Will Russia survive its economic and political crisis?
September 17, 1998
in this forum:
Is Primakov the right man for the job? What does the appointment of Primakov mean for Russia's relations with the West ? What should the United States and the West do to help Russia get through this crisis? What does the average Russian think about the current crisis? Can the appointment of Primakov be interpreted as a defeat for the reformist policies of Yeltsin? Is there any possibility that Yeltsin will dismantle the monopolies?
Bill Murphy of Harrisburg, PA, asks: Is there any possibility that Yeltsin or a designated prime minister would dismantle the monopolies which are considered to be primarily responsible for the crisis?
Michael McFaul, assistant professor of political science at Stanford University, responds:
The so-called financial oligarchs already have collapsed, or become severely weakened, as a result of this laest financial crisis. They will be weak for some time. In fact, they will have to fight very hard simply to hold the assets that they seized during the "loans-for-shares" program of 1994-1995. For instance, the financial-industrial group, Menatep, put up shares in its oil company, Yukos, to borrow dollars from Western banks. As Menatep has defaulted on these loans, these Western banks -- at least on paper -- have control of this oil company, the secodn largest in Russia.
As this drama plays out, my guess is that there will be a push to renationalize some of these assets. The present Duma and government are not about to hand over control of Russia's oil fields to Western banks.
As for other monopolies, this government will do little to break them up. On the contrary, I believe that Russian monopolies will be strengthened by the latest change in government.
Leon Aron, resident scholar at the American Enterprise Institute, responds:
In the past, the so-called "natural monopolies" (gas, transportation, energy) have been vigorously defended by the Duma against the attempt by the President and the government to dismantle them. In so far as this government is the Duma's government, I think they are likely to let the monopolies be. Unless, of course, the "new industrial policy" will become more radical than has been announced so far and the monopolies (along with banks) are nationalized.
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