Russian President Vladimir Putin has signed a decree seeking to attract new foreign investment to Russia’s financial markets despite sweeping sanctions over the war in Ukraine.

According to the new rules, foreign investors, including from so-called “unfriendly” countries, will be able to invest in Russian securities without blocking their funds in special type C accounts,  writes Bloomberg.

Instead, new investors will be able to use foreign nominal accounts marked IN, which will allow for the repatriation of capital outside of Russia .

According to the decree, restrictions imposed by Russia after the start of a full-scale invasion of Ukraine in 2022, which forced investors to hold funds in blocked accounts in the country, will not apply to new investments.

However, the decree does not allow the withdrawal of funds that are already frozen in existing Type C accounts .

In response to sanctions for the full-scale war it unleashed against Ukraine, the Kremlin imposed capital controls that included mandatory C-type accounts for investors from “unfriendly” jurisdictions. This move effectively blocked billions of dollars in dividends, coupon payments, and sales proceeds belonging to foreign investors.

The Russian Finance Ministry said last December that it was working on proposals that would guarantee new foreign investors the ability to freely withdraw their funds.

Elvira Nabiullina, the head of the Central Bank of the Russian Federation, added that her institution and the Russian Ministry of Finance agree that Russia needs new investments and that fresh capital should be exempt from restrictions in response to sanctions.

This measure may attract new investors to Russia, but it will not be “revolutionary” for those whose money is frozen in C accounts, as there are no investment opportunities until the sanctions are lifted.

As reported, the volume of foreign investment in Russia continues to decline rapidly and as of October 2024  had fallen to a minimum in the last 15 years . Thus, the Kremlin’s hopes that “friendly” countries would replace Western investors in Russia turned out to be in vain.

Before the start of the full-scale war against Ukraine, three-quarters of foreign direct investment in Russia was provided by countries on the “unfriendly” list , and the investment stopped after the imposition of sanctions and counter-sanctions.

Last December, Putin declared that Russia had surpassed all countries in the world in terms of investment attractiveness . According to Putin, this assessment was made by the state Agency for Strategic Initiatives, which, Putin claimed, used the same methodology as the World Bank.

“More than 800 criteria were taken into account – from opening enterprises to resolving insolvency problems. The study showed that Russia is among the global leaders in the investment climate rating. At the same time, in terms of the level of the regulatory framework and the quality of public services, Russia is certainly ahead of all countries,” Putin said then.

Author:  Halyna Yalivets Джерело: https://censor.net/n3561021

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