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. Last Updated: 07/27/2016

Little Security Without More Clarity

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In 2005, anti-monopoly authorities quashed a deal that would have allowed Germany's Siemens to buy Power Machines, citing the strategic nature of the turbine producer's work for the Navy. The decision generated public calls, including from President Vladimir Putin, to define which sectors of the economy should be considered strategic and to lay out clear rules for foreign investors looking to buy into them.

So the government's initial approval on Wednesday of a bill identifying 40 industries as strategic and requiring federal approval for significant investment is a welcome step toward making the rules of the game more transparent.

There is much left to be clarified, however, in the version the government signed off on Wednesday. In the month remaining before the legislation should be submitted to the State Duma, and during the parliament's deliberations, investors will be looking for a more concrete accounting of the criteria that will be used by the Federal Security Service, or FSB, and other governmental agencies to assess the desirability of purchases by foreigners.

One positive step would be to keep the number of agencies involved in decisions to a minimum, thus reducing the number of bureaucratic hurdles involved. Once these agencies have been identified, they should be given clear and objective guidelines to follow in reaching decisions. These guidelines should also be made available for foreign companies or individuals considering a purchase in a strategic sector.

A failure to take these steps would only underscore existing uncertainty among foreign investors. More important, perhaps, a minefield of officials and agencies reaching decisions on the basis of vague guidelines and rules would become just another breeding ground for government corruption.

Economic Development and Trade Minister German Gref rightfully pointed out that a broader idea of the term "security" has to be considered here.

Most countries monitor or regulate foreign participation in certain domestic industries to some degree. But in a world where national power increasingly comes more from a cash register than the end of a gun, casting the rules so broadly that they seriously undercut the economy as a whole or so vaguely that they end up engendering more corruption will not increase security.

Finding the right balance and making the rules clear for everyone is the safest path.