|
Magazine |
|
About |
|
SUMMIT |
|
Contacts |
|
Home |
|
|
|
|
| |
|
|
|
#2' 2003 |
print version |
|
PROPERTY AND NATIONALIZATION IN RUSSIA |
|
Vladimir Shlyomin
y order of Prime Minister Mikhail Kasyanov a bill was introduced into our parliament, which Russians call in brief the ”law on nationalization”. The official title of this document goes like this: the federal law ”On transferring property owned by citizens and legal entities to property of the Russian Federation (nationalization)”.
The nationalization procedure in Russia, that underwent two violent social revolutions in the 20th century, is today considered both horrendous and extraordinary. Specific legal mechanisms are not the primary thought. Instead, what comes to mind are brutal scenes from the communist past, illegal property seizures, expulsion of owners by secret police and commissars with Mauser pistols, freight cars overfilled with "the bourgeoisie" and other "enemies of the people" being exiled to Siberia and more often a freezing death.
However, all civilized countries do have nationalization laws. For example, laying trunk lines, building military facilities or establishing national preserves require the alienation of private property. The Constitution of the Russian Federation also contains the concept of nationalization but there are no set standards of the process itself. And this uncertainty has a negative impact on the investment climate in the country.
In new Russia everybody seemed to recognize the necessity of clear-cut legal acts to regulate the matter of property. In the years of reforms a number of laws was adopted dealing with privatization, joint-stock companies, bankruptcies, etc. The law on nationalization provided for by the Civil Code is the last major legal document of this kind but because of strong disagreements in parliament the work on it was constantly postponed.
In the ten years of the State Dumas existence fractions on the political left prepared eight draft laws on nationalization. These initiatives were politically motivated and, so, it was not surprising that most of them were distinguished by their radicalism. Here are several typical proposals formulated during the lawmaking process.
The draft worked out by Adrian Puzanovsky (the Peoples deputy group) proposed to seize citizens property, if its private ownership leads to "violating moral and legal principles of the society" and is detrimental to "the political stability".
Nikolai Arefiev, the Russian Communist Partys deputy, also believes that the nationalization can be done not only for state security but for the protection of citizens morality, health, rights and legitimate interests as well. Achieving these broadly interpreted objectives permits freedom of action. "As far as a property owner is concerned, we should pay him back only the amount that he originally spent when acquiring it during privatization", said Arefiev. As for compensation, the author of the draft law proposes to settle accounts not with money but with vouchers as in our years of privatization.
Another communist deputy Vasily Shandybin thinks it possible to transfer private property to the ownership of the state in exchange for bonds with payments deferred for 10 to 20 years. The list of property subject to such a nationalization includes large industrial and transport enterprises, enterprises of the military industrial complex, ‘socially hazardous production facilities, historical and cultural institutions, monuments, sanatoriums and rest houses as well as other property, which "was passed into private hands with gross violations of the law".
In contrast to draft laws worked out by deputies from the left those put forward by executive agencies provide for observing all civilized norms.
The Russian Ministry of Property prepared a draft law that sets both the basis for alienating property in favor of the state and mechanisms for doing it. "The document fixes the fact that the basis for the nationalization can be only the need for strategic products, which ensure the national defense and security", stresses Alexander Braverman, the first deputy minister.
The basic principle of transferring private property to the state is the compensation of property market value and damage from nationalization to owners. An owner should receive the full market value of property being nationalized. At the same time an owner has the right to challenge in a court of law this amount as well: even a conscientious appraiser might fail to take into account factors that affect the property value, such as availability of know-how, prospects for entering new markets, launching of new technologies, etc. The federal budget will serve as a financial base for making decisions on nationalization and it should provide for redemption funds.
In Bravermans opinion, the government should be very careful when using the right to nationalize private property. First, it is necessary to conduct a detailed market study and only after that a nationalization decision might be taken.
As Alexander Braverman points out, the nationalization is not a punishment. "It should not be confused with such things as seizure or confiscation of property", he stresses.
The governments version of the law, of course, was met with grievances from some deputies and, first of all, from the left.
"It would be more correct to call it not the law on nationalization but the law on non-nationalization", said Mikhail Emelyanov, the deputy chairman of the committee on property of the Russian State Duma. He drew attention to the complexity of the proposed procedure, which, in his view, would significantly reduce chances to carry out a nationalization decision. For example, the state commits itself to compensate the value of the nationalized property. But what if there are no enough funds to make a compensatory payment? Under the draft law, in this case final payments are to be put off till the next year. In the opinion of some experts, this might become the laws weak spot. The document does not define the status of property till the final buyout and that is fraught with the risk that property, which gets stuck in the nationalization process, will be taken away bit by bit. In order to prevent it the Kremlin proposes to cut down terms of implementing nationalization to the maximum.
There are still a lot of reasons for debates. By their very nature legal acts of this kind are conflict-ridden. For example, it is stipulated that the property is evaluated by an independent appraiser to be chosen through tenders. But determining terms of tenders remains the privilege of an authorized federal agency, which will choose a winner.
"Methods of calculating an owners losses are not standardized", notes Alexander Zhyglo, the department head of the company Finance-Business Consulting. "Every evaluation company has its mechanism of calculating, say, lost profits", he adds. Vladimir Entin, who heads the Center to legally protect intellectual property, points to one more problem: "an enterprise, which is being nationalized, might happen to have debts to the state that are difficult to settle".
At the same time the future law does not scare those, whom it concerns. Leonid Skoptsov, the general director of Geology and Prospecting JSC, says that if the vector of the countrys political development remains stable, then, the law will not be practically applied.
But, still, there are abounding questions. The interpretation of the strategic security is quite vague in itself. Many enterprises of the ferrous and non-ferrous metallurgy can be easily included in the category of strategic material producers. How is it guaranteed that the defense system will not require pipes, rails, aluminum, titanium and other elements at a given moment? The provisions of the draft law stating that "the nationalization" should be used, only if the states needs cannot be met through "acquiring strategic products in the open market", look unconvincing. There are strong doubts that the state will start buying titanium in the West instead of using production capacities of a Russian enterprise.
|
|
|
|
|
current issue
previous issue
russian issue
|
|