[Editor: Originally, the fourth paragraph of this article stated erroneously that Russian state-owned gas company Gazprom purchased privately held Russian oil company Yukos. It has been changed below to reflect the correct beneficiary of the deal: Russian state-owned oil company Rosneft]

Totalitarian Russia is dramatically reemerging as a world power. The Kremlin’s consolidation of strategic industries over the past several years provides evidence of this trend.

In one of Russian President Vladimir Putin’s latest moves to increase Kremlin influence, he decreed the merger of Russia’s aircraft manufacturing industry. Under the plan, the newly created Unified Aircraft Corporation, which will be 75 percent government-owned, will comprise civil and military aircraft makers such as Tupolev, Il-yushin, MiG and Irkut (Financial Times, February 22).

Commenting on the amalgamation, Russian Energy Minister Viktor Khristenko said that the new corporation will be better able to withstand foreign competition and that it is planning to double the existing combined production over the coming decade.

Under President Putin’s leadership, the Kremlin has continually been gaining control of the nation’s most strategic industries. Last year, the most significant of those takeovers was state-owned oil giant Rosneft’s acquisition of the privately held oil major Yukos, in which deal the Russian government levied back taxes on Yukos, forcing it into bankruptcy so that Rosneft could more easily purchase it. Gazprom, another state-controlled gas company (which produces 20 percent of the world’s gas) has also benefited by purchasing less significant Yukos holdings.

Gazprom was the company that later cut Ukraine’s gas supply off after Ukraine’s newly elected, pro-Western government balked at paying increased gas prices that were four times greater than those paid by the previous, pro-Russian government.

But the petroleum and aircraft manufacturing sectors are not the only industries that the Russian government has been taking over.

The head of the Russian Federal Atomic Energy Agency, Sergei Kiriyenko, recently announced the creation of another conglomerate—a nuclear energy conglomerate.

When asked about his plans to reorganize the nuclear power industry, Mr. Kiriyenko said, “We need to build a vertically integrated holding company that, by analogy with Gazprom, might be called Atomprom” (Current Digest of the Post-Soviet Press, March 8).

The Current Digest of the Post-Soviet Press says the consolidation plan will “strengthen government influence, and … do so in short order,” and that it will create an energy major that will be a competitive player in the world market. Mr. Kiriyenko says the new company will eventually be able to capture one fifth of the world market in nuclear power generation.

The Kremlin is strengthening influence elsewhere too. Vladimir Putin recently said that he supported a plan to create a state-controlled mega automobile manufacturing conglomerate in an attempt to strengthen Russia’s struggling vehicle producers. Under the proposal, the nation’s four largest auto manufacturers would be merged, although at this time it is still unclear how the privately owned companies would be merged with the state-owned ones. To alleviate any concerns over a Yukos-style takeover, President Putin said that while he supported the merger plan he would “not impose any decisions” on the industry (Prime-Tass Business News Agency, January 31).

Mikhail Zak, an analyst at Moscow-based Veles Capital Investment Company, believes that most strategic industries will eventually be under the Kremlin’s control—industries such as “aviation, mechanical engineering, diamonds, petrol, gas, production of military-industrial complex, and production of automobiles” (Agency WPS, March 1).

Sergei Zhavoronkov, a senior member of the Institute for Economy in Transition, says that a “further takeover of [the] fuel and energy sector is already determined” and that “similar processes are expected in non ferrous metallurgy” and the “sphere of precious metals production” (ibid.).

It appears Russia’s flirtation with elements of Western-style democracy was short-lived. Its leaders are reverting to typical totalitarian form.

Watch for Russia to continue to increase its power and influence—and use its vast resources and reviving state-owned industries to eventually challenge the world’s powers for supremacy. For more information, see our booklet Russia and China in Prophecy.