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#21 - JRL 2007-27 - JRL Home
Bill on foreign access to Russian strategic cos. sent to depts.

MOSCOW, February 3 (RIA Novosti) - Russia's Industry and Energy Ministry said Saturday it had sent an updated draft law on foreigners' access to Russian strategic organizations to interested ministries and departments.

The Russian government approved in general terms January 31 draft laws on foreign investment in the country's strategic assets, which among other restrictions stipulate that foreigners should only be able to buy controlling stakes in energy, military-related and other enterprises classed as "strategic" with the permission of a government commission, and after approval from the Federal Security Service (FSB).

"The bill has been updated particularly optimizing levels of decision-making on foreign investors' applications," a ministry source said.

The source said the document was sent to the Economic Development and Trade Ministry, the Natural Resources Ministry, the Federal Security Service and the Defense Ministry. The bill suggests restricting foreign companies' access in 39 spheres, including production of arms, military hardware, nuclear materials, and construction of nuclear facilities.

Restrictions also apply to spheres having 2-3% share in the GDP.

Russian officials say the measures aim to make mechanisms of state control over energy deals more transparent and understandable to foreign investors, and ensure the country's security and interests in sensitive spheres. However, critics say the decisions could harm Russia's investment climate.

Last year, Russian authorities applied pressure to reduce foreign companies' shares in oil and gas projects being implemented under production-sharing agreements allowing for major tax and other privileges.

In December 2007, natural gas monopoly Gazprom acquired a 50% plus one share in the Sakhalin II liquefied natural gas project off Russia's Pacific coast for $7.45 billion. Up until the deal, operator Royal Dutch Shell had come under months of intense pressure from environmental regulators for large-scale ecological destruction caused in the region.