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AFX News: UK’s Darling Calls for Legal Certainty Regarding Investment in Russia

(25/04/2007)

The UK’s Trade and Industry Secretary Alistair Darling has called for openness and legal certainty for companies investing in Russia.

“We need legal certainty. Legal certainty is a vital ingredient for ensuring a positive investment climate,” he said at the 10th Annual Russian Economic Forum in London.

The UK is the largest foreign investor in Russia – it invested more than US $5.5 billion last year, and trade has trebled in the last five years – but the comments come at a time of deterioration in relations between the two countries, a topic mentioned throughout the forum. Many Russian government officials pulled out of the forum at the last minute amid speculation the Kremlin had discouraged their attendance.

Concerning the energy markets, Darling noted that the UK had issued a record number of oil and gas licenses last year and that 2006 was the best year for discoveries in around five years.

“We are firm believers of open, efficient, competitive energy markets, supported by transparent, equitable and stable, effective legal and regulatory frameworks,” he said.

“We have seen the growth of economic nationalism. It won’t work. It is protectionism and protectionism dressed up as patriotism is still protectionism.

“It is rash to close markets at the very time they ought to be expanding.”

The comments come days after the conclusion of a US $7.5 billion deal that saw Shell cede control of the giant Sakhalin-2 project to Russia’s state-owned Gazprom.

The Russian environmental watchdog last year launched an aggressive environmental campaign against the US $20 billion gas project, which industry experts believe was politically motivated as it led to Gazprom eventually taking on the majority stake.

Russia is the largest economy still outside the WTO, pointed out Darling, adding that the WTO talks to admit Russia – a quest that has been ongoing for 14 years – are moving towards a crucial stage.

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