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Working Hard for the (Bailout) Money

It was too long ago that Vladimir Putin and the billionaire Rusal owner Oleg Deripaska were catching a lot of flak for the state’s preferential bailout of the corporate giant – like similar complaints in the U.S. bailout, many felt as though the taxpayer was being forced to subsidize the ultra-wealthy executives who played a role in the crisis in the first place.

While at the time the bailout awards handed out by VEB appeared to come strings-free, now the Kremlin is calling back on the favor with a very vague request that these companies do more to modernize the economy and export less oil and gas.  The FT quotes President Dmitry Medvedev as saying that the “government had the right” to expect these rescued companies not to “continue the policy of increasing natural resource exports.

Given that the recovery of Russia’s stock market has been moving in lockstep with the return of strong oil prices, Medvedev has a pretty hard pitch here:  stop investing in production and export of raw materials, and invest this capital into innovation and research and development.

Sounds like a great idea but one that will be difficult to enforce.