NO NEED TO MAKE EXCUSES FOR NORMAL PRACTICES*

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MOSCOW, February 22, (RIA Novosti's commentator Marina Pustilnik) - The statement made by Russian authorities last week has once again got foreign investors to ponder over the necessity of spending money and wasting their nerves in Russia. It was Minister for Natural Resources Yury Trutnev who made an announcement that foreign companies would not be admitted to auctions for the right to develop major oil-and-gas deposits as well as gold and copper-fields.

However, following the threats by France's Total and America's ConocoPhillips to see to it that such innovations will tell on planned investment into the Russian economy, the government has taken some protective measures. On February 16, last Wednesday, Yury Trutnev told newsmen that most minerals-development auctions would be open in 2005.

On the next day, Thursday, the floor was given to the pillar of liberal ideas, Economics Minister German Gref, who declared that minerals-development rights auctions could be closed for foreigners.

In some cases, it is quite justified, say in reference to some definite fields, said the minister. He called the very idea of closed auctions as "a normal practice", adding that all the countries make use of it. The necessity of pushing forward the liberal image of German Gref appeared after the excuses by Minister for Natural Resources Yury Trutnev who also aimed at abating tensions but remained unheeded.

Meanwhile, Trutnev reported that despite his earlier statements most of the 250 minerals auctions to be staged in 2005 would be open-90 percent of them.

Despite his earlier statements, Trutnev has not renounced his last week's pronouncements, repeating that strategic deposits should be developed by Russian companies. "We want strategically-important reserves to be mined by Russian companies and rules of business games are quite evident here," he said. In respect to closed auctions, the minister made a reminder that all the world was practicing closed auctions on strategic materials for non-residents. "Russia is no exception. We, like others, have got national interests."

Among the deposits from which foreign investors shall be barred, according to the ministry for natural resources and the federal agency for minerals utilization, are the oil-and-gas deposit Sakahlin-3, the gas-fields in the Barents Sea, the Roman Trebs deposit, the Anatoly Titov deposit, four units of the Central Khoreiver Depression, the Udokan copper project and Sukhoi Log gold-ore deposit. As to terms of the said auctions, the federal agency for minerals utilization will stem from the premise that 51 percent of the capital of a company admitted to such auctions should belong to Russian partners.

Actually, the behaviour of Russian authorities is quite logical. The practice they are seeking to justify themselves for is absolutely normal for a majority of countries rich in natural resources. Take Saudi Arabia whose authorities are usually very thorough in selecting potential partners for mining projects and see to it that the controlling bloc of shares in joint ventures will belong to locals.

That the announcement of closed auctions has caused such discontent among Western investors points to the fact that the opportunity to participate in the development of , say, the precious deposits of Sakhalin-3, Sukhoi Log or Udokanskoye has been until recently almost the only "carrot" attracting foreign investors to Russia. As to other Russian raw materials sectors, they create many additional difficulties for foreign investors who see no adequate compensation for their efforts. One can and ought to make a correct inference. The Russian authorities need not to justify themselves for activities that are internationally accepted as "normal practice". Instead, they'd better improve the abnormal practices: home and foreign companies have to be freed of constant arbitrariness and inconsistency prevailing in the Russian business environment.

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