As companies leave Russia, their assets could be seized
The “Evropeisky” mall in Moscow was once a symbol of a Russia integrated into the global consumer economy, with atriums named after cities like London, Paris and Rome.
But now large parts of the seven-story shopping center have gone quiet after Western brands from Apple to Victoria’s Secret closed their Russian operations in the two weeks since the country invaded Ukraine.
Hundreds of companies have similarly announced plans to curtail ties to Russia, with the pace accelerating over the past week as the deadly violence and humanitarian crisis in Ukraine worsens, and as Western governments ratchet up economic sanctions.
Russian President Vladimir Putin responded Thursday by saying that if foreign companies shut down production in Russia, he favored a plan to “bring in outside management and then transfer these companies to those who want to work.”
A draft law could allow Russian courts to appoint external administrators for companies that cease operations and are at least 25% foreign-owned. If the owners refuse to resume operations or to sell, the company's shares could be auctioned off, the ruling United Russia party has said, calling it “the first step toward nationalization.”
Chris Weafer of Macro-Advisory, a consultancy specializing in Russia, said the Russian government "is adopting a carrot-and-stick approach to foreign business,” with talk of nationalization balanced out with government help for those who stay. A key reason, Weafer said, is the Kremlin's desire to avoid mass unemployment.
“When it comes to social pressures or potential public backlash, what they understand, I guess, is that people will not take to the streets because they cannot buy a Big Mac,” Weafer said. “But they might take to the streets if they have no job and no income.”
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