production is foreseen in this country apart from semi-finished products and
fuel for export, as well as servicing the oil and gas industry. Some companies
stand a chance of surviving in this climate, but research and development
facilities will be thoroughly, methodically eliminated. No one even tries to
hide the fact that these facilities are being sold because of the commercial
value of their property, not of their accumulated expertise.
A country without a developed industrial sector cannot afford the luxury of
specialized R&D. It doesn't need to come up with its own designs. Even the much
heralded new automobile holding may well do little more than assemble vehicles
that have been designed abroad.
The destruction of the bulk of Russia's industrial base is the predictable
result of our bid to join the World Trade Organization, but the government has
gone even further. It's doing everything possible to shed economic dead weight
even before it gets into the WTO. Shutting down state-owned facilities is
complicated; once they're privatized most of those complications melt away.
The regime clearly sees privatization as the height of sober economic
forecasting and sound thinking. Only one unpleasant detail remains: What do you
do with all the people? The government's current model of economic development
will only support a population of 40 million to 50 million people. You have to
wonder what they plan to do with the 100 million left over.
The government might as well take the logical next step -- "to dissolve the
people and elect another," as Bertolt Brecht once sarcastically proposed. In
the end it could simply declare the whole country unprofitable and close it
down.
Boris Kagarlitsky is director of the Institute for Globalization Studies.
[Non-text portions of this message have been removed]
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