By John Meyer, financial consultant – Eurasia Business News, March 7, 2022 – Updated on March 25, 2022

Smolenskyi Boulevard, Moscow, 2021–  Photo credit : Swann Collins.

Politicians from the ruling party “United Russia” proposed to nationalize the Russian assets of Western companies that announced their decision to leave the Russian market because of Western sanctions, said today the Secretary of the General Council of the party and senator Andrey Turchak.

The first to announce such a possibility on February 26 was the deputy head of the Russian Security Council and former President of Russia, Dmitry Medvedev : “Russia will respond symmetrically in the event of the implementation of Western threats to arrest the funds of all Russians abroad, and the funds of foreigners and foreign companies in the Russian Federation will also be arrested on a country-by-country basis […].”

Dmitry Medvedev also did not rule out the nationalization of the property of persons registered in “unfriendly jurisdictions”, for example, in the United States or EU countries :

“They are also frightened by the arrest of money of Russian citizens and Russian companies abroad. Just everyone, without any sanctions. Solid. Kind of annoying. But this will have to be answered quite symmetrically. Arrest of funds of foreigners and foreign companies in Russia on a country-by-country basis. And maybe the nationalization of the property of those persons who are registered in unfriendly jurisdictions. Such as the United States, the EU states and a number of sing-along states of the Anglo-Saxon world, which will take part in this.”

The senator Andrey Turchak believes that “such actions of Western companies are nothing more than premeditated bankruptcy.“

“In all cases, this is a purely political decision. The price of which is a large number of Russian workers fired overnight. Not to mention the fact that by such actions these companies undermine their own economy, act on the principle of “bees against honey,” said the senator.

According to Andrey Turchak : “the West unleashed a sanctions war against Russia, in which not only governments, but also private companies were involved. […] Some of them are announcing their exit from business in Russia and the closure of their enterprises.”

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The Secretary of “United Russia” noted that the proposed nationalization is “an extreme measure, but we will not tolerate stabs in the back, and we will protect our people.”

The Russian central bank has already banned the outflow of foreign capital by Russian legal entities. If this measure had been taken a few days ago, companies like Shell or BP would not have been able to get their assets out of Russia. This is already a form of nationalization. 

On March 10, Vladimir Potanin, the oligarch and head of Norilsk Nickel said that the confiscation of companies that announced their withdrawal from the Russian market should be approached very carefully. Indeed, the issue of nationalization is sensitive in Russia, because of the Bolshevik Revolution of October 1917 that opened seven decades of communism.

Vladimir Potanin said : “This will take us back a hundred years, to 1917, and the consequences of such a step – global distrust of Russia on the part of investors – we will experience for many decades […].”

As of April 2021, Vladimir Potanin was the second richest man in Russia with a fortune of $ 27 billion.

The Russian government and the Prosecutor General’s Office sent a list of 59 companies that can be nationalized due to the termination of work in Russia. Among those who are already in the document: Volkswagen, Apple, IKEA, Microsoft, IBM, Shell, McDonald’s, Porsche, Toyota, H&M and others.

The total volume of all liabilities of these organizations exceeds six trillion rubles, which is equal to their revenue in Russia over the past three years.

The Russian government commission on legislative activities approved the second package of measures to support the economy, including one of the mechanisms for nationalizing the property of foreign organizations.

As specified by Deputies of the ruling party “United Russia”, the project enable authorities, upon termination of activities by court decision, to introduce external management in organizations, more than 25 percent of which are owned by foreign persons from “unfriendly states”. Such measures are seen by Russia as an effective way to prevent bankruptcy and save jobs.

At the same time, the foreign owner within five days can refuse external management in the event of the resumption of activities or the sale of a share, provided that the business and employees are preserved. If this does not happen, a Russian court will designate a temporary administration for three months, after the shares of the new organization are put up for auction, and the old one is liquidated. 

Update to come.

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