Investments without insurance are like money down the drain, and investors know it

There appeared information (including ones here in English and here in Russian) that:

"Dmitry Medvedev has instructed Prime Minister Vladimir Putin to submit proposals on the procedure of formation and functioning of a special fund to attract foreign investments in Russia. The President of Russia has decided to implement the idea of a special fund to attract foreign investment. Foreigners who fear for their capital, will invest in the Russian economy, together with the state."

I would insist that when you pretend to create a sustainable flow of non-speculative investments you should remembered that investments go in row with insurance of these investments. Participation of major insurance companies and consortia in this process, their calculation of insurance rates, the definition and categorization of risks, their assessment of payments due on insurance cases - all that contribute into formation of the investment process as systematic, market-based, and smoothed form decreasing the volatility of investments.

Without market participants both in the investment process (such as investor de-facto, unfortunately, too often comprises only of the Russian state) and in the process of pricing risk and loss settlements (not frequent however unavoidable losses), investment in Russia shall remain a solely state issue, without contributing to the development of large and medium-sized businesses in Russia.

I emphasize the need for a systemic approach - both in terms of attracting investment, and for hedging risks. Also information and financial infrastructure investment should be translated from Western capitals to Moscow, St. Petersburg and Russian regions.

Here we have to underline at least the following two corner points.

The first issue is to create or encourage the establishment of (under the state wings or surveillance, for example, by Ministry for Economic Development and Trade), the investments rating agency. I think that this may be an agency that will determine risks of regions of the Russian Federation and industries to invest in Russia, and (on its other side, external) its other function will to determine ratings of the countries where investments go from Russia. Accordingly, Russian banks will take lending decisions on interest rates for lending based on the rankings of the agency. Incidentally, it will be an additional political tool, for example after a new "north-territorial-sickness-syndrome” in Japan the agency might downgrade the rating for investments into this country to, say, the level of rating of investments in Afghanistan or Sudan.

The second issue is the need to form insurance agency to insure investments in Russia and from Russia. Perhaps it will be one agency both for foreign and domestic investment. Alternatively there will be two separate organizations. There is some possibility that major Russian insurance companies might form an insurance investment pool, or there might be a s-called public-private partnership (PPP) involving the Central Bank, VTB, Sberbank and the largest federal commercial insurance companies of Russia.