Putin decree allows for nationalisation of "naughty" Western companies

By Ben Aris in Berlin June 18, 2023

Vladimir Putin has instructed the government to make it even harder for “naughty” (nekhoroshi) Western companies to work in Russia and those that do not want to play by the Kremlin’s rules should leave the country, the Financial Times reported on June 15.

A presidential decree prepared last week and seen by the Financial Times lays the ground for de facto nationalisation of foreign-owned assets in Russia. It gives the state the right to buy assets at a bargain price, with their subsequent purchase by a Russian company.

The goal of the decree will be another source of revenue to the cash-strapped budget, as well as a tool to punish foreign countries for the imposition of sanctions. The Russian owners of the confiscated assets will be obliged to list 20% of the company on the Russian stock market.

Russian businessmen interviewed by the Financial Times consider nationalisation inevitable: "The state needs money," says one of them. Presumably it will primarily affect the extractive industries and the production of consumer goods.

“Chairman of the Central Bank Elvira Nabiullina spoke out in favour of limiting the exit of foreign companies under the threat of nationalisation,” the central bank governor said during a panel session at St Petersburg International Economic Forum (SPIEF) the same day.

The Central Bank is worried that the outflow of foreign capital will weaken the ruble and limit the opportunities for Russian investors. But Finance Minister Anton Siluanov supported the departure of foreigners, seeing this as “a way to squeeze more money into the budget.”

Presidential spokesman Dmitry Peskov told the FT that among Western companies there are those that have stopped paying salaries or simply left with losses.

“If a company does not fulfil its obligations, naturally, it falls into the category of “naughty”, Peskov told the newspaper. “With such we say goodbye. And what will happen to their assets later is our business.”

While the nationalisation in Russia has affected a few companies, the most striking example is Fortum and Uniper. Companies leaving Russia are already required to sell their assets at half price and pay a “voluntary contribution” of 5-10%, not counting the excess profit tax of previous years.

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