Russia urgently needs to diversify by engaging more fully with the global economy, and that will not be possible as long as even its biggest investor is hamstrung by unenforceable contracts, corrupt police and venal courtrooms, said The Times of London in an editorial yesterday. Excerpts:
The new man in the Kremlin cannot afford to stand aloof while oligarchs and officials ruin Russia’s reputation with investors.
In Moscow yesterday, the Russian migration service approved work permits for 48 foreign employees of an oil company half-owned by BP. Seldom can such a trivial piece of bureaucracy have meant so much: At stake in this argument over the status of a few dozen oil workers is nothing less than Russia’s reputation as a place to do business, and the long-term health of its economy. The approval of the permits means that, for the time being, senior foreign staff of TNK-BP, a British-Russian joint venture, can go on working in Russia. BP’s $8 billion stake in this venture is the single largest foreign investment in Russia. TNK-BP itself is the third-biggest oil producer in the country, where the oil and gas industries still overwhelmingly dominate the economy.
Russia needs specialized foreign investment and know how more than it is prepared to admit. Its net oil output fell in the first half of this year for the first time in a decade, and its state-owned energy giants, for all their size, lack the resources to open up the new fields in eastern Siberia on which strong future output depends.
