a Political and Economic Issue

• Main Author: Paola Barchietto
• Other Authors: The Pennsylvania State University CiteSeerX Archives
• Format: Text
• Language: English
• Published: 2009
• Subjects: Expropriation Risk; Foreign Investment; Hedging Tools; Export Credit; Sakhalin
• Online Access: http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.489.2334; http://www.sacebt.it/GruppoSACE/export/sites/default/download/DMG/WP9_Russia_a_Political_and_Economic_Issue.pdf

The target of my analysis is to investigate the Expropriation Risk in Russia, and in relation to it, to assess the attractiveness and profitability of Foreign Investment, particularly considering the “strategic ” natural resources sector. The analysis starts with a look at the political scenario, when Putin came to power in 2001, to further present, and better understand, two of the most striking cases of Expropriation actions brought by the Government: Yukos and Sakhalin 2. Furthermore, the research singles out hedging strategies to avoid or reduce the Expropriation Risk, among which we see Export Credit Agencies (such as SACE in Italy) playing an important role. The main conclusion is that despite the worsening of the Expropriation Risk over the last few years and months, and the current Financial Crisis, Russia still remains a high-return potential market, which investors should look at, while protecting their projects by implementing successful hedging tools.