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Protectionism in Russia’s Strategic Sectors

The Moscow Times is running a column by Glenn Kolleeny and Randy Bregman of Salans which argues that Russia’s Law on Foreign Investment in Strategic Companies reaches far beyond its legitimate purpose to protect certain industries from foreign influence, and overextends into transparent protectionism and enrichment of non-competitive local companies and individuals. Needless to say, it bodes very poorly for Russia’s future economic development and diversification that the number of hydrocarbon fields deemed “strategic” has tripled since 2006, which explains why Russia’s oil production is stagnating during these years of peak demand. The authors write:

The recently published list of technologies critical to national security, raises real concerns about protectionism. The list consists of broad categories of technology covering everything from weather forecasting to “processing, storage, transfer and protection of information” technology. The majority of Russian companies have technology that could be considered “critical.” National legislatures have an obligation to create laws that provide for protection against foreign control of assets vital to national security. Unfortunately, the recent steps taken in Russia to implement the Law on Foreign Investment in Strategic Companies seem designed to lead to protectionism, a decrease in foreign investment, and competition.