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Russia set for stronger state interference as economic crisis looms

January 14, 2015, 15:33 UTC+3 MOSCOW
Prime Minister Dmitry Medvedev called it right to temporarily return the government’s representatives to the boards of directors of state-controlled companies
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© AP Photo/Alexander Zemlianichenko, File

MOSCOW, January 14. /TASS/. The Russian government is intensifying state interference in the economy, which looks increasingly weaker amid the country’s continued dependence on energy exports and falling world oil prices.

The trend of the state’s increasing presence in the economy was confirmed by a series of statements made by government officials at the Gaidar economic forum in Moscow on Wednesday.

Prime Minister Dmitry Medvedev called it right to temporarily return the government’s representatives to the boards of directors of state-controlled companies.

“Companies with state stakes need closer control today. That is why, I consider it expedient to temporarily return government officials to the boards of directors and supervisory boards at this stage,” Medvedev told the Gaidar economic forum.

The Russian government has large experience in anti-crisis measures, including during the uneasy period of 2008-2009, “which we supplement with prompt pin-pointed measures,” the premier said.

Sberbank head and former Economic Development Minister German Gref said the state’s share in the economy might “increase dramatically” already in a year.

“Our calculations show that we’ll have to make provisions of about 3 trillion rubles [about $45 billion] for 2015 at an oil price of $45 per barrel,” he said.

“This means the state will recapitalize banks and increase its stakes in them while banks will buy industrial enterprises to turn into financial and industrial groups. We’ll have a huge state and the state will comprise the whole of the economy,” Gref said.

Government officials were widely represented in the boards of directors of state companies before 2011. After that, then-President Dmitry Medvedev initiated a campaign for their replacement by professional or independent directors.

The news about the return of government officials to state companies appeared in the media in January this year. Media reports said government officials would enter the board of directors of Gazprom, Transneft, Rosneftegaz, RusHydro, Russian Grids, VTB Bank and Russian Agricultural Bank.

Deputy Economic Development Minister Olga Dergunova said in mid-2014 that 2,500 joint stock companies were managed by federal authorities in Russia and by 2016 the government was set to cut their number to 160 companies, which the state would be able to govern through discussions with the boards of directors. She said that “sooner or later the boards of directors will be able to assume the functions for these assets, which are currently done by the state.”

Russian President Vladimir Putin urged in September 2014 “to use maximally widely the instruments of state and private partnership for infrastructure development both at the federal and regional level amid restricted budget possibilities.”.

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