Alexander Firanchuk, Senior Researcher at the Gaidar Institute’s International Trade Department explained in a commentary for RBC why modern examples of the state playing a greater role in the economy are not always correctly referred to as nationalization.
According to the expert, in English-language literature, “nationalization” is often understood to mean any transfer of control over an asset to the state, including the purchase of shares, recapitalization, and anti-crisis support for companies, whereas in Russian, the term is usually associated with the forced expropriation of property.
Commenting on historian Nicholas Mulder’s thesis regarding the “fourth wave of nationalization,” Alexander Firanchuk noted that many contemporary examples in developed countries are linked not to a reevaluation of the principles of a market economy, but to governments’ responses to financial crises, the pandemic, and the energy shock. In particular, the cases of Germany’s Uniper, France’s EDF, and the state’s equity stake in the U.S.-based MP Materials were accompanied by compensation for owners and took place within the framework of market mechanisms.
“It is more accurate to speak of an increase in the number of cases where the state temporarily acquires a stake in systemically important companies, rather than of large-scale nationalization in the traditional sense. In many countries, the authorities initially viewed such measures as temporary and are already implementing plans to reduce their stake in these businesses,” Alexander Firanchuk pointed out.
He added that the key concern for investors remains the risk of property expropriation without adequate compensation.
“If we define nationalization as the expropriation of property without compensation, then such a risk appears to remain extremely limited,” noted Alexander Firanchuk.