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. Last Updated: 07/27/2016

Zhukov Outlines Strategic Sectors

MTDeputy Prime Minister Alexander Zhukov
LONDON -- The government's plan to impose restrictions on foreign investment will focus on key oil and natural gas fields and defense, leaving other industries free from interference, Deputy Prime Minister Alexander Zhukov said.

The new law "quite clearly" details so-called strategic industries in which foreign investment will be limited, Zhukov said in an interview last week in London.

"There will be very few of these areas" and they will be "exclusively linked to defense and some strategic oil and gas fields," Zhukov said on the sidelines of a conference. "In everything else there won't be such limitations."

President Vladimir Putin's increased control over energy and his plans to merge the state aviation and auto industries have raised concerns that he is aiming to create Soviet-style monopolies and exclude foreigners.

Economic Development and Trade Minister German Gref told lawmakers in early March that the government planned to limit foreign investment in 39 sectors of the economy, including arms manufacturing and nuclear energy.

Among the 39 "strategic" sectors will also be aerospace, natural monopolies, and space and aviation technology, the Financial Times reported.

There are a limited number of industries in which Russia wants to merge assets to create companies that can compete on a global level, Zhukov said. The authorities are guided by "efficiency and competitiveness" and no other motivations, he said.

"There are some industries where we think only big companies can compete in a global economy," he said.

"That is why we recently decided to consolidate our biggest aviation companies to create one that will be able to compete with Boeing and Airbus.

"Of course, we would want to have even higher investment growth," he said. "We are making a lot of effort to protect private property rights and improve corporate governance." The government probably will be able to bring the annual inflation rate below 10 percent this year, and seeks to slow inflation to 5 percent in the next three years, Zhukov said.

The annual domestic capital investment growth rate of 10 percent is "quite high," he said.