Russia's Putin signs foreign investment law

MOSCOW (Reuters) - Russian President Vladimir Putin on Monday signed a long-awaited law on strategic industries, designed to clarify which assets will be off-limits to foreigners, the Kremlin said in a statement.

The signing of the law is a milestone in one of the chief aims of the Putin presidency: to bring strategic industries, above all oil and natural gas, back under state control after they were sold off during the privatization of the 1990s.

The law is coming into effect days before the inauguration of President-elect Dmitry Medevedev, who on Wednesday will inherit an economy dominated by state-controlled companies.

These companies, including Gazprom GAZP.MM, the gas export monopoly Medvedev headed, have at times secured vital assets at the expense of foreign investors, largely ignoring Western criticism of property rights violations.

Analysts praised the law for clarifying the rules of investing in Russia, where a lack of mature legislation has led to political risks. Investors, however, have complained that the law limits access to more than half of Russia’s economy.

It lists 42 sectors where foreign investment will be restricted, such as nuclear energy, natural monopolies, exploration of strategic mineral deposits, aviation, space and other defense-sensitive industries.

The State Duma, Russia’s lower house of parliament, passed the law with an overwhelming majority on April 2, with the upper house confirming the vote two weeks later.

The pro-Kremlin United Russia faction, which dominates the Duma, took guidance from the Kremlin administration and security services when drafting the law.

Reporting by Simon Shuster; Editing by Louise Ireland