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. Last Updated: 07/27/2016

Flight Capital and Doubling Russia's GDP

Last week, the Central Bank reported a record private sector net capital outflow from Russia in the third quarter of 2003. According to the bank's figures, outflow in the three months from July to September totaled $7.7 billion. Total outflow for 2002 amounted to just $8.2 billion.

The Central Bank's figures do not include the $2 billion that Roman Abramovich is set to receive for his sale of a 25 percent stake in Russian Aluminum, but it's hard to imagine that this money will stay in the country. No one sells a company then turns around and leaves his newly fattened wallet lying on the side of the highway.

It's clear why Abramovich was selling. It's less clear why Oleg Deripaska was buying. Keep in mind that Abramovich only parted with half of his 50 percent stake in RusAl. What is the remaining 25 percent stake worth by the brutal standards of Russian business? A whole lot of nothing.

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I have a hunch -- and it's just a hunch, mind you -- that some of Abramovich's old business partners, let's call them Borya and Badri, might own a share of that remaining 25 percent. And if that's the case, Deripaska's decision to buy would make perfect sense to the Kremlin. "Look, fellahs, Roma and I figured out a way to stick it to a certain political refugee."

The $11 billion that Mikhail Khodorkovsky would have cleared for selling off a quarter of Yukos to Chevron or Exxon also won't figure in the Central Bank's capital flight figures. As soon as rumors of the sale began to leak, the Prosecutor General's Office raided a Yukos-owned business center. Every such raid knocks down the potential value of the company. Who knows. Maybe our law enforcement agencies disapprove of selling off the Motherland, even for a tidy profit. Or maybe they're hoping for a payoff. In any case, the prosecutors probably aren't worried that the money would leave the country. More likely, they're worried that it would be used in a pitched battle with the Kremlin. And that would be far worse than a little capital flight.

The sale of assets to foreigners has started to look like lemmings following one another over the cliff. BP bought TNK; Danone is buying leading juice and dairy company Wimm-Bill-Dann. Even Malik Saidullayev, who was forced out of the presidential race in Chechnya, has announced that he is selling off his company in Russia because to do business in Russia "you've got to have access to the Kremlin."

Saidullayev's main business is the popular lottery Russkoye Loto -- not exactly something that foreign investors will queue up to buy. You've got to feel bad for Saidullayev. The rest of Akhmad Kadyrov's opponents were bought off, but he was simply struck off the ballot. Yet his announcement is typical. After all, the boss is much more likely to believe you've got the flu if you call in sick during a flu epidemic.

Selling assets to the West provides no protection against the excesses of arbitrary rule at home. A foreigner will not stand guard for his Russian partner. When things get hot, he'll swear he's never seen you before. But such sales are the best way to legalize capital. It's easier to get away from the Russian Central Bank than from Carla del Ponte. The other option is to secure political asylum, like Boris Berezovsky. The efforts of the prosecutor's office turned him from the "godfather of the Kremlin" not just into a political refugee, but into the sole oligarch with fully laundered money.

All of this shows that we are steadily progressing toward the goal of doubling GDP by 2008 -- the part of GDP that has fled the country, that is.

The Central Bank's figures demonstrate that Russian business has returned to the early days of privatization. The owners of companies now feel like "red directors": It's time to get out while the going's good. The bird -- or rather cash -- in hand is once more worth two in the bush. The harder the regime comes down on business, the more business will retreat into the shadows. And the more it retreats, the more ravenous become the pitbulls of the regime.

Yulia Latynina is a presenter of "24" on RenTV.