Russian banking chief calls for private investment as Ukraine sanctions bite

Russian banking chief calls for private investment as Ukraine sanctions bite

Russia needs private investment and could sell non-controlling stakes in state firms in a privatisation drive, according to Andrei Kostin, the chief of the state bank VTB.

The comments suggest Moscow’s coffers are suffering because of sanctions imposed in the wake of the invasion of Ukraine last year.

Vladimir Putin says western sanctions amount to economic war but have not caused serious damage.

Kostin reported this month that sanctions had crushed parts of Russia’s economy that had been developing since the fall of communism. He called for a fresh growth model through privatisation, reallocated state funding and increased state debt.

He told Rossiya-24: “Privatisation can come in many forms. It could be some kind of non-controlling stake in public companies…The main thing is not to miss the moment when we can attract private money.”

Kostin proposed selling almost 20 per cent of state-owned oil giant Rosneft and similar sell-offs for oil pipeline monopoly Transneft, Russian Railways and Russian Post.

He said state-owned firms lacked competition, because of the legacy of communism, which deterred investment.

Kostin singled out Anatoly Chubais, who was involved in privatisations in a loans-for-shares scheme under President Boris Yeltsin in the mid-1990s.

State assets were sold cheaply to tycoons who are now known as oligarchs and saddled Russia with crippling inequality.

Kostin promised that similar mistakes would not be repeated under Putin.

“We have a different country now, a different president, a different government that cannot allow what happened then,” Kostin said.

Tougher sanctions

Pro-Ukrainian US academics have argued that the sanctions regime against Russia should be toughened with a full embargo on Russian steel, iron and diamonds.

The International Working Group on Russian Sanctions of around 40 academics reported: “The only way to stop the ongoing killing, suffering and economic destruction is to defeat the Russian military and force Russian soldiers to withdraw from Ukraine’s sovereign territory.”

The report, called “Action Plan 2.0. Strengthening Sanctions against the Russian Federation”, said Russian energy should be the main focus.

“We see further energy sanctions as key to constraining its war-making capability, especially because the G7 has recently decided against lowering the price cap,” the report said.

It said the price cap should be lowered to US$45 a barrel with a future target of US$30, which the academics estimated to be Russia’s production costs of marginal oil.

The report called on Japan, Taiwan and South Korea to impose an East Asian embargo on Russian energy.

Picture credit: YouTube

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