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The Bailout Trap

First Fridman, then Deripaska. Now a report in Reuters points out the obvious fact that the acceptance of corporate welfare in Russia is a Faustian bargain:

The billionaires have transferred stakes in some of their most prized firms from Western banks to the Russian state as collateral, handing the Kremlin the means to grab the assets should the oligarchs fail to repay loans or fall out of favor. “The turmoil provides an opportune moment for the state to get a little closer to the equity that was sold in the 1990s,” said Michael Kavanagh, metals analyst at UralSib. (…) VEB has said no company would get more than $2.5 billion, but Deripaska’s aluminum major, United Company RUSAL, received $4.5 billion to pay back debt to foreign banks, which it amassed to buy 25 percent in mining giant Norilsk Nickel. “It is possible that neither Alfa nor UC RUSAL will find fresh cash to repay the VEB loans, and the state could eventually get the stakes in both Norilsk Nickel and Vimpelcom,” analysts from UniCredit Aton said in a note.