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Russia Tycoons Seek $78B Kremlin Bailout

Looming foreign debt forces oligarchs to return power to state

By Rebecca Smith Hurd, Newser User

Posted Dec 22, 2008 10:33 AM CST

(Newser) – A dozen years after bailing out the Soviet government, Russia’s oligarchs are seeking $78 billion in Kremlin handouts to weather the credit crunch, Bloomberg reports. Russian businesses have racked up some $110 billion in foreign debt due in 2009. The one-year loans, sought by more than 100 companies, would likely shift control of some industries back to the state.

“It’s extremely unlikely they’ll all be able to repay in a year,” said one money manager, with the financial crisis having picked $230 billion in equity from Russia’s wealthiest pockets. Without state help, over-extended industries (particularly steel) could be tapped out. “If they have to pay this, then they have no money for capital expenditure, no nothing,” an economist said.

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Russian billionaire Roman Abramovich, who won a legislative seat in the remote Russian Arctic region of Chukotka in 2006, has already received financial aid from Prime Minister Vladimir Putin. (AP Photo)

Russia President Dmitry Medvedev, left, speaks with billionaire Oleg Deripaska, right, as Economy Minister Elvira Nabiullina listens in. Deripaska is receiving bailout funds from the government. (AP Photo)

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Some of them will definitely lose their property, either to the state or to investors. They’ve been over-borrowing and sales of their companies have been falling.
- Billionaire Alexander Lebedev, on how the credit crisis will affect Russia's oligarchs

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Russia Tycoons Seek $78B Kremlin Bailout