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The oligarch shuffle Add to ...

Mr. Potanin, the president of Russian investment firm Interros, whose biggest holding is Norilsk, has lost billions too. Norilsk shares have lost 80 per cent of their value in six months. Mr. Potanin and Mr. Deripaska are scrambling to forge what looks like a back-door bailout, one that would see Norilsk merge with several steel companies to create a resources supergiant. The duo reportedly hope the government will take a 25 per cent stake in the new company - effectively control - in return for writing off some $27-billion of debt held by the companies. Analysts say the proposal is probably too complex to succeed. Mr. Abramovich is taking a beating on his significant investment in Evraz, the Russian steel company that owns plants and mines around the world, including Western Canada, where it bought Ipsco's tubular steel assets. In late 2008, Evraz received $1.8-billion in loans from VEB to help restructure its enormous debt load.

However many billions Mr. Abramovich has lost on paper, there is no sense his pain is as intense as Mr. Deripaska's. He is suing the Sunday Times for suggesting he wants to sell Chelsea FC to shore up his capital. The soccer team is not for sale, he insists.

The Kremlin's role

As Russia's downturn deepens, the government is widely viewed as likely to become increasingly involved in the economy. The question is, to what degree is the government likely to end up owning what once belonged to the oligarchs?

Some analysts and executives think the Kremlin would love to get its hands on the prize assets that were virtually given away during the privatization years. Others think the Kremlin realizes state ownership would make the economy less competitive when Russia needs all the competitive advantages it can muster.

Mr. Lebedev expects bailouts galore. "The bigger the losses, the more right you have, apparently, to share them with the country," he said.

By January, VEB, whose supervisory board chairman is Mr. Putin himself, had dispensed about $10-billion to help Russian companies refinance their foreign debt. Billions more are waiting to go out the door. VEB insists on strong collateral and, in some cases, management and board representation. If the loans cannot be repaid, there is a good chance the state will end up owning, perhaps even controlling, vast chunks of the economy.

Mr. Putin himself is suggesting heavy state involvement should be no more than a short-term fix. "In the 20th century, the Soviet Union made the state's role absolute," he said at Davos. "In the long run, this made the Soviet economy totally uncompetitive. This soon cost us dearly. I am sure nobody wants to see it repeated."

His remarks do not mean he is unhappy that some of the men who grabbed Russian businesses on the cheap are taking a financial beating. Through VEB and other agencies of the state, he has the power to spare the ones he finds useful. Who they will be is an open question.

But one thing is certain: Corporate Russia will go through a meat grinder before the doomed get out of the way and the survivors take their place.

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