Privatization in Russia

[6] In the late 1980s, as part of the perestroika reformation movement, legislation championed by Mikhail Gorbachev—who pledged to build a "mixed socialist economy"[7]—effectively transferred some controlling rights over enterprises from the government to the employees and management.

[10] Later that year, private Soviet farmers were permitted to rent land from the state, purchase equipment, and hire workers, a significant step away from mandated collective farming following decades of dominance by state-owned agricultural concerns.

[7] The legislation also enabled these enterprises to withdraw from associations on their own, which led to the process of so-called spontaneous privatization in which control over some industrial assets was acquired by their managers.

[citation needed] In September 1990, the Soviet parliament granted Gorbachev emergency privatization powers, including the authority to transform state enterprises into joint-stock companies with shares offered on stock exchanges.

In the months before the dissolution of the Soviet Union in December 1991, soon-to-be president Boris Yeltsin began assembling a team of economic reformers led by Yegor Gaidar, then a young reformist economist, and including Anatoly Chubais.

The reform team initially considered Swedish social democracy as a model for Russia, but Gaidar opted instead to study Hungary as a template and was influenced by Poland's use of shock therapy.

To distribute property quickly and to win over popular support, the reformers decided to rely mostly on the mechanism of free voucher privatization, which was earlier implemented in Czechoslovakia.

[14] Thus, although several of the initial objectives had not been fully achieved by the end of the vouchers program, a great deal of assets did fall into private ownership remarkably quickly and worked to provide some basis for market competition.

This privatization had been partial because the federal government had obtained ownership positions in several companies and had also retained full control over the transport of oil to lucrative world markets.

[17] In 1995, facing severe fiscal deficit and in desperate need of funds for the 1996 presidential elections, the government of Boris Yeltsin adopted a "loans-for-share" scheme proposed by banker Vladimir Potanin and endorsed by Anatoly Chubais, then a deputy prime minister, whereby some of the largest state industrial assets (including state-owned shares in Norilsk Nickel, Yukos, Lukoil, Sibneft, Surgutneftegas, Novolipetsk Steel, and Mechel) were leased through auctions for money lent by commercial banks to the government.

[21] In October 2017, Russian Minister for Economic Development Maxim Oreshkin told Reuters that "there are almost no fiscal reasons left for privatization", following an improving economy due to increased oil prices.