Russian prime minister Viktor Chernomyrdin told the Consultative Council on Foreign Investors on October 13 that a presidential decree has been prepared giving foreign investors a 50 percent reduction in customs duties on equipment imports. Foreign investors previously enjoyed this tax break, but the Russian Duma removed it in late 1996, arguing that it amounted to unfair competition for Russian equipment manufacturers. In order to qualify for the tax reduction, a given project must be on the Economy Ministry’s approved list, and the planned foreign investment must exceed $100 million in total. A draft law defining the terms and conditions of foreign investment in Russia is making agonizingly slow progress through the Duma, while the law on production sharing, passed two years ago, is only now being put into effect, in a handful of sites. (Russian agencies, October 13)
In the first six months of this year foreign investment in Russia of all kinds reached $6.7 billion, the bulk of which was indirect investment in shares and government bonds. About $2 billion was direct investment in Russian plants: roughly twice as much as in the same period last year, but still only equal to around 4 percent of total investment in the Russian economy. For all the government’s rhetoric about the need to encourage foreign investment, the truth is that Russia’s corporate bosses and their allies in the regional political elite simply do not want foreign investment if it means relinquishing control over their industries.
Meanwhile, a Foreign Trade Ministry official announced on October 13 that, beginning on January 1, 1998, Russia will impose import quotas on carpets from the EU. Russia imports $800 million worth of textiles from the European Union each year, but EU quotas limit Russian exports to $200 million dollars a year.
Udugov Claims Moscow Has Already Recognized Chechen Independence.