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Friday, March 07, 2008

Russia's Paranoid, Neo-Soviet, Xenophobic Crackdown on Foreigners Continues

Reuters reports:

Russia may limit foreign ownership of Internet providers, electronic mass media and publishing houses, extending a list of industries deemed strategic, a senior lawmaker told Reuters on Wednesday.

Russia's parliament is set to debate the controversial law this month amid a tussle between government officials and the security services over what industries should be deemed sensitive and how much to limit foreign investment in them.

"We need to defend our public space from foreign firms, which may seize dominant positions," said Martin Shakkum, head of the parliament's land and construction committee, which is responsible for preparing the new law.

According to the draft law, a foreign company seeking a controlling stake in a Russian firm working in a sector deemed strategic will need to seek a permission from a special government committee. Outgoing President Vladimir Putin secured tight control over national television channels and other major media during his eight-year rule, prompting criticism from Western governments and human rights groups.

The media arm of state-controlled gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research) controls national television channel NTV, Izvestia newspaper and even the Ekho Moskvy radio station, which sometimes criticises the Kremlin.

MORE SECTORS

Smaller traditional media outlets as well as Internet media enjoy relative freedom and have been targeted by international companies seeking to tap Russia's booming advertising market.

Sweden's Modern Times Group (MTGb.ST: Quote, Profile, Research) owns 40 percent of television firm CTC Media Inc (CTCM.O: Quote, Profile, Research) and Finland's SanomaWSOY (SWS1V.HE: Quote, Profile, Research) owns the publisher of business daily Vedomosti. Mobile operator Vimpelcom (VIP.N: Quote, Profile, Research), where Norwegian group Telenor (TEL.OL: Quote, Profile, Research) has a blocking stake, provides Internet services through recently acquired fixed-line operator Golden Telecom. Other major Internet providers are Russian-owned.

"The presidential administration wants to put more sectors on the list, they want to control mass media, publishing and the Internet. In the last draft there were 40 sectors, now there will be 43 to 45," a senior government source told Reuters.

The Duma passed the draft at a first reading last September, over two years after Putin ordered officials to more clearly draw up legislation to define rules on foreign investment.

Russian officials had pledged the law would be passed last year, before the parliamentary and presidential election, but the second hearing was delayed after intervention by the security services.

The parliament also asked the government to submit amendments to the subsoil law, which defines strategic natural resource deposits. The new investment law would then apply curbs to exploration of such deposits.

Industry sources told Reuters the Federal Security Service (FSB) wanted the limits on foreign investment in exploration of strategic deposits to apply to existing licences, causing an outcry among foreign investors already working in Russia.

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