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Monday, February 13, 2012

Russian Private Property: Based on Fairness or Legality?

In a move to shore up popular support before the presidential election in 2012, Vladimir Putin called for a windfall levy on the dishonest privatisations of the 1990s. “We need to close the problems of the 1990s, of what, speaking honestly, was dishonest privatisation,” he told tycoons meeting at a congress of Russia’s big business lobby. He went on to say, “We need to establish the social legitimacy of private property itself and social confidence in business.” The implication is that just acquisition is requisite to private property being recognized as legitimate, societally.

Directly contradicting Putin’s assumption, Mikhail Prokhorov, the Russian billionaire who was running at the time against Putin for the presidency, said, “To review the [privatisation] results now would destroy the legitimacy of all property rights in the country. The problem is fundamental—everything that was done then was legal even if it wasn’t just.” In other words, the acquisition need not be just for the property to be legitimate. In fact, it is the taking of private property that was acquired legally that undercuts the legitimacy of private property. If this is because such a taking is unfair, then why wouldn’t the unfairness in the privatisations in the 1990s also negate the legitimacy of the private property?

Source:
Catherine Belton, “Putin Calls For Windfall Levey on “Dishonest” Privatisations,” Financial Times, February 10, 2012. http://www.ft.com/cms/s/0/77de73aa-5346-11e1-aafd-00144feabdc0.html#axzz1mIa4LJKV