Russia’s Sovereign Investment Projects and Participation By “Friendly” Countries

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Opportunities on both sides as Russian manufacturing looks to combine forces with overseas partners 

By Paul Goncharoff

Sanctions and embargos have always been a part of the relationship between the United States and Russia. Depending on the 4-year cycles of Washington’s geopolitical weather, they waxed or waned, but never entirely went away. An economic commentator once observed that US-imposed economic controls are similar to Pavlov’s experiments with behavior modification done on canine friends.

In 1948, the United States began a campaign of economic sanctions against the then-Soviet Union that, barring occasional thaws and freezes, continue to this day. This started when the US Congress approved these restrictions by passing the Export Control Act of 1949. This was enhanced in 1951 with an aptly named “Battle Act”. According to this act, the United States would not assist or support any nation that did not embargo strategic goods, including oil, with the Soviet Union and nations in its sphere of influence. Under pressure from its allies, notably Western European and NATO countries, the United States made certain exemptions from this act, and it was not notably effective. Sound familiar?

Fast forward to 2014, the coup in Kiev, the civil war in the Donbas, and Crimean reintegration with Russia, and sanctions were put on steroids. As of May 2023, there are 12,900 US sanctions designations against Russia of which about 3,900 are against commercial or scientific entities, the rest against individuals.

This has led, of necessity, to a strong and well-supported movement in Russia towards import substitution, and stand-alone development and manufacturing. It has also been an economic boon to “friendly” countries, those unaligned with US-led sanctions.

There are sectors of the Russian economy that have been classified as priority sectors for development and investment. These are not only limited to Russian investors but to investors from “friendly” countries as well. The largest of these priority sectors according to analysis conducted by VEB.RF are automotive, microelectronics, aviation, and shipbuilding – which may require up to ₽8.6 trillion in investments. Overall, these sectors cover 12 industries where it is seen that technological sovereignty is desirable.

The greatest need for investment is specifically defined projects in the automotive industry (2 trillion rubles), microelectronics (1.8 trillion rubles), aviation industry (1.4 trillion rubles), and shipbuilding (1.3 trillion rubles). The risk profiles for projects related to the automotive industry are considered low and medium risk, aviation and shipbuilding between medium and high risk, and microelectronics as high-risk projects. The more innovative the technological project, the higher the risk, as well as the return.

Prioritized projects in other sectors require smaller investments, for example, pharmaceuticals – 900 billion rubles, energy, and agricultural engineering – 250 billion rubles, railway engineering, and medical industry – 150 billion rubles.

These projects have been defined as well for potential average annual growth to 2030. This is based on how much this product can be consumed by the internal Russian economy, and exported as “icing on the cake”. The highest growth rates (10-15%) are in the machine tool industry, automobile and aviation industry, construction, road engineering, pharmaceutical industry, chemical industry, and microelectronics.

This development in defining prioritized sectors of the Russian economic body should be a clarion call to industries and investors from all “friendly” countries, such as the BRICS+ nations,  where their expertise and manufacturing capabilities, combined with Russia can utilize the advantages of localizing production in Russia, with its supportive infrastructure of human, natural, geophysical, transport and capital resources.

Dezan Shira & Associates can assist Russian investors move into markets throughout Asia, and have other 30 years experience helping foreign investors with legal, tax and operational investments into China, ASEAN, India and the Middle East. We can also introduce Asian investors to Russian manufacturers 

For assistance, please contact Maria Kotova at  

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During these uncertain times and with sanctions in place, our firm helps Russian companies relocate to Asia. We also provide financial and sanctions compliance services to foreign companies operating in Russia. Additionally, we offer market research and advisory services to foreign exporters interested in doing business in Russia as the economy looks to replace Western-sourced products. For assistance please email or visit

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