Putin says he will start large-scale nationalization

RUSSIA / FSU POLITICS - In Brief 11 Mar 2022 by Alex Teddy

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On March 10 the president said the government shall take swift and firm action over the 250 foreign companies that have stopped operating in Russia. He said he would not allow local suppliers to lose out. The businesses are to be handed to those who wish to operate them and the law enables this. This is the biggest economic shakeup since 1991.Russia is widely agreed to be teetering on the economic precipice. Putin is rebuilding the USSR but not in the way that he intended. One of Putin's loyal oligarchs Vladimir Potanin publicly warned that nationalization is the road to disaster.Putin was indifferent to economic policy; instead caring mainly about a strong military and robust foreign policy. Russian oligarchs say that his statist response to the crisis is dragging the country back to the failed policies of the Soviet era.The government is introducing price controls for food. This will mean that profits are low to non-existent. Russia could return to an era of empty shelves. Some of the measures are helpful in the short term but harmful in the long term.Business complains that the government has no coherent plan. Clearly the Kremlin thought that the West was bluffing about tough sanctions. There will be tax breaks and credit holidays but that will make state and bank finances even worse. State support to major businesses. As usual, SMEs get neglected.The Moscow Stock Exchange is still closed after 10 days. The Central Bank of Russia (CBR) has provided unlimited liquidity to banks. Economists forecast that GDP will fall at least 10% in 2022. It has been rising 1 or 2% per annum since 2024.The United Russia Party said sanctions amount to economic warfare. Bellicose rheto...