At first glance, it would seem that Russia’s latest statistics on foreign investment should have raised a cheer, but all they raised were questions.

The data, which came Wednesday from the Federal Statistics Service, showed that nearly $88 billion of foreign investments entered Russia in the first six months of 2011. That’s nearly triple the amount seen during the first half of last year, and the highest in incoming foreign investment Russia has ever recorded in any six-month period–even the heady pre-crisis years of the oil boom.

The problem is that at least half of that money was on its way out of the country almost as soon as it came in. More than $44 billion was invested into the broadly-named “financial activity” sector, with an almost identical sum–$44.5 billion—being invested by that sector abroad during the same period. Most of these funds came into the country from Switzerland.

Who brought that money in—and where it then went—is anybody’s guess. One theory floated by analysts: higher-than-expected oil prices have brought a bumper crop of revenue for exporters, who repatriate the cash, and then, lacking a way to invest it in Russia, send the money back out. Others point to speculators moving cash in and out of the country, trying to take advantage of Russia’s relatively high interest rates. Shadowy schemes hatched by Russian bureaucrats to safeguard their money ahead of the 2012 presidential elections is yet another theory.

One thing, however, is certain. The actual amount of foreign direct investment, defined as inflows of investment to acquire an interest in a Russian enterprise, continues to be miserly. That amount was just over $7 billion, most of it concentrated in the oil and gas sector.

That’s up nearly 30% on the year—but paltry when compared to the $30 billion in capital outflows Russia recorded in the first half of 2011.

True, foreign investment was never Russia’s strong point—investors were always wary of government interference, high inflation and competition from government-controlled monopolies, among other things. But there has been a strong Kremlin effort in the last six months to reshape Russia’s image as an investment destination through a high privatization drive and ministers leaving corporate boards.

Although some of these efforts have been greeted with cautious applause, it seems that unless more concrete changes are made, true investors will continue to stay away, while strange, hard to explain movements of capital will always be plenty.

The Wall Street Journal