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Crisis and Property Rights

From a Financial Times editorial:

The politically charged cases against Mikhail Khodorkovsky, the jailed former chief of Yukos, the oil company since devoured by the state, and once Russia’s richest man, or the long stand-off between BP and its local partners in TNK-BP have understandably fostered the conviction that Russian courts are tools of the Kremlin and (favoured) oligarchs. Now Russia’s decade of explosive growth has fizzled, more-over, there are perfectly conventional reasons for investor caution.

The government’s short-term handling of the macroeconomy has been good enough to earn Russia a breathing space. The problem has been its failure to use the oil and credit boom to diversify and lessen dependence on foreign loans, to upgrade its third-world infrastructure and mend its buckled institutions. But it has failed above all to strengthen property rights and embed the rule of law – the pledge Mr Medvedev gave to combat Russia’s tradition of “legal nihilism”.

Given the severity of the crisis, it seems unlikely the Kremlin power-brokers grouped around Vladimir Putin are angling to renationalise strategic chunks of the economy. They know they no longer have the resources or personnel to manage what would fall into their lap if things were to get a lot worse.