Thanks to sanctions, Russia will be able to nationalize big business
On April 6, 2018, the US Department of the Treasury listed Oleg Deripaska and his business entities in the so-called SDN list, an sanctioned list of “bad guys” and rogue states. The regulator ordered all American investors to get rid of toxic Russian assets and terminate all previously concluded agreements.
The results were not slow to affect. Traders announced force majeure on the supply of Russian aluminum. The London Metal Exchange first stopped listing its primary aluminum produced by Rusal, then on April 17 imposed temporary restrictions on its trading.
The leadership of the Russian company, after closing the US and European Union markets for it, hoped to find new markets in Asia. However, there she was expecting an unpleasant surprise. The largest consumers of aluminum products in Japan notified their Russian suppliers that they refused to buy metal from a company listed on the SDN, for fear of falling under the sanction of the US Treasury. Japanese corporations refuse to publicly comment on this decision, but on condition of anonymity the following opinion was voiced:
Japanese industry will now be forced to replace Russian imports in Malaysia, India, Australia and the Middle East. For Rusal, which exports two-thirds of its output, the situation is simply disastrous. Transcontainer announced the suspension of export shipments of Russian aluminum. According to the representative of the carrier, out of the planned 3000 freight containers, only 700 were transported.
Shares of Rusal after receiving the American "black mark" collapsed and continue to fall. As of April 18, the metallurgical giant is worth just $ 2,728 billion. Compared with the company's value for 2010, when an IPO in Hong Kong was held, it fell 7,7 times after the introduction of US sanctions.
The business empire of the oligarch Deripaska has been dealt a mortal blow. Labor Minister Topilin reassures that so far there are no bad signals from a metallurgical company asking to support employment in enterprises. But this is only a matter of time. Obviously, the country's metallurgical industry will need to be saved.
The proposal to nationalize Rusal was made by the chairman of the Federation of Independent Trade Unions. Mikhail Shmakov stated:
The head of all Russian trade unions believes that the demand for aluminum will not go anywhere, but after nationalization the income from its sale will go into the state’s pocket.
It would seem that the proposal for the nationalization of the aluminum industry, about which much is said in the patriotic public, is welcome. However, the devil is always in the details. The key question is the cost of the ransom, or rather, should there be any compensation at all for the impoverished oligarch.
While the enterprises flourished, the liberal economists who set the tone for the government did not care that they were in private hands, and the main income was sent there. However, as soon as enterprises became unprofitable, the question of dumping toxic assets onto the state budget immediately came up on the agenda, which would plug all the holes. Should the state pay Oleg Deripaska something? Or should it rightfully take it from him, leaving the oligarch content with what he received from his many years of exploitation of the enterprises he privatized? By whether “nationalization” will be carried out and how it will be carried out, it will be possible to assess whose interests the government is primarily protecting.
The results were not slow to affect. Traders announced force majeure on the supply of Russian aluminum. The London Metal Exchange first stopped listing its primary aluminum produced by Rusal, then on April 17 imposed temporary restrictions on its trading.
The leadership of the Russian company, after closing the US and European Union markets for it, hoped to find new markets in Asia. However, there she was expecting an unpleasant surprise. The largest consumers of aluminum products in Japan notified their Russian suppliers that they refused to buy metal from a company listed on the SDN, for fear of falling under the sanction of the US Treasury. Japanese corporations refuse to publicly comment on this decision, but on condition of anonymity the following opinion was voiced:
We asked Rusal to stop supplying aluminum under our contracts, as we cannot make payments in US dollars and do not want to take the risk of falling under US secondary sanctions
Japanese industry will now be forced to replace Russian imports in Malaysia, India, Australia and the Middle East. For Rusal, which exports two-thirds of its output, the situation is simply disastrous. Transcontainer announced the suspension of export shipments of Russian aluminum. According to the representative of the carrier, out of the planned 3000 freight containers, only 700 were transported.
Shares of Rusal after receiving the American "black mark" collapsed and continue to fall. As of April 18, the metallurgical giant is worth just $ 2,728 billion. Compared with the company's value for 2010, when an IPO in Hong Kong was held, it fell 7,7 times after the introduction of US sanctions.
The business empire of the oligarch Deripaska has been dealt a mortal blow. Labor Minister Topilin reassures that so far there are no bad signals from a metallurgical company asking to support employment in enterprises. But this is only a matter of time. Obviously, the country's metallurgical industry will need to be saved.
The proposal to nationalize Rusal was made by the chairman of the Federation of Independent Trade Unions. Mikhail Shmakov stated:
It’s time to nationalize this company, to redeem it at the lowest price at which it stands today, and then launch it as a state investment project
The head of all Russian trade unions believes that the demand for aluminum will not go anywhere, but after nationalization the income from its sale will go into the state’s pocket.
It would seem that the proposal for the nationalization of the aluminum industry, about which much is said in the patriotic public, is welcome. However, the devil is always in the details. The key question is the cost of the ransom, or rather, should there be any compensation at all for the impoverished oligarch.
While the enterprises flourished, the liberal economists who set the tone for the government did not care that they were in private hands, and the main income was sent there. However, as soon as enterprises became unprofitable, the question of dumping toxic assets onto the state budget immediately came up on the agenda, which would plug all the holes. Should the state pay Oleg Deripaska something? Or should it rightfully take it from him, leaving the oligarch content with what he received from his many years of exploitation of the enterprises he privatized? By whether “nationalization” will be carried out and how it will be carried out, it will be possible to assess whose interests the government is primarily protecting.
- Sergey Marzhetsky
- https://www.2000.ua
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