To a large extent the natural monopolies are the Russian
economy. At the start of this year no-one believed that president
Vladimir Putin had either the political will or the power to tackle
Russia's most deeply entrenched vested interests. But investors
were shocked when at the end of May the president booted out what
one fund manager calls "Russia's most encrusted interest", Rem
Vyakhirev, the chief executive of gas monopoly Gazprom, and
replaced him with a loyal lackey.
Putin followed through with plans for power grid company United
Energy Systems and the ministry of railways. Telecoms reform has
already begun.
Fixing the problems with the natural monopolies will have
wide-ranging implications. Much of Russia's deadwood industry has
been able to survive over the past decade because it receives an
implicit subsidy from the state in the form of below-market prices
for energy. In some cases, enterprises were simply let off their
energy...
