Policy Memos

The Selective Use of State Capacity in Russia's Economy: Property Disputes and Enterprise Takeovers After 2000

Policy Memo:

273

Publication Date:

10-2002

Author(s):

Description:

Throughout the 1990s, the role of the Russian state in governing the private economy was negligible. Private organizations of various kinds, such as organized criminal groups, private security agencies, and informal groups of state police and security officers, were key to resolving property disputes, enforcing contracts, and processing security-related business information. After Vladimir Putin came to power, the central authority’s major concern became the reassertion of state capacity. To what extent has the policy of strengthening the state and of increasing its role in economic governance been successful? What are the main achievements of this policy and what are its side effects? How did property transfers and patterns of resolving property disputes change after 2000?

This memo looks at a new form of violent property disputes--so-called enterprise takeovers--and argues that although the Russian state became stronger and managed to bring more order and security into the economic domain, it still remains internally incoherent and segmented, failing to provide a space governed by efficient, homogeneous rule. If in the 1990s, rising business groups used bandits and private security companies to advance their economic interests, after 2000 the major instruments of aggressive enterprise takeovers are corrupt state organizations that have judicial and coercive power. The first step in reconstructing the state has been made: the bandit has gone; the state employee has taken his place. The second step--making him act as a state employee rather than a bandit--is still a problem. [...]

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About the author

Vice-Rector for Innovations; Head of the Research Institute for the Rule of Law
European University at St. Petersburg