Russian Foreign Investments Climate: Warm Or Cold?

During the Russian-German summit held in Ekaterinburg in mid-July, 2010, German businessmen raised the question of easing the visa requirements between Russia and the countries of the European Union.  This issue came as a surprise to Dmitry Medvedev and Angela Merkel. It was the Germans who asked, not the Russians, proving once again that Western businessmen are interested in Russia and this interest is growing steadily.  Investors are beginning to think about where to put their post-crisis cash.


It’s no secret that Russia today is not terribly attractive to investors.  That’s a fair assessment. On the World  Bank’s list of the 183 most business-friendly 
countries, Russia is ranked 120th. Major investors are primarily interested in the so-called strategic industries, which are still the most highly-regulated. 


Acquiring more than a 5% equity stake in a company from one of these industries requires the approval of a government commission. Mentioning that kind of a commission would scare off any private investor, but especially a foreign one... So, on one hand, there’s not a favorable investment climate, and on the other, the government’s cautious attitude toward foreign investors has resulted in Russia being nowhere near the top hundred rankings on the World Bank list…


Russian laws are formulated on the principle of ensuring that  foreign investment is treated favorably.  This is the very principle that guides the laws. Foreign investors can operate and use the profit they earn under terms just as favorable as those enjoyed by Russian investors. In addition, Russian 
laws guarantee full protection of a foreign investor’s rights within the Russian Federation, guarantee the reimbursement of any damages resulting from the illegal actions of a government agency, and so on.  Russia is also bound by a number of international treaties and ratified conventions on the protection of foreign investments.


At a meeting in early 2010 about the problems in the investment climate, Russian President Dmitry Medvedev identified investment activity as the deciding factor for the modernization of the country’s economy and announced a set of measures that should be implemented in order to warm "up" investment activity. Some of these are already in effect, including the suspension of quotas on highly-qualified foreign professionals.