Russia 10th riskiest country for investors

The annual Political Risk Atlas is published by the British risk-assessment consulting company Maplecroft. Their global risk portifolio combine rigorous research with technological innovation and monitoring tools to present in-depth reports on risks, such as political, for business communities.

The 2011 political risk report was published on Thursday and highlights the rising political risk seen in Russia.

The report reads that despite its growing economic power, Russia now features alongside Pakistan in joining the 10 nations most affected by fast-changing, dynamic political risks.

The top eleven list, said to be of “extreme risk” include: Somalia (1), Democratic Republic of Congo (2), Sudan (3), Myanmar (4), Afghanistan (5), Iraq (6), Zimbabwe (7), North Korea (8), Pakistan (9), Russia (10) and Central African Republic (11).

According to the survey by Maplecroft, the challenges for companies operating in Russia stem from an ineffective legal and regulatory system, which includes a lack of judicial independence from the government. As an example of this, Maplecroft names the recently politicised case of Michael Khodorkovsky, said to be a “show trail.”

Companies should monitor the increasing risk of poor contract enforcement and expropriation, the report reads.

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Terrorism is another risk-factor that has increased in Russia over the last year, not only in the Caucasus region, but also due to strike targets elsewhere in the country, including the Metro bombings in Moscow in March.

Russia’s poor performance is compounded by its ‘extreme risk’ ratings for its business environment, corporate governance and the endemic nature of corruption, which is prevalent throughout all tiers of government.

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Last year, Russia took the 15th place on the global political risk index for investors.

At the same time as the Maplecroft report was published on Thursday, Russian President Dmitri Medvedev had a meeting with the Anti-Corruption Council in Moscow. Medvedev outlined some of the most pressing problems in combating corruption in Russia.

The President instructed the Federal Tax Service and the prosecutor General’s office to validate the tax declarations from officials within the next three months period, informs Kremlin.ru, the President’s official portal.

- It is a particular need to expand the format of participation of civil society in all anti-corruption activities, said Medvedev.

Russia is not only doing badly on the global political risk index. According to Transparency International’s Corruption Perception Index for 2010, Russia is sliding to the 154th place among the 178 countries listed. As previously reported by BarentsObserver, Russia took the 147th place in the 2009 Transparency International list.

On the 2009 Global Peace Index, Russia ranked number 136 of the 144 countries listed BarentsObserver reported.