Russia ready to retaliate over U.S. restrictions on foreign investment
MOSCOW: President Vladimir Putin said Monday that Russia might impose new restrictions on foreign investment in response to the U.S. strengthening of control over purchases made by foreign companies in the United States.
Putin said Russia was concerned about recently passed U.S. legislation intended to tighten national security reviews of proposed foreign investment, which he described as a “step away from liberal economics.”
“We remember the time when our economic potential, including in the investment sphere, was limited and we were being told from abroad that we should open our economy as widely as possible and offer investment opportunities to foreign companies,” Putin said during a trip to the United Arab Emirates.
“Now when we have got such potential, other countries, our partners are taking steps in the opposite direction and effectively close or create conditions for closing their markets for investment,” he said. “Of course, that causes our concern.”
In televised comments, Putin specifically referred to a new bill signed by President George W. Bush in July, which envisages participation by high-level officials, including the director of national intelligence, in decisions concerning the security implications of direct foreign investment.
The new law extends the scope of national security to cover deals involving critical infrastructure and energy, and requires a second-stage investigation of most proposed acquisitions by state-owned companies.
“In our opinion, that may result in certain restrictions on investment activities,” Putin said. He added that Russia long had considered a similar legislation and refrained from passing it, but that it may change its mind now after the passage of the U.S. law and as similar legislation was being considered in Europe.
“If it continues like that, we will have to take corresponding steps to protect our investment,” Putin said.
Putins cabinet has worked inconclusively for four years on new legislation regulating subsoil resources. But officials have stated repeatedly that foreign companies would be barred from having majority interests in oil or gas deposits over a certain size deemed by the government to be “strategic.”
In recent months, foreign oil companies have been forced to cede control of a number of major projects which they acquired in the 1990s, most notably with the sale by Royal Dutch Shell of a controlling stake in the Sakhalin-2 project, and BPs sale of its stake in the Kovykta gas field.
The Russian state-run natural gas monopoly Gazprom was the buyer of both.
Meanwhile, a leading financier based in Moscow said Monday that Russia needed to guarantee the rule of law and keep government out of business to guarantee future prosperity
Boris Jordan, who helped advise on the first Russian privatizations in the 1990s and now runs a $2 billion private equity and advisory firm named the Sputnik Group, said Russia had made huge progress since the rocky first days of capitalism.
“The economic reform process, particularly over the last four years, in my opinion, has come to a grinding halt,” Jordan said at an investment conference in Moscow.
“The big question is the rule of law,” he said.
He added, “Probably the single biggest thing business in Russia today suffers from is that you cant really expect to get a proper court hearing.”
