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Sanctions: an unprecedented moment for doing business in Russia

Sanctions: an unprecedented moment for doing business in Russia The complete version of the article is available as PDF.

2014 has brought many challenges to the Russian economy. The already modest growth rates that were demonstrated in the previous year were targeted even more by various sanctions imposed against Russia by the US, EU and some other jurisdictions. As a reaction to these, Russia has installed counter-sanctions in the food sector, hitting some of the European food producers hard.

The wave of sanctions, together with the weakening oil prices have made investments into Russia extremely attractive. Firstly, since January 2014, the national currency has lost its weight against the US dollar and euro by an average of 20%, which means that Russian assets have become cheaper. Secondly, the current limitations provided by the sanctions regulations on both sides do not actually limit investments.

When reading the sanctions list, one notes that it is almost exclusively state finances, shelf drilling and food supply that have been put on hold. On the contrary, Russian counter-sanctions actually encourage foreign investors to establish production facilities in Russia. Those international firms that have already established local production frankly admit that they are benefiting from the sanctions and seem to be quite happy about it.

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