The biggest redistribution since privatisation

Over the past three years, Russia has experienced the largest redistribution of property since the days of Yeltsin privatisation. According to Reuters, over $50 billion of assets have come under state control since 2022, often through judicial seizures motivated by allegations of corruption or emergency decrees related to national security.

If in the 1990s flash privatisations created the oligarchs, today the pendulum is swinging in the opposite direction: the state is buying back strategic and non-strategic companies, consolidating a new economic elite politically loyal to the Kremlin. The independent media, from Meduza to Važnye Istorii, speak of a ‘second silent nationalisation ‘, which redesigns power rather than the production structure.

The Južuralzoloto case: an IPO turned into a trap

The symbolic episode of this process is Južuralzoloto (UGC), the Moscow-listed gold giant. In 2023, it had made one of the largest IPOs in Russia, with around 10 per cent of the floating capital, attracting small domestic and institutional investors looking for stability in an environment of capital flight.

Two years later, the state acquired 67.8 per cent of the shares of oligarch Konstantin Strukov without issuing the compulsory takeover offer(OPA) required by Federal Law 208-FZ, which imposes an obligation on anyone exceeding 30 per cent of the voting capital to address all shareholders within 35 days.

The Central Bank of Russia(CBR), headed by Elvira Nabiullina, opened administrative proceedings against Rosimuščestvo, the agency that manages state assets, accusing it of violating minority rights. The Moscow Stock Exchange (MOEX) also filed an official complaint, reporting reputational damage for the entire market.

“The long-term damage to the economy far outweighs the immediate benefits of billions seized,” a source close to the CBR told Reuters.

Fajzrachmanov v Šulgina: the jurists’ front

The legal front is split. Karim Fajzrachmanov, partner at Forward Legal, argues that the state still has to comply with the law: ‘Seizures for bribery are not among the exceptions to the takeover obligation. Unless there is a special rule for UGC, the rule still applies’.

Margarita Šulgina of the Delcredere Order, on the other hand, has a more pragmatic approach: ‘Thetakeover bid will be up to the new buyer, not the state. After the resale by Rosimuščestvo, it will be the new shareholder who will make the offer’.

Šulgina admits, however, that some small investors might appeal the decision, but doubts whether the cases will have a favourable outcome in such a politicised court system.

Trapped savers and the ‘Russian discount’

UGC has become the litmus test of investment risk in Russia. Shares bought in good faith by retail investors have depreciated sharply, and the prospects for redemption or legal protection are minimal.

This aggravated the so-called ‘Russiandiscount‘: the systemic penalty applied to Russian securities due to political risk, lack of transparency and state interference. Nabiullina herself acknowledged in a Duma hearing that ‘investor confidence can only be rebuilt with legal certainty‘.

Nabiullina: rate cuts and coded messages

The governor’s latest statements show a deeper message than it seems. “According to our forecasts, the key rate reduction cycle will last throughout next year,” Nabiullina said yesterday.

Formally, it is a monetary policy announcement. In reality, analysts read it as a distancing from government pressure, which is pushing for massive support for public and military credit. Instead, the Central Bank intends to start a cycle of ‘gradual normalisation’, a sign of institutional continuity and confidence in the domestic market.

It is also a way of reaffirming the autonomy of the CBR: ‘Nabiullina does not openly challenge the Kremlin,’ explains an Alfa-Bank economist, ‘but every time she talks about law, competition or stability she sends an indirect message: the economy cannot stand on the state apparatus alone.’

From nationalisation to the ‘militarisation of property’

Analyses by independent media converge. Važnye Istorii called the new wave of expropriations ‘an elite construction for political loyalty’, with assets confiscated in excess of 3.9 trillion roubles.

The analytical centre Re-Russia, on the other hand, speaks of a ‘militarisation of ownership‘: a system in which the allocation of assets follows logics of loyalty, not efficiency.

The economist Andrej Jakovlev, quoted in the same channel, described the phenomenon as ‘the silence of the elites‘: those who receive state assets become part of the power bloc, and thus can no longer oppose them.

The precedent: from the Jukos case to the new paradigm

The UGC seizure is inevitably reminiscent of Michail Chodorkovsky‘s Jukos case, when in the early 2000s the oil company was dismembered and absorbed by Rosneft. Then as now, the justifications were legal – evasion, corruption, economic patriotism – but the effect was the same: to strengthen political control over the economy.

The difference is that today the process is more capillary and systematic. It no longer only affects rebellious oligarchs, but entire industries: metallurgy, agriculture, logistics, finance, even digital.

The boundary between law and power

The conflict between the Central Bank and Rosimuščestvo summarises the underlying tension in today’s Russia: the survival of market legality within an increasingly state-controlled economy.

Should the line of Nabiullina and the technocrats prevail, the Russian economy could return to partial normality. If, however, the drift towards ‘political ownership‘ continues, the country risks losing even its last anchor of confidence.

And in that case, the ‘Russian discount‘ will no longer be a financial formula – but the definition of a system.