Political Risk for Foreign Firms in Russia

In this article the author discusses the political risks of foreign firms in Russia. Risks vary a great deal between the industries. Telecommunications is the most risky industry for a foreign firm at the moment. State consolidation in the oil and gas business has continued. When Russia experiences difficult times, foreign oil companies enjoy good times in Russia, and vice versa, and therefore, the latest crisis gives, at least, a temporary relief for foreign oil firms. I predict that the metal industry will also see its national champion. The production of electrical energy is a strategic sector, though it was not explicitly named in the law of strategic sectors, and foreign electricity firms operating in Russia may face surprises, if the Russian Government turns more nationalistic in the next decade.

Keywords: Investment climate, political risks, foreign direct investment in Russia
JEL Classification: F21, F23