State Capitalism is weighing down the Russian economy, and there is not much Russian President Vladimir Putin can do to prop up the system, a leading Western expert contends. The trend raises questions about Putin’s ability to maintain his Kung-fu grip on power.
During an early October talk, hosted by the Kennan Institute at the Woodrow Wilson Center in Washington, DC, economist Anders Aslund examined structural flaws in the economic architecture of Russia under Putin.
In Aslund’s view, Russia’s key economic sectors are thoroughly dominated by “state capitalism.” These include energy (oil, natural gas, and electricity); finance (in particular the largest banks, including Sberbank, Agroprombank and Gazprombank); defense (e.g., Russian Technology, United Shipyards, United Aircraft and Rosatom); as well as transportation and telecommunications (Russian Railways, Transneft, and Rostelecom). The companies in these sectors have substantial state ownership, or high levels of direct government intervention.
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Richard Weitz is a senior fellow at the Hudson Institute in Washington, DC.