The Russian State Duma is working on new legislation that would enable the authorities to seize the local business of Western companies that have decided to leave the Russian market following its decision to launch an all-out invasion of Ukraine.
According to the bill, Russian agencies will have the right to act if there is a threat to local jobs or industry, outlining the procedure for appointing an administrator to firms where at least 25% of the shares are in so-called “unfriendly” countries, i.e. states that have introduced sanctions against Russia.
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The law targets companies manufacturing medical devices, dealing with transport and energy, and any firm whose closure could push up prices in shops. The state-appointed administrator would also be allowed to sell the confiscated business. Meanwhile, the former owners would be barred from doing business in the country.
Its adoption, which might take place in several weeks, comes after an exodus of big companies, including Starbucks, McDonald’s, brewer AB InBev, and the European Commission’s proposal to make the circumvention of sanctions a crime.
The bill aims to preclude companies from leaving Russia unless they are prepared to take a major financial loss. They include Italian lender UniCredit, Austrian bank Raiffeisen, leading furniture brand IKEA and fast food chain Burger King.
The Russia economy has already plunged into recession, with the situation worsening by the day as the Biden administration announced it would not extend a debt payment waiver that would assist Russia to pay U.S. bondholders.
“The government is interested in preserving jobs and tax revenues,” said Sergej Suchanow, a lawyer with risk management and compliance consultancy RSP International, explaining the logic behind the law.
“First and foremost, the government will apply the rules to big companies. To avoid an administrator, companies must show they are not leaving their Russian businesses in the lurch.”
However, some Western experts are not impressed by Russia’s attempts to force businesses to stay in the country. Michael Loewy of the Federation of Austrian Industries, has noted that “Russia was already isolated and no longer of interest to investors. This law can only make that worse.”
The exodus of Western companies has sparked a backlash among Russian officials and propagandists. While the former president of Russia, Dmitry Medvedev, who is fond of writing lampoons in his Telegram channel, said that the West is attempting to cripple the country and “ruin our lives”
RT chief Margarita Simonyan has called on Russia to confiscate the assets of those who have decided to leave the Russian market.
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