National champions

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National champion is a political concept in which large corporations in strategic sectors are expected not only to seek profit but also to "advance the interests of the nation.” This policy has been popular and practiced by many countries. Its pinnacle is probably the post-World War II era in France as part of the dirigisme. Other examples include the creation of the British Steel Corporation by the UK government who acquired the largest fourteen domestic steel companies in 1967.

The risk involved with such policies is exemplified by the unsuccessful challenges to IBM’s dominance of the computer market by UK’s ICL, France’s Bull, and Italy’s Olivetti during the 1970s. The “national champion” policy has made a come back in the current century with Russia as its maximal exponent (see below). Other examples are the merger of E.ON with Ruhrgas backed by the German government in 2000 or the merger of GDF with Suez backed by the French government in 2008.[1]

Russian Renewal[edit]

Russian President Vladimir Putin has made "national champions" a central axis of his policy. The concept was introduced by Putin in his 1997 dissertation "Strategic Planning of the Reproduction of the Resource Bases." Putin, in turn, may have gotten the idea from a textbook by University of Pittsburgh analysts William King and David Cleland.[2] Putin later expanded on the subject in an article published in 1999 in the Journal of the St. Petersburg Mining Institute.[3]

Charles de Gaulle had also advocated similar ideas when he was the president of France in the 1950s.[2]

Vertical integration[edit]

In his dissertation, Putin wrote: "The process of restructuring the national economy must have the goal of creating the most effective and competitive companies on both the domestic and world markets."

Putin's 1999 article proposes that the state should closely regulate and develop the natural resources sector through creating companies with close links to the power vertical, making the firms big enough to compete with multinationals. These companies would become “national champions”, representing the state’s interest in international commerce.[3]

Most national champions are likely to be 50% or more owned by the Russian government, but there is no reason why predominantly private companies could not also serve as national champions, given the right guidance and pressure.[2]

Advancing national interests[edit]

Instead of allowing the country's oligarch-controlled corporations to focus exclusively on making profit, Putin proposed that they should be used instead to advance the country's national interests, suggesting that Russia should reclaim some of the assets that were privatized during Yeltsin, and integrate them vertically into industrial conglomerates so they could compete better with Western multinational corporations.

Regardless of who is the legal owner of the country's natural resources and in particular the mineral resources, the state has the right to regulate the process of their development and use. The state should act in the interests of society as a whole and of individual property owners, when their interests come into conflict with each other and when they need the help of state organs of power to reach compromises when their interests conflict.

—Vladimir Putin[2]

One example of the concept is that energy corporations such as Gazprom should keep the prices inside Russia low, as a form of subsidy for the public, and only strive for maximal profit in foreign countries.[2]

See also[edit]

Examples[edit]

References[edit]

  1. ^ background note in OECD roundtable on "competition policy, industrial policy and national champions". Paris: OECD. 2009. 
  2. ^ a b c d e Goldman, Marshall I. (2008). "Chapter 5". Petrostate: Putin, Power and the New Russia. Oxford University Press. ISBN 978-0-19-534073-0. 
  3. ^ a b Crotty, Ivor (2009-10-06). "The Stereotypical Champion". Russia Profile. Retrieved 2009-07-03.