That’s the case that could’ve been made, had the Russian Duma not proposed a statute, allowing the Russian government to nationalize properties of all the foreign firms that exited or stopped operating since the Russian invasion of Ukraine started. Following pressure from many prominent leader figures inside the country. Passing and subsequent implementation of this law can devastate the Russian economy far after the sanctions are lifted, the invasion concludes (in a way that’s to western liking), and Putin exits. As it’s often expressed, reputation takes years to build, and seconds to deconstruct. And then of course years to build again.
Vladimir Putin constructed what was the 21st-century Russian economic reputation himself. From the ground up at the turn of the millennium, reviving a crumbling economy and decomposing ruble. International investors were less than impressed and willing to invest in a country whose currency showed no solid foundation, as Russia by now had proven beyond a shadow of a doubt, that it was anything but a stable economy. Especially after the 1998 financial crisis.
Starting with the Bolsheviks taking over the reins from the Tsar in 1917’s “Russian Revolution”. With the accomplishment of the instant agenda, of seizing control of all capital in the new communist state, and thus nationalizing all foreign-owned investments in the country and forgiving itself of all its accumulated debt in 1918.
Interestingly Bolsheviks were quick to realize that their passion burnt too bright for them to see at the moment, and subsequently in earnest would quickly decide to turn to a mixed economic system and try to attract foreign investment, through Foreign Concessions, enterprises that existed via the help of foreign capital. All under the “New Economic Policy” in 1922. Few foreign investors bit the needle until the new economic policy had become outdated by 1930, and of course, those investments would be nationalized again, although this time it did pay what it owed. Regardless It was too late, although the Soviet Union would continue to trade with international companies to a degree. A reputation had been made.
By the 1980s superficial nature of gains in GDP as a result of industrialization had begun to show, and falling oil prices did not help, the GDP growth continued to dip going forward. The “self-sufficient policy” to guise the failures of uncompetitive exports, and in attracting foreign investment was apparent. Moreover, the “soft” nature of the ruble due to low demand, and high fixed exchange rate meant it was not acceptable for imports. USSR had to go to western creditors, to seek the hard currency needed to import goods, amassing heavy debts. The economy kept unstable, ironically perhaps the only thing stable about the USSR economy.
Again, then General Secretary of the Communist Party, leader of USSR, Mikhail Gorbachev came with Perestroika, to combat zastoy – era of stagnation. A movement to reform and open up the communist country. However, the economy kept spiraling leading to the collapse of the USSR, and the newly formed Russian Federation coming out with the burden of the debt owed by the Union. Then the much unknown Vladimir Putin took the driver’s seat and drove the economy from rags to (relative) riches, a story enough to shed a tear.
Or perhaps to receive the time magazine person of the year award in 2007, for as time magazine put it performing the extraordinary feat of leadership in imposing stability on a nation that has rarely known it and bringing Russia back to the table of world power. The same prestigious award was bestowed to perhaps his predecessor of sorts Joseph Stalin (twice), and who could forget Adolf Hitler.
If Russia lacks the character to look inside itself and how historically this move has previously haunted Russia. It has plenty an examples, it could just look over at perhaps best friend in Cuba, which has suffered the backlash of mistrust from international stakeholders in the past Russia itself has presented the safety nets for the Cuban economy. Or it’s a sweetheart in Iraq it was secretly helping in Kuwait, whose frozen assets were distributed to international shareholders after the invasion through a decision by a UN tribunal.
There isn’t much analysis needed for the validity of the proposed provision. USSR’s fall proved Russia isn’t good at “self-sufficiency”. It doesn’t take a wizard to figure out there is little to no point in nationalizing than to give rich oligarchs more assets to own, with a brand logo already applied to take over the 800+ branches of McDonald’s (which is still compensating former employees). Preservation of jobs is implied. Yet how will a Russian oligarch that takes over Apple’s assets continue to produce iPhones; will they also nationalize some international supply chains?
Given the war goes for a long stretch and Russia can find alternative supply chains through China in exchange for energy exports, they will still never be able to produce these goods competitively. Although food chains can be nationalized through local supplies, there exists little use for more normal goods, and rather the same money be invested in inferior goods when the economy is skydiving with no parachutes in place.
The man that saved the economy, is the same man who is driving the Russian economy to the same fate he saved it from. Poetic, for all the wrong reasons. The Harley Dent quote from The Dark Knight applies. That would be economical of course. Humanitarian perspective; always a villain.
