Russia Mulls Ring-Fencing SWF from Sanctions

Could geopolitics hit global co-investors in Russia?

The $10 billion Russian Direct Investment Fund (RDIF) could be transferred from state ownership to the country’s central bank to avoid economic sanctions that may be applied over the Ukraine conflict.

The fund’s array of Asian, European, Middle Eastern, and North American co-investors are concerned its ability to invest might be stifled should global security organisations agree limits on its finances, Bloomberg reported.   

A spokesman for the RDIF told the newswire that a decision had not yet been made on the fund’s ownership structure. In July, the fund issued a statement outlining how sanctions up to that point would not affect its day-to-day activity.

Russia has already been subject to several rounds of sanctions from the US, Europe, and other allied nations. These partners have again mooted further measures following military action in disputed Ukrainian territory.

This week, The Guardian reported that Australian Prime Minister Tony Abbott said his country would follow the European Union in adopting tougher sanctions against Russia, accusing Moscow of “deliberately and now openly violating Ukrainian sovereignty”.

The RDIF, which was set up to facilitate investment in Russia by foreign asset owners, has partners around the globe. The Kuwait Investment Authority has confirmed it partnered with the fund to invest in Russian banks, while the French Caisse des Dépôts International partnered with the RDIF to create the Russia-France Investment Fund.

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