Russian President Vladimir Putin on Thursday endorsed a plan to nationalize foreign-owned businesses that flee the country over its invasion of Ukraine, reflecting the Kremlin’s alarm over job losses and other economic pain the exodus is inflicting.
Putin’s approval of the plan, scheduled to be discussed in Russia’s parliament Friday, came as Goldman Sachs said it was “winding down” its business in Russia, following hundreds of other Western firms that have closed or suspended operations.
McDonald's, IKEA and Apple are few among the list of 59 companies that the Russian Federation may nationalize, according to Oleg Pavlov, head of the Public Consumer Initiative organization.
"A list of foreign companies has been sent to the government and the Prosecutor General's Office that can be nationalized due to the cessation of their work in Russia," Pavlov said.
Under the proposals, a Moscow court would consider requests from board members and others to bring in external managers. The court could then freeze shares of foreign-owned companies as part of an effort to preserve property and employees.
External management could include state development bank VEB.RF, according to a ministry statement. Owners would have five days to resume activity or resort to other options such as selling their stake.
The head of the Public Consumer Initiative also noted that the Ministry of Industry and Trade, law enforcement officers, and Rospotrebnadzor, Russia's federal consumer rights agency, are all working together on the list and it's implications.
During a meeting with government officials Thursday, President Putin said Russia must “introduce external management” on departing companies “and then transfer these enterprises to those who want to work,” endorsing a legislative proposal that would create a pathway for the government to take over and eventually sell businesses that quit the country.
Putin’s remarks are another sign of the economic distress hitting Russia in the wake of unprecedented Western sanctions. The ruble has lost more than 40 percent of its value since the invasion began two weeks ago, prompting Russia’s central bank to restrict trade of the currency to try to halt its fall.
The central bank this week also placed limits on withdrawals from foreign-currency accounts as Western sanctions limit the nation’s supply of dollars and euros, prompting Russians to form long lines at banks to try to withdraw their hard-currency savings.
Meanwhile, the White House has commented on reports that Moscow is considering seizing the assets of Western firms that have left the country
White House Press secretary Jen Psaki has warned, in a series of tweets, that such a "lawless" move from Russia would damage its business reputation in the long run.
Every day, more and more firms are exiting Russia in protest of its invasion of Ukraine. McDonalds, Western Union, Goldman Sachs, JPMorgan Chase and Warner Music have all signalled that intention recently.
All of these businesses have offices, buildings, factories, storefronts in Russia – these could all be forcibly taken by the state if the reports about Moscow’s intentions are right.
