The Problem With Russia's 'Big Privatization' Dream. The Problem With Russia's 'Big Privatization' Dream Photo-illustration by Newsweek/Getty
Russian officials are hoping a privatization plan of state-owned assets, including those seized by court order since the start of President Vladimir Putin's invasion of Ukraine, will boost government coffers after the desertion of Western capital from the sanctions-hit economy.
Vladimir Milov, a Putin critic and former Russian minister, told Newsweek that the proposal to sell stakes in companies would not attract market players because they wouldn't have any influence over state-dominated firms.
The announcement of the privatizations by Russian Finance Minister Anton Siluanov resurrects a stalled 2010 campaign to dispose of state assets and could generate billions of dollars in federal budget revenues.
Newsweek has contacted the Russian Finance Ministry for comment.
Why It Matters
The privatization plan follows Russia's seizure of assets from owners accused of harming the country's national interests.
Selling off stakes in state-owned firms, including seized ones, marks another episode in property redistribution in Russia, which seeks to fund its military as it faces the economic turbulence of sanctions, a worker shortage and inflation.
What To Know
On Tuesday, during a meeting with Rosimushchestvo, Russia's federal agency for property management, Siluanov announced major privatizations, where stakes in seven large companies would be sold to raise 300 billion rubles ($3.66 billion), Reuters reported.
In 2023, Siluanov revisited a stalled plan that had been launched in 2010 proposing that the government sell shares in 30 state-owned companies without losing a controlling stake.
Russia's Prosecutor General's Office has filed lawsuits to seize assets from companies, which Putin insisted was not a reversal of privatization because the targeted owners were deemed to be harming the country's security.
Firms in the military-industrial complex, engineering, food, ports and real estate linked to business owners abroad were most often targeted, raising concerns among businesses at the scope of nationalizations.
Russian President Vladimir Putin (C) as Central Bank Chairwoman Elvira Nabiulina (L) and Finance Minister Anton Siluanov (R) at the Grand Kremlin Palace on March 17, 2025. Getty Images
Milov told Newsweek that in these circumstances, it would be difficult to find buyers for assets. Also, prior privatization announcements by Russian authorities were not followed by real actions, he said.
"The value of assets actually privatized is negligible because for over two decades, the Russian government maintains control over key economic industries and do not want to let go of ownership of strategic players," Milov added.
Milov, who was Russia's deputy energy minister between May and October 2002, said the Russian government might sell minority equity stakes in state-owned companies, retaining strategic control.
However, this would be of little interest for market players because minority ownership requires significant investment and they would be unable to influence the firm's governance, rendering it a waste of money.
Another option would be to prearrange the sale of minority stakes in some of the large state-owned companies to other big state players, Milov said, but this would not be privatization in the classical sense.
Vasily Astrov, an expert on the Russian economy at the Vienna Institute for International Economic Studies, said the privatization plan was another episode in property redistribution in Russia and that private actors close to government would get hold of the assets in question.
Siluanov has said privatizations would intensify and that this year revenues from the sale of such property would be at least 100 billion rubles ($1.23 billion).
Boris Grozovski, a Russian economics expert at the Wilson Center, a think tank in Washington, D.C., told Newsweek that Siluanov was grappling with the government budget difficulties and that revenues from the privatizations would help him a lot.
Timothy Ash, an emerging markets strategist at BlueBay Asset Management, told Newsweek that the plan highlighted the fiscal challenges Russia's authorities faced and how they had drawn down resources in the sovereign wealth fund.
What People Are Saying
Russian Finance Minister Anton Siluanov said on Tuesday: "We have had proposals for big privatization."
Former Russian Deputy Energy Minister Vladimir Milov told Newsweek: "This is of little interest for market players … such minority ownership requires significant investment but doesn't provide any opportunity for real influence over governance in companies still dominated by state control, and therefore remains simply a waste of money. No one wants to buy such useless minority stakes, which give zero influence and control."
Boris Grozovski, a Russian economics expert at the Wilson Center, told Newsweek: "Siluanov has great difficulties with the budget for 2025 and beyond, and 2-3 trillion a year would help him a lot. … That is why he came up with this idea."
What Happens Next
Russia's Finance Ministry added dozens of new entries to the list of federal assets slated for privatization in the next two years, and auctions are scheduled for the second quarter of 2025.
According to Grozovski, it is hard to say what the real extent of privatization will be because among the nationalized enterprises, many are directly or indirectly related to the military-industrial complex.
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This story was originally published March 23, 2025 at 4:00 AM.