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Russian Cabinet Gives Tentative Approval to Foreign Investments Bill


The Russian government has given preliminary approval to legislation restricting foreign investment in strategic sectors of the country's economy such as oil and natural gas.

Under the draft law, foreign access will be limited in about 40 sectors of the economy, including atomic energy and military hardware.

Several cabinet members, including Prime Minister Mikhail Fradkov, voiced concerns Wednesday about details of the legislation. Fradkov said the bill will be fine-tuned in the coming weeks, before it is sent to the lower house of parliament.

The contentious issue of foreign oil and gas investment boiled over late last year, when Russia moved to gain a majority hold in a massive oil and gas field on the country's far eastern island of Sakhalin. Until then, Hague-based company Royal Dutch Shell and Japanese industrial giant Mitsubishi ran the project.

The consortium ceded controlling interest in the $22 billion Sakhalin 2 project, after Moscow threatened several multi-billion-dollar lawsuits for alleged environmental violations at the project site.

Analysts inside and outside Russia say Moscow used the lawsuit threat as a pretext to gain controlling interest. Russian authorities have not publicly mentioned the environmental issue since the investment restructuring took place in December.

Some information for this report was provided by AP and Reuters.

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