Russia’s annexation of Russian foreign investment policy in March 2014 is not recognized by the U. USG sanctions on various Russian government officials and a limited number of entities, as well as the imposition of stricter licensing controls on certain products exported to Russia. The government of Russia continues to express interest in attracting higher levels of domestic and foreign investment. Looking to domestic investment, the Russian Government has established a number of regulations which penalize Russian individuals and firms for investing abroad, in part possibly to offset lower levels of foreign direct investment in Russia during 2014.

American firms seeking to invest in the Russian Federation should be aware that the Russian investment climate continues to be marked by high levels of corruption and political risk, making thorough due diligence and good legal counsel essential for any potential investment. USG sanctions on various Russian government officials and a limited number of entities, and the postponement of key bilateral and multilateral engagement on economic reforms. In late March, Senator Andrei Klishas of the Federation Council, the upper chamber of Russia’s national legislature, said the Council plans to draft legislation which would allow the confiscation of property, assets, and accounts of American and EU companies, including private companies, as a retaliatory measure on possible sanctions from the U. However, the government of Russia continues to express interest in attracting higher levels of domestic and foreign investment by private companies. Looking to domestic investment, the Russian Government has established a number of regulations which penalize Russian individuals and firms for investing abroad, possibly to offset lower foreign direct investment in Russia during 2014. As detailed below, the Russian Government has also worked actively on the technical level to improve the business and investment climate.

Despite numerous new programs and initiatives, progress has been uneven and the government has yet to take action to make much needed structural reforms. Russia’s illegal annexation of Crimea has dampened growth prospects for the Russian economy. The International Monetary Fund predicts the Russian economy will grow by a sluggish 0. Given the uncertainty surrounding Russia’s actions in Ukraine, the World Bank provided two estimates for GDP in 2014.