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Russia has long been considered a risky place for foreign investment.
Since Russian President Vladimir Putin came to power in 1999, the Russian government has steadily extended its reach over the country’s industries, bringing them back under the Kremlin’s umbrella and re-creating the state champions reminiscent of the Soviet days. Furthermore, since the fall of the Soviet Union, Russian business laws have long been full of “gray areas” concerning who is allowed to own certain companies and industries and how much control those owners are allowed. These laws — which are sometimes deliberately confusing and complex — allowed the Kremlin to target companies on a whim.
However, Putin signed a long-expected law May 5 that finally clarifies what assets will be off-limits and to whom, sending a clear message that foreign intervention in Russia simply will not be tolerated — no matter the cost.
Foreign investors flocked to the broken Soviet Union in the 1990s, since it had an enormous wealth of natural resources and a plethora of industries and opportunities, and most of the infrastructure and companies were already in place. Then-President Boris Yeltsin fueled the investment chaos by allowing most of the companies the Soviet Union had considered strategic to be sold off, split apart or given away to Russia’s new class of businessmen, called oligarchs, who looked abroad for help in developing their new resources.
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