Putin seeks levy on past privatisation deals

Russian Prime Minister Vladimir Putin on Thursday suggested that all tycoons who made fortunes in the controversial privatisation deals of the 1990s pay one-off fees to the state.

Putin’s proposal came as the Russian strongman lobbies populist support for his return to the Kremlin in March 4 presidential polls.

“Society has to accept the manner in which we close the chapter on the problem of this unfair, to say the least, privatisation,” Putin told members of the Russian Union of Industrialists and Entrepreneurs.

“This needs to be either a one-time contribution, or something else. We all have to think it over,” he told the industrial lobby.

Russia’s oligarchs are despised by many voters since making fortunes in tightly-arranged selloffs of Soviet-era mines and energy deposits that made billionaires out of a select group of Kremlin insiders.

Putin made an uneasy truce with the tycoons after winning the presidency for the first time in 2000 and then promising not to investigate their past dealings if they followed new rules set by the state.

He then moved to re-nationalise some of their holdings and eventually created a top state oil company out of assets owned by Yukos following the imprisonment of its chief Mikhail Khodorkovsky.

The idea of a flat payment has never before been raised by Putin and appeared to catch some of the meeting’s participants off guard.

“What do you think about this luxury tax,” Putin suddenly asked Magnitogorsk Metals Group chief Viktor Rashnikov.

“Vladimir Vladimirovich (Putin), you only just raised this idea,” the billionaire stammered in response.

“But if the time has come…” Rashnikov added before trailing off in televised comments.

“Good answer,” a smiling Putin replied.

The former KGB chief is widely expected to return to the Kremlin after serving two terms as president between 2000 and 2008 and then becoming premier under his hand-picked successor Dmitry Medvedev.

The business community has been jittery since Moscow was hit by a wave of street protests that followed disputed December 5 parliamentary polls.

Analysts had predicted a period of political stability that could foster growth upon Putin’s almost certain election to a third term.

But the demonstrations suggest that Putin may for the first time lead from a position of weakness and be forced to adopt populist measures to retain command.

Economists note that his past battles with tycoons had nevertheless created clear market rules that drew investments from Western energy majors and saw the Moscow exchange become one of the world’s top performers in the past decade.

But the MICEX-RTS exchange fell shortly after Putin’s pronouncement and the ruble lost some of its value before recovering in late evening trading.

Russia’s Vedomosti business daily compared the idea to the “windfall levy” the Labour government imposed in Britain in 1997 following the privatisation of state businesses in the 1980s at prices that were deemed to low.

But the architect of Russia’s 1990s privatisation effort said he did not believe that Putin would go through with the idea after assuming his Kremlin seat.

“I think that interest in (this) idea will naturally disappear with the end of the election campaign,” Anataly Chubai wrote in his blog.