The Russian bear is back

Despite its poor image, foreign direct investment in Russia hit a new record in the first nine months of 2006. So should you join the rush to go East?

Perhaps there is no better quote to illustrate the unique place of Russia in the investment world than this simple comment from the Financial Times: "Gazprom [the giant Russian oil and gas company] does not comprehend why its thinly veiled threats and bullying are not, as at home, seen as a normal negotiating tactic."

What do we make of Russia? Assassinations, broken promises, corruption, frequent roughhouse tacticsthese things loom large in the investor's mind, reinforcing the idea of Russia as some sort of recurring nightmare. Then there are those flashbacks to 2004 and the whole Yukos fiasco. The government basically seized the company for back taxes in a move widely considered politically motivated (i.e., Putin didn't like its ambitious billionaire CEO, Khodorkovsky, who was arrested and sent to rot in Siberia).

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