Legal Basis for Transformation of Public Property and Russian Legislationon Privatization in the 1990s

Abstract

The article discusses the history of the legislation on privatization in Russia and features of use of privatizationas a regulator of the modern economic policy in the Russian Federation. The author shows the uniqueexperience of privatization in Russia in the 1990s, which allowed rapid creation of private sector in theRussian economy. Privatization as a paradigm of modern economic policies of developed countries hasnow become truly universal. Having replaced the strategy of state intervention in the economy, the policy ofprivatization rapidly covered the majority of foreign countries in the early 1970s. In Russia, privatization hasbecome one of the key elements in the system of market reforms and decentralization of the economy. Incontrast to countries with developed market economies, where the transfer of the state-owned property intoprivate ownership helped increase the effectiveness of individual enterprises, privatization in Russia wasintended to provide a radical shift in property relations. The article analyses different approaches to definingprivatization, including the approaches provided for in the legislation in regards to this term, highlightsthe main stages of the Russian legislation development in the field of privatization. The legislation on the“first wave” of privatization had been launched in 1992, when Russia began the “voucher” privatization(1992-1994) featured by using vouchers as means of payment (hence, this stage was called “voucher”privatization). A privatization voucher did not certify its owner’s right to the share in the public property.It was a kind of government security, the yield of which was dependent on the method of its use by theowner. By purchasing shares for privatization vouchers, their owners could earn income through the sale ofshares or in the form of dividends to be paid. After the voucher privatization, the government moved towardsa new model, known as “monetary privatization”. Main reason for transition to monetary privatization wasurgent need for federal budget revenues and the need for investment for structural transformation of theRussian economy. The article describes mortgaging auctions, which were among the non-standard formsof privatization used in practice at that period. Individual privatization projects can also be referred to thenonstandard forms. They included measures aimed at privatization of public property particularly importantfor the state, region or industry, and providing for the pre-sale preparation of the property with assistance ofan independent financial consultant.