KREMLIN observers last night predicted that President Putin would threaten to limit foreign ownership of Russian assets in a tit-for-tat manoevre after SeverStal’s failure to seal a deal with Arcelor.

Konstantin Simonov, director of the Centre for Current Politics in Moscow, said: “I expect President Putin will try to find a symmetric response, making it harder for Western companies to enter Russia.

“It will still be possible, but it will be a case of tit-for-tat — if you are allowed to buy Russian assets, you should help Russian companies buy Western assets. The Kremlin thought the SeverStal merger was signed and completed, so this is a very unpleasant surprise for them. It comes at a bad time, just as the Government is considering what sectors of the economy should be blocked to foreigners under the new law on strategic sectors.”

Last night, Viktor Khristenko, the Russian Energy Minister, said: “For the last 15 years Russia has heard words of concern from the West about the health of the Russian economy, about how to help it integrate with the world economy. But now the Russian economy has finally got to its feet . . . . we meet a reaction that is far from satisfactory.”

Russian fury over Arcelor’s decision late on Sunday evening to renege on its agreement to merge with SeverStal and instead accept a revised offer from Mittal Steel comes at a time when the Kremlin is drawing up new legislation on strategic sectors. Mr Putin is weighing up which industries ought only to be held in Russian hands, such as those that are perceived to have strategic importance for the country, for example oil or the media. Mr Simonov said: “The list of which sectors are considered strategic seems to get bigger each day.”

Only recently, Mr Putin told a delegation from the European Union at the Russia-EU summit in Sochi that commercial relations should be reciprocal, with Russia opening up its economy to foreign investment in return for the EU opening up its economy to Russian companies.

Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, said: “It seems some countries don’t want to see Russia as a strategic partner.”

Gregory Mason, SeverStal’s deputy chief, has said that the company is considering whether to sue Arcelor for breach of contract, although he says that the company will expect to get the €140 million (£97 million) break-of-contract fee from Arcelor.

Mr Mason declined to comment on a Russian media report that SeverStal could team up with the billionaire Roman Abramovich, a shareholder in Evraz Steel, to offer a better bid for Arcelor. Evraz also failed to return calls.

SeverStal may feel that Arcelor used it as a foil to push up Mittal’s bid by 40 per cent. Mr Mason said: “I can’t comment on whether they used us, but the fact is we made a good last offer, and they didn’t even have the courtesy to discuss it.”

Boris Gryzlov, Speaker of the Russian Duma, said that the failure of the merger showed the “serious obstacles that Russian businesses face when they try to expand into global markets”.

The Russian press said that the merger’s failure would raise tensions before the G8 summit in St Petersburg next month.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax