Foreign investment

   Under perestroika, the Kremlin sought to attract foreign investment into the Soviet economy for the first time since the 1920s. Under Mikhail Gorbachev’s premiership, the Law on Joint Ventures with Firms from Capitalist Countries, allowing up to 49 percent foreign ownership, opened the door to foreign investors. While modest in scope, the new laws allowed the Union of Soviet Socialist Republics (USSR) to acquire high technology and begin to modernize its manufacturing system. Under Boris Yeltsin, the new Foreign Investment Law of 1991 further opened the country to foreign capital, including natural resources, government-owned enterprises, and property. Oil and natural gas proved most attractive to foreign investors, and in 1995 a new law was passed giving greater protection to multinational corporations involved in Russia’s hydrocarbon industries. Under Vladimir Putin, foreign investment increased dramatically, reaching an all-time high of $100 billion in 2007. Investors from Great Britain, the United States, Germany, Switzerland, the Netherlands, and Cyprus lead the pack, though much of the influx from the latter country is thought to be Russian investment returning after the “capital flight” of the 1990s. China is also an increasingly important player in foreign direct investment.