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. Last Updated: 07/27/2016

Privatization Smothered By Secrecy

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Another tender, another controversy, another court case. This scenario has become so depressingly familiar that it is hard to imagine Russia will ever break free of this self-destructive cycle.

The latest example comes from the Nenets autonomous district, where the little-known company Severnaya Neft won a tender to develop three oil fields in northern Gamburtsev Val. The tender left the losers — including some of Russia's largest oil companies such as LUKoil, Surgutneftegaz and Sibneft — crying foul and swearing to take the matter to court. "The entire tender process should be more transparent," LUKoil vice president Leonid Fedun told journalists Tuesday.

While it is hard to be too sympathetic with these particular companies, many of which have successfully manipulated Russia's seriously flawed tender processes in the past, it is easy to wholeheartedly endorse Fedun's sentiment. Whether or not this tender was rigged, the lawsuit is likely to stall development of the fields and block their economic benefits to the region for years.

In separate, but surprisingly related news, the State Duma's Audit Chamber reported on the same day that the Railways Ministry had been deliberately and systematically sabotaging its work by refusing to release documents or open its finances to scrutiny.

The Railways Ministry, it should be recalled, is currently pushing a restructuring plan under which private companies will be allowed to compete with a wholly state-owned Russian Railways Co. and be granted equal access to the transportation infrastructure. In view of the ministry's contemptuous treatment of the Audit Chamber, observers are skeptical that the post-reform system will be truly transparent and competitive.

In a nutshell, the transparency issue remains as painfully unresolved as ever, a debilitating obstacle to one reform initiative after another. Moreover, it is a problem that grows increasingly ominous when you recall that Russia may be on the verge of privatizing agricultural land and other crucial state assets. As much as we would like to see rapid progress on all these reforms, we cannot help but share the concerns of critics who argue that there are no reliable mechanisms in place for carrying them out in any satisfactory way.

And, what is worse, no one seems to be seriously working on this problem. One good place to start would be to give subpoena power to the Audit Chamber — to allow it to demand documents and testimony and to charge stonewalling officials with contempt. Maybe an oversight mechanism like this with some teeth in it would take away some of the current enthusiasm for continued opacity.