Vladimir Potapov

D

espite the remaining Despite the remaining internal discord, the Government of the Russian Federation adopted as a whole the privatization plan for 2005 and for the period till 2007. "I would like to see that the Government’s position on privatization, which is not fully and neatly formulated yet, does not give the impression of its insufficient effectiveness", said Prime Minister Mikhail Fradkov commenting on this decision. In the opinion of the Cabinet’s head, in 2005 earnings from privatization of state property should provide an additional source of financing the country’s accelerated economic development.

The Government’s privatization plans traditionally contain several entities that stand out as the most attractive. The State’s 7.59% stake in the oil company LUKoil was rightfully considered the "delicious item" of 2004. In plans for 2005 a special attention is drawn to state assets in such companies as Aeroflot and Svyazinvest.
The total amount of earnings from selling state property should come to 40 billion rubles ($1.4 billion). However, far from all offers by the Government enjoy demand: among enterprises to be privatized in 2005 about 1,100 of them were initially included in the 2004 plans. Probably, precisely because of it they were supplemented with Aeroflot and Svyazinvest, which so far were on the list of enterprises not subject to privatization. This unexpected change raised a lot of questions.
Kirill Tomaschuk, the head of the Russian Federal Property Fund, tried to explain it by referring to the new privatization law that has been in effect since 2002. He justified the intention to put up "strategic enterprises" for sale by the fact that their list was being revised all the time. Apparently, Aeroflot and Svyazinvest were simply omitted, Tomaschuk said. However, his interpretation turned out to be inconsistent: it was proved by thoroughly examining the "List of strategic enterprises and strategic joint-stock companies" approved recently by the Order of the President of the Russian Federation.
Commenting on these events for the Echo of Moscow radio station Arkady Volsky, the head of the Russian Union of Industrialists and Entrepreneurs, emotionally exclaimed: "Will we ever do away with this Svyazinvest? It is a shame! I do not understand, who is handling it?".
Indeed, scandals around privatizing this company have not abated since 1997. It was too tough even to George Soros. But Minister of Communication Leonid Reiman, who chairs the Svyazinvest Board of Directors, obviously knows exactly "who is handling it", say analysts, who cannot help refraining from sarcasm. In this connection, they recall some episodes from Reiman’s business record and in particular, his belonging to the group of businessmen from Saint Petersburg, who own Telekominvest Holding set up by Reinman. And precisely this group is considered a key contender for Svyazinvest. At the same time Valery Yashin, the general director of Svyazinvest, is against selling the company to private business. "This is not that kind of assets, the sale of which will bring enormous earnings to the State. But a loss of influence on such an important industry as communication can result in tangibly negative consequences", he cautions.
Not all is clear with Aeroflot as well. Remarks by Kirill Tomaschuk are quite typical in this respect. He said that the question of selling state assets of Aeroflot was not considered at the preliminary stage of discussing the privatization plan and that no final decision was made.
Such an uncertainty, most likely, reflects a behind-the-scene struggle between two sides in the highest echelons of power. One of these sides, which is vividly represented by Minister of Economy Herman Gref, insists on a drastic reduction of the list of enterprises that are not subject to privatization. "It is necessary to limit the list of strategic enterprises to the ones in such areas as the national defense and security, as well as to enterprises, which are needed by the State to perform its duties", the Minister said. He revealed that his Ministry intended to introduce "a number of amendments (to the Law on Privatization), which will allow to make the privatization procedure simpler and more effective".
At the same time, even in Gref’s Ministry itself there are people, who do not share the opinion of their boss. For example, his deputy Andrei Sharonov believes that there is no need to hurry with privatizing Svyazinvest. In Sharonov’s words, "the problem is not how much money can be made". "The most important thing to do is to weigh and consider all possible consequences taking into account the fact that the company now has a monopolistic market position", he points out.
Nevertheless, the Government has already ordered to submit proposals on dates, terms of privatization and number of the State-owned Svyazinvest shares that are to be sold.
As far as the Russian metallurgical business is concerned, of the biggest interest is the forthcoming sale of the large (17.8 %) State-owned stake in the Magnitogorsk Iron & Steel Works (ÌÌÊ JSC). This stake is expected to be sold for 8 billion rubles ($270 million). By the way, ÌÌÊ is not mentioned in the latest list of strategic enterprises provided by the official site of Russian President Vladimir Putin.