Russian champion firms seeking Western partners

MOSCOW – The renationalization of the world’s top titanium maker, Russian VSMPO-Avisma, nearly a done deal, marks another milestone in the Kremlin’s drive to create national champions and boost its global economic clout. Big, dominant state-owned or state-friendly national giants will follow in other strategic areas, such as metals, energy, cars and aerospace under President Vladimir Putin’s vision for a resurgent Russia, say analysts. «The Russians are here. And there will be more coming,» said Bob Foresman, the American deputy chairman of Moscow investment bank Renaissance Capital. VSMPO-Avisma’s takeover by state arms trader Rosoboronexport will allow the government a stake in the world’s supply of titanium, a light and heat-resistant metal. The takeover has major implications for US plane maker Boeing, which has a deal with VSMPO-Avisma for a 50/50 joint venture to produce billions of dollars worth of aircraft parts. Such alliances, unthinkable during the dark days of the Cold War, will be a key feature of Russia’s uneasy integration into Western markets. In another example of growing ties between the Russian and European aviation industries, media reports said last week that Russia’s second-biggest bank Vneshtorgbank bought a 5 percent stake in the Franco-German aerospace and defense giant EADS. But in a reminder of the lack of transparency that tends to surround Russian deals, Putin aide Igor Shuvalov on Tuesday declined to comment on the reports. Arkady Dvorkovich, a senior adviser to Putin, said recently Russia must create «champion» companies to develop its economy. Sectors in which Russia already has champions, or is set to have them, include oil, metallurgy, telecoms, naval and aeronautical engineering and maritime transport, he said. Oil and gas assets are being consolidated into state-controlled Rosneft and Gazprom, while Russia’s top aluminium producers Rusal and Sual have announced plans to merge to form the world’s No. 1 producer. With record prices for key commodities, Russian companies are likely to be among the key global players. Many are headed by Putin associates – Dmitry Medvedev is first deputy prime minister and chairman of Gazprom and Igor Sechin is Putin’s deputy chief of staff and Rosneft chairman. Vladimir Yakunin, chief executive of Russian Railways, is also a Putin associate and so is Rosoboronexport CEO Sergei Chemezov, a close friend of Putin who shares his KGB background. «The Kremlin is playing an active role in all this consolidation,» said Sergei Markov, a political analyst with Kremlin connections. «They’re not just behind it, they’re responsible for it.»