-Caveat Lector-

MOSCOW (December 29, 1998 8:08 p.m. EST http://www.nandotimes.com) - Direct
foreign investment in Russia dropped this year to $2 billion, half its level
in 1997, an Economics Ministry official said Tuesday, quoted by a news agency.

The numbers reflected investors' fears over the Russian economy, hit over the
past year by a currency devaluation and its worst recession since 1991,
Vladimir Yefimov said.

"Unfortunately, this is a very small volume given the state of our industry,"
Yefimov told the ITAR-Tass news agency.

By comparison, foreign direct investments in Poland, the Czech Republic and
Hungary will total around $11.4 billion in 1998 - although their combined
population is less than half of Russia's.

Direct foreign investment in Russia - that is, investment directly in
companies, as opposed to stocks or other financial instruments - reached $3.9
billion in 1997 before collapsing this year.

Yefimov predicted that direct investment would climb back to $2.5 billion in
1999.

Most Russian manufactures are cash-starved and use obsolete equipment,
producing goods that often fail to compete with more expensive imports.

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