Publication: Monitor Volume: 4 Issue: 190

During a speech Wednesday to the upper chamber of Russia’s parliament, the Federation Council, Prime Minister Yevgeny Primakov lashed out at how privatization has been carried out in Russia. Primakov said his government had postponed sales of stakes in both the state oil company Rosneft and the giant Svyazinvest telecommunications holding company because they were being offered at “throw-away” prices. Primakov also cited the example of Purneftegaz, a key Rosneft sub-unit, which had been quietly sold for US$10 million when its market value was at least US$600 million. “We don’t need this kind of privatization,” Primakov said.

Primakov reported that the members of his cabinet had been provided with documents from the Federal Security Service, the Prosecutor General’s Office and the Interior Ministry, so that the ministers could come up with ways to prevent the illegal flight of capital abroad. The prime minister gave several examples of “loopholes” through which money goes abroad. Oil, he said, is shipped to Ukraine or Belarus under false documents, ostensibly for refining, after which it is supposed to be sent back to Russia. Instead, the oil is sold in the West or importers understate the cost of their merchandise in order to lower their customs payments (Russian agencies, October 14).

During a meeting with Russia’s top banker-industrialists on October 13, Primakov said that since last August’s financial meltdown, capital had been leaving Russia at a rate of US$1.5-$2 billion dollars per month (Russian agencies, October 13).