The number of property confiscations in Russia is growing rapidly, further complicating the prospects of an already sluggish economy, although it does help to temporarily replenish the depleted state treasury.

Source: Bloomberg

Details:Experts report that the total value of confiscated property since 2022 was approximately US$49.5 billion. In the last year alone, the number of such seizures has tripled.

Of this amount, almost half of those seized are strategically important companies over which the Kremlin seeks to tighten control. The rest are assets in various industries, which are often sold to new owners, with the proceeds going to the budget. In total, lawyers have counted 102 such cases.

Although this allows the government to temporarily replenish the budget and strengthen control over the economy, such practices weaken its stability and effectively destroy the private sector, the very sector that helped Russia withstand sanctions and economic blows after its invasion of Ukraine in 2022.

The authorities use various grounds for confiscation – from violations during privatisation in the past, as well as accusations of corruption or extremism to "protecting public interests", lawyers say.

"The Kremlin is solving two problems at once," explains economist Andrei Yakovlev of Harvard University. "Confiscating property that’s later re-sold creates a new revenue stream for the budget and ‘reshapes the business elite so their fate is tied to the regime’s survival’."

Last year, the federal budget received 132 billion roubles (US$1.6 billion) from the sale of confiscated property, many times more than the planned 1 billion (US$12.7 million). Most of the funds came from assets seized by the Prosecutor General's Office, including the car dealer Rolf and companies in the chemical and agricultural sectors.

Finance Minister Anton Siluanov said in March that he wants to maintain this pace in 2025.

However, Yakovlev says that replacing experienced private owners with people whose success depends solely on state support inevitably reduces the efficiency of the economy.

Background : The Russian government has effectively supported a bill that allows the seizure of property belonging to Russians who have left the country and criticise the authorities: in May, the document was already approved by the State Duma after its first reading.

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