Russia Will Have to Learn to Live Without Foreign Investors

NEW – August 31, 2022

Russia will have to learn to live without foreign investors and somehow focus on internal reserves and growth points.

Over the past 15 years, 566 billion foreign direct investments have come to Russia, from which 1% or less than $6 billion are CIS countries and Ukraine, and the remaining 99% are foreign countries.

Among foreign countries, accumulated direct investments of over $750 million were made by 32 countries that contributed to 99.3% of the total direct investments of foreign countries, i.e. countries with accumulated investments of less than $750 million over 15 years make no sense to consider.

In these 32 countries, only three are neutral – these are China, Qatar and the UAE, whose total investments amounted to $8.4 billion or less than 1.5% of the total direct investments of foreign countries. Accordingly, almost all investments in Russia came from offshore and unfriendly countries.

It is difficult to consider Turkey neutral, being integrated into NATO, but if with Turkey, it is another $2.5 billion, which does not change the overall picture.

More than 233 billion and another 27 billion have passed through offshore companies to Russia, which are not distributed among countries, but presumably from offshore. Thus, almost 47% of all investments in Russia came from offshore, and the largest are Cyprus (98 billion), the Virgin Islands (41.5 billion), the Bahamas (35.3 billion) and Bermuda (33.2 billion). Indirectly, Ireland can also be recorded as offshore.

At least 70% of Russian capital is offshore, so at least a third of direct investments are Russian money.

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Among Western countries, the largest investors in Russia were the United Kingdom and the Netherlands in the framework of oil and gas projects.

Unless it is possible to build new ties with neutral countries, but for now this is difficult, foreign direct investment in Russia will be close to zero. Therefore, the focus on the concept of the investment climate is outdated – it does not exist anymore.

A new era has begun, where Russia can win more than lose, because focusing on its own resources will allow building a more viable, solid and independent economic and political structure.

Pavel Ryabov

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