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. Last Updated: 07/27/2016

Is This the Right Time to Invest?

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With investors and government officials gathered at Harvard this week for the first major U.S.-Russian investment conference since the Yukos affair erupted, it is a suitable moment to take a step back and look at the implications of the events of recent months and the upcoming parliamentary and presidential elections for Russia's investment climate.

An issue of paramount concern must be the increased uncertainty about where the country is headed politically, economically and -- perhaps above all -- on the thorny issue of property rights.

It is ironic that the forthcoming elections are not the major source of uncertainty per se. We already know that, by hook or by crook, pro-Kremlin forces will almost without doubt command a majority in the next State Duma. And as regards the presidential election in March, the main question is whether President Vladimir Putin wins re-election in the first or second round.

And yet this knowledge does not shed much light on the political complexion or the economic program of the "second" Putin administration. This situation highlights the inherent instability of a quasi-authoritarian regime that lacks transparent decision-making and policy implementation.

In the past few weeks we have heard a cacophony of contradictory statements from various parts of the presidential administration, government and pro-Kremlin parties on key economic policy issues (including Putin's inconsistent public position on aspects of the Yukos affair).

For example, Deputy Economic Trade and Development Minister Arkady Dvorkovich recently warned: "The risks that past sins will be reexamined exists, and this risk should be included in all [investment] projects in Russia."

Putin, however, has repeatedly stated that there will be no general revision of the results of privatization, seeking to reassure investors that the Yukos affair is an isolated case. The trouble is that all investors have to go on is Putin's word, which is not underpinned by any legislative guarantees.

The election season should be a perfect time to debate economic policy, including how to deal with the difficult legacy of 1990s privatization and the related issue of oligarchs "capturing" the political process. However, despite the pro-business bent during the first half of Putin's term, there does not seem to be the political will at the top to clarify the administration's position on key issues or to move toward putting them on a more sound legal footing.

Until that is done, it is very hard in good faith to recommend making any major investments in Russia.