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It is necessary to acknowledge: the List of systemic companies of strategic importance (hereinafter the List) was formed as an all-hands-job simultaneously with defining its goals and objectives and with discussing the possible governments measures. This, of course, marked an imprint on the composition of the List. On top of that, the benefits for the future members of the List were still unclear, so different groups of stakeholders were lobbying the process of the List development. It appears that if only the business community had known the scope and format of future government support in advance, the number of willing participants could have turned out not as big.

Government support to strategic companies was stated to have the following objectives:

First and foremost assure social stability, prevent massive layouts at major enterprises;

Second assure sustainability of critical cooperation value chains by way of supporting their elements;

Third assure stable operations of the key infrastructure elements.

Today we have to recognize: forming the List and administering it (which meant, first of all, monitoring its members and providing government support to them) have become the critical element of the anti-crisis policy. With that, support to strategic companies had its own specifics in different sectors from the standpoint of both the applied mechanisms and the scope of measures.

We have identified the following topics allowing for detailed review of the government anti-crisis policy:

(1) the List of strategic companies its objectives and formation principles, sector breakdown;

(2) the key areas and mechanisms of government support to strategic companies specifics and practical implementation challenges;

(3) high-level definition of sector-based specifics within the government support to strategic companies benchmarking the scale of support and instruments used in priority industries.

Decree of the RF President of August 24, 2004, No. 1009 On Approving the List of Strategic Enterprises and Strategic Joint-Stock Companies Section Institutional Problems The following material limitations applied to the performed analysis need to be highlighted:

Support rendered to defense industries was quite special, so we are going to refrain from its review (except for some very limited examples);

The scope of our analysis covers only the instruments and measures which the RF Government was really using during the crisis period.

5.2.2. List of systemic organizations of strategic importance:

formation principles and composition Objectives, principles and criteria for forming the list of strategic companies As per public information, the first approaches to forming the List of strategic companies were discussed at the government level as early as early December 2008. At that time the inclination was to select about 150200 companies with the biggest contribution to Russian GDP. Various government agencies were simultaneously developing their proposals on including companies into the list and on criteria for qualifying the companies as strategic ones.

They were mostly focused on such attributes for as size and social value of a company.

However, already at the first stage at least part of the stakeholders was viewing this List formation not only from the standpoint of preventing bankruptcy of major enterprises, but also from the point of view of creating the capability for future development. Thus, according to the representative of the RF Ministry of Commerce, List preparation was approached from the standpoint of demand configuration, so that in several years when the crisis is over the companies could enter the market being fully competitive1. Respectively, the following criteria were offered: unique technological capabilities, availability of export contracts for 2009, on-going major capital projects, and key positions within the inter-sector business network.

In December 2008 the List of strategic companies was finalized2, 295 organizations were included. Initially it was declared open for including other companies; however, no significant changes were made even though there were a number of attempts to increase the list.

As per available data, over 300 proposals to increase the List of strategic companies were received during the first year. However, the List was only insignificantly increased4 by way of adding several agricultural enterprises, one agricultural engineering enterprise, two jewelry industry plants and Goznak (money-printing enterprise).

In our opinion, based both on the finalized List as a whole and on comments provided by various government officials, the formation of the List of strategic companies was associated, on one hand, with significant lobbying by certain agencies to include the maximum possible range of their subordinate organizations into this List; and on the other hand with the tendency for minimizing the List to the extent possible demonstrated by a number of other agencies. The last tendency, in our view, was based not only on the fact of Government resources to support businesses being limited, but also by a limited throughput capacity of the respective decision-making system. The number of reviewed issues was limited by multistage endorsement practice within the complicated system of sector-based, inter-sector and gov Cited as per Article Putins List, Vedomosty, December 9, List of systemic organizations of strategic value was approved by the RF Government Commission for improving sustainable development of Russian economy on December 23, RUSSIAN ECONOMY IN trends and outlooks ernment commissions. Besides, those commissions did not have enough resources and staff for developing the solutions they were relying on the available personnel of the respective government agencies.

For example, the Cross-Sector Work Group for monitoring economic and financial positions of organizations included in the List of strategic companies held 6 meetings between January 17 and 30, 2009. 15 strategic companies were reviewed at those meetings1. And still, with the List comprising more than 300 companies at that point of time, even such facilitated review would not allow for immediate monitoring of all the strategic companies totality.

In addition to lack of clear understanding of the List objectives and criteria, the situation was complicated because the package of potential rights and responsibilities of strategic companies was not defined at that point of time. In particular, the format of potential government support to the List members was not clear, which stimulated the companies for lobbying their inclusion into the List. In our opinion, some pretty tough statements by officials declaring that becoming members of the List would mean thorough control on behalf of the government and would not guarantee financial support2 could be explained by their desire to somehow limit such lobbying activity.

A very meaningful, though ambiguous from the methodology standpoint decision was made to include multidiscipline holdings and business groups into the List. On one hand, they undoubtedly belong to the backbone of Russian economy and provide for its sustainability to a great extent. On the other hand, major groups comprise of multiple enterprises, businesses and organizations, and most of them do not fall under the criteria for strategic companies. The transparency of intra-group connections and relations is extremely poor, so selecting such groups for monitoring and support significantly limits both pin-point selective support capabilities and efficiency of situational monitoring by different sectors and activities.

Thus, due to the above listed contradictions the List of strategic companies viewed as a government policy instrument lacked clear overall objective, but was a sort of a compromise between various specific objectives. And given numerous commentaries to the List including those by government officials, none of the available official documents contain a definition of its main objective. All we can do is just to recover some of them by analyzing the method of forming the List and its composition. We need to emphasize that it would be an ideal set of objectives and that not each and every of them has eventually been achieved.

The List was aimed to:

provide for on-line monitoring of key companies which are indicative for the economic situation and responsible for socially valuable sectors of economy; also for presumably preventing opportunistic actions by the companies owners and management actions potentially leading to serious negative social consequences and/or damaging economic security of the country (e.g., due to infrastructure deterioration);

assure immediate review of government support to major companies to prevent catastrophic scenarios in unfavorable circumstances;

monitor the efficiency of government support rendered to specific companies.

Press-Release by the RF Ministry of Finance of February 4, 2009.

See, for example, the RF Government Press Service commentary to publishing the List of strategic companies (http://premier.gov.ru/events/messages/2883/).

Section Institutional Problems All those objectives to a certain extent were reflected in the criteria for selecting the future members of the List. The size of the company actually became the dominating criterion, which is quite disputable from the standpoint of reflecting the true role of the company for the national economy, as well as distorting the sector structure by way shifting the focus to the sectors with high concentration of industries and domination of business super-giants.

Initially it was planned to perform screening of the companies with revenues no less than Rb 15 mln and headcount no less than 5,000 pers.1 These numbers were not underpinned by any meaningful analysis of Russian economy profile, and soon it became clear that many defacto strategic companies turn out to be beyond the set limits. Eventually the quantitative criteria became softer, but they still were not differentiated by sectors (except for special requirements set for agriculture). The finalized criteria were set in the Methodology Guidelines by the RF Ministry of Economic Development2 as follows:

Qualitative criteria (a company should comply with at least one of them):

technology capabilities (availability of hi-po / unique technology included into the List of technologies of social and economic importance or valuable from the national security/defense standpoint (critical technology)3;

impact on social stability (jobs maintenance and prevention of massive one-time unemployment );

meaningful for maintaining infrastructure and production chains;

participation in hi-po investment projects;

participation in international agreements / commitments.

Quantitative criteria (all of them are mandatory):

annual revenue for 2007 no less than Rb 10 bn (for agriculture no less than Rb 4 bn);

fiscal charges into different level budgets for the last 3 years no less than Rb 5 bn (for agriculture no less than Rb 2 bn);

headcount no less than 4,000 pers. (for agriculture no less than 1,500 pers.).

As it is easy to see, the qualitative criteria were rather high-level and could be interpreted were broadly and in a biased manner, because they were based on non-regulated concepts, such as hi-po investment projects, production chains, mass one-time unemployment, etc. We can take the risk and assume that a very big portion of major and mid-sized businesses in Russia could be recognized as compliant with at least one of those qualitative criteria. No wonder, the qualitative criteria became the ones that really worked.

Composition of the List of Strategic Companies Let us see if the List of Strategic Companies was adequately representing Russian economy4, was in line with the challenges and priorities of both the crisis stage and of the midterm perspective.

Lower thresholds were set for agricultural businesses.

Methodology Guidelines for including businesses into the List of Strategic Companies, April 16, (http://www.economy.gov.ru/minec/activity/sections/macro/politic/doc1239893148108) Approved by the RF Government Resolution No.1243-p of August 25, It is worth noting that it is very difficult to fully evaluate the List from the standpoint of sectors and regions representations due to a number of reasons. Reason number one: the List comprised not just companies per se stand-alone productive assets with the status of legal entities but multidiscipline diversified corporations with dozens and even hundreds of subsidiaries. In addition, the List comprised holdings at the level of their headquarters and it is difficult to define their sectors and even the level of their control over their own enter RUSSIAN ECONOMY IN trends and outlooks The results of data search for separate enterprises included into the list allow for the following conclusion: the publication of this document was not backed by public information about the key characteristics of the entities of this List. The main sources of data for analytical purposes were SPARK, Expert-400 rating, official corporate sites, media publications.

List of Strategic Companies versus the list of major Russian companies As it has been noted above, the main numeric criterion for including a company into the List was its size. In this context it is interesting to benchmark the List against the list of Russian majors composed by Expert journal. Let us remember that Expert-400 comprises all major companies irrespective of the business area or sector the operate in, while as mainly real sector (productive) companies and trading companies were included into the List of Strategic Companies. To assure like-for-like comparison we excluded financial sector players (banks and insurance firms) from Expert-400 list, as well as a number of servicing companies (entertainment, IT).

The finalized cleared list of major companies has got 344 instead of 400 (compare with 304 in the List of Strategic Companies). Let us note that the passing score the size of the annual revenue was Rb 11.3 bn for Expert-400, which is pretty close to Rb 10 bn threshold approved for the List.

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