PRIVATIZATION PLAN COULD STUMBLE BEFORE LEAVING THE GATE
By Kim Iskyan
In early June, Russia’s largest bank, Sberbank, agreed to buy DenizBank of Turkey from French-Belgian lender Dexia, for $3.5 billion. The deal marked Sberbank’s second-largest transaction in recent years outside the former Soviet Union.
In late May, newly reelected president Vladimir Putin approved the modestly-reformist cabinet of his prime minister (and former president) Dmitry Medvedev. The most senior figure after the prime minister is Igor Shuvalov, who is viewed as a market-friendly, reform-focused figure. Putin’s Kremlin staff will likely have more clout than the cabinet. The new cabinet appears focused mostly on continuing the status quo, rather than bringing about a sharp policy shift.
In early June the Russian government approved a new privatization plan that aims to raise about $10 billion through the sale of government stakes by the end of 2012. The plan is similar to one advanced by Medvedev in 2011, which met with heavy resistance from conservatives in government. Poor market conditions are also likely to significantly postpone the latest privatization plan iteration.
Gas giant Gazprom said it would substantially rethink its plans for the massive Shtokman gas project in Arctic waters, possibly abandoning current partners Statoil and France’s Total. Gazprom has been unable to make much headway with the project.