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Last Updated: Thursday, 24 March, 2005, 17:12 GMT
Putin 'halts' privatisation probe
Vladimir Putin
Mr Putin held a rare meeting with business chiefs
Russian President Vladimir Putin has told business chiefs there will be no more reviews of the privatisations of the 1990s that made many of them rich.

At a rare meeting with industrialists at the Kremlin on Thursday, he vowed to "help the business community" by guaranteeing property rights.

There have been increasing jitters over the business climate in the wake of the Kremlin break up of oil giant Yukos.

Analysts welcomed the move, saying it could help revive investment in Russia.

Mr Putin backed a proposed new law that will exempt property privatisations which took place more than three years ago from future criminal inquiries.

Such a move would safeguard the empires of many of the so-called oligarchs, who made billions in the post-Soviet era by buying state assets at knockdown prices.

Among those present at the meeting were Alexei Mordashov, head of the Severstal steel company, and Norilsk Nickel chief Vladimir Potanin, both of whom were named last year in a Forbes magazine survey of Russia's richest men.

Tax demands

Confidence in Russian business has been severely dented by the Kremlin's pursuit of Yukos for back taxes, which has lead to the effective renationalisation of the firm's key Siberian oil unit.

You'll see an incoming flood of pent-up capital that's been eyeing Russia
William Browder, Hermitage Fund

The government's scrutiny of the company has been seen as a politically-motivated response to the political ambitions of its former chief executive, Mikhail Khodorkovsky.

The authorities have also pursued other firms with similar tax demands.

Yukos spokesman Alexander Shadrin gave a cautious welcome to the announcement.

"This is definitely very positive news," he said. "But it remains to be seen how quickly it becomes law and whether it will fully rule out any selective application."

'Pent-up' demand

Russian stocks rose 4% after Mr Putin's announcement, with analysts saying the move will encourage investment to flow back into Russia.

"Although it isn't a pure, outright amnesty, it's probably as close as you're going to get," William Browder, who runs Moscow-based hedge fund Hermitage, told Reuters.

"This eliminates one of the most important barriers to investment - the fear of renationalisation.

"You'll see an incoming flood of pent-up capital that's been eyeing Russia but unable to invest."

Business leaders have also been pushing for a formal tax amnesty amid fears of further inquiries.

Russian experts, however, believe Mr Putin is unlikely to back such a measure as the oligarchs remain unpopular among the general public.

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