Dmitri Litvinovich: State monopoly on vodka returns to Russia

The epoch of the primary accumulation of capital has long been left behind in Russia. Today’s businessmen are different from those of hot money hunters of the early 1990s. Present-day businessmen do care about their image. The state also tries to catch up with business and wants to show the West a beautiful glossy wrapping in the form of assurances of business being liberalized and corruption being fought. According to numerous declarations,the privatization of the country’s economy is in progress. Really, it is a good idea. However, as so often has been the case here, business is confined to those declarations of intent. The other day, the country’s patent department, Rospatent, registered 43 vodka brands, including the world-known trade marks of “Stolichnaya” and “Moskovskaya," and granted to the Ministry of Agriculture the right to use them. Solicitation by the Procurator General’s Office to strip the rights for those brands was explained by the fact that the privatization of the former large vodka concern had been conducted with irregularities. The highest arbitration court confirmed this, and Rospatent returned the brands to the state. It is the first case in Russia’s history when intellectual property has become nationalized. Yet, the above decision is just another culmination in the Russian battle for vodka. Here, the Russian state, together with notorious businessmen, wants to get hold of vodka production and the related money flow, using expropriation or court proceedings. There are numerous instances when state-controlled armed squads or private security guards attack distilleries. Four chief executives have been changed at the famous Kristall factory alone. The successor of the Smirnoff brand was forced to close up its Moscow office after an ugly fight with an alleged new owner. Deep in the province, forcible takeovers also have taken place. At the moment, there are over 700 distilleries in Russia. Retail sales of vodka and other alcohol beverages in Russia has increased over the fist 9 months of the current year by 5%, making up 86.4m decilitres of pure spirit. Besides, it is believed that 40-70% of vodka consumed in Russia is produced in underground factories. No wonder that the state has dared to recapture the Brezhnev times’ most profitable source of income. The point is that the taxes imposed on wine and vodka production already bring billions of rubles to the state coffers. In the light of an unfavourable oil market, one should not neglect anything, including the vodka monopoly.

Dmitri Litvinovich PRAVDA.Ru

Read the original in Russian: http://www.pravda.ru/main/2001/11/01/33319.html