Moscow gains control over assets of Western companies

Moscow gains control over assets of Western companies

President Putin Takes Temporary Control of Western Companies in Russia

Reuters

In a surprising move, President Vladimir Putin has signed decrees to temporarily take control of assets belonging to certain Western companies operating in Russia. This retaliatory measure is in response to foreign actions against Russian companies abroad. Moreover, Putin had warned back in April that the Kremlin might seize more assets in the future. This dynamic situation calls for a closer look at the affected companies and the implications of these actions.

A List of the Affected Companies

  1. Carlsberg (CARLb.CO): On July 16, the Russian state took control of Danish beer company Carlsberg’s stake in local brewer Baltika Breweries. The decree signed by Putin placed the company under the “temporary management” of government property agency Rosimushchestvo.

  2. Danone (DANO.PA): Also on July 16, the Russian state took control of French yoghurt maker Danone’s Russian subsidiary, Danone Russia. The decree signed by Putin brought the subsidiary under temporary control of the government property agency.

  3. Fortum (FORTUM.HE): On April 25, Putin signed a decree granting control over the Russian subsidiary of Finnish utility company Fortum, which operates power plants in Russia. The CEO was replaced, and the unit was put under temporary asset management.

  4. Uniper (UN01.DE): Similarly, on April 25, the Kremlin took action against Unipro, the Russian division of the German utility company Uniper. The company, which has five power plants in Russia, underwent external management changes and saw the appointment of a new CEO.

Understanding the Implications

President Putin’s move to take temporary control of these Western companies’ assets in Russia has significant implications for both the companies involved and the broader international business landscape. Let’s explore these implications in more detail.

  • Retaliatory Measures: By seizing Western companies’ assets, Putin aims to respond to actions taken against Russian companies abroad. This tactic demonstrates that Russia is not willing to be passive when facing economic encroachments by foreign entities. It serves as a reminder that any actions against Russian corporations could result in consequences for foreign companies within Russian borders.

  • Ownership and Temporary Asset Management: The temporary control granted by Putin allows the Russian state to have oversight and influence over these Western companies. The government property agency, Rosimushchestvo, assumes responsibility for managing and operating the seized assets during this period. This move ensures that the Russian government can protect its interests and potentially influence the companies’ operations.

  • Security Concerns: The actions taken by the Russian government raise questions about the security and stability of foreign investments in Russia. The sudden seizure of assets can create uncertainty for other Western companies operating in the country and may deter future investments. It is crucial for businesses to carefully evaluate the risks associated with operating in politically sensitive regions.

  • Potential Escalation: Although the companies affected so far are primarily from Denmark, France, and Finland, Putin’s warning back in April about the possibility of seizing more assets indicates that this situation could escalate further. Foreign companies across a range of industries need to closely monitor geopolitical developments to assess the potential risks to their operations.

Conclusion

President Putin’s decrees to temporarily take control of certain Western companies in Russia highlight the complex dynamics between Russia and foreign businesses. These actions serve as a strong reminder that Russia is willing to protect its interests and respond to any perceived threats from foreign entities. The implications of this move extend beyond the affected companies, raising questions about the security of foreign investments and potential escalation in the future. The international business community would be well-advised to closely monitor these developments and assess their potential impact on their own operations in the region.