Putin Rivals Lenin in Seizing Foreign Investment in Russia

Vladimir Putin’s seizure of yet another American company highlights a little known facet to his rule. During Russia’s war against Ukraine, the Kremlin has seized $60 billion worth of foreign investment in Russia. This is double the amount seized by the Bolsheviks in 1917.After the November 1917 coup, the communists nationalized about $30 billion worth of foreign assets as measured in 2026 dollars. At the time, the largest losers were British investors. They accounted for three quarters of claims.This time around, the biggest losers are Americans. They record one third of the losses, according to a study by the Kyiv School of Economics. On Monday, the Kremlin seized control of the Russia subsidiary of Aptar, an Illinois-based company that produces packaging and drug delivery devices in 18 countries.This seizure comes on the heels of the Russian government’s takeover last week of local operations of four other foreign companies, including Switzerland’s Nestlé, and, from France, supermarket chain Auchan, and home improvement chain Lemana PRO, formerly Leroy Merlin. Moscow’s economic newspaper Kommersant valued these seizures as totalling $7 billion.The Kremlin paints the seizures as reactions to the actions of foreign governments. France led the move last week to renew sanctions against Russia. Neutral Switzerland holds a referendum this Sunday on a measure that would end Swiss mirroring of European Union sanctions. Last Friday President Trump signed into law the bill named after the late Senator Lindsay Graham that gives the White House powers to impose 100 percent tariffs on countries that buy oil from Russia and Iran.“We are talking about European companies from unfriendly countries,” Kremlin spokesman Dmitry Peskov told reporters before the American bill was signed. He added that these European states are “currently involved in the most active manner in military actions against our country.”Alexander Shokhin, who heads Russia’s largest business lobby, told reporters in Moscow that the latest seizures of Western companies should serve as “preemptive signals” to European officials. “Decisions of this kind are largely connected to demonstrating that if you do this, we have retaliatory measures,” said Mr. Shokhin, who heads the pro-Kremlin Russian Union of Industrialists and Entrepreneurs.In the West, source of much capital and technology for Russia since the 1990s, analysts say seizures of foreign companies will tarnish Russia’s lure for foreign investors for years to come. The Kyiv School of Economics calculates that the true financial losses to foreign investors amounts to $170 billion. This includes: asset writeoffs, forced sales at deep discounts and ‘exit taxes.’ “Russia is shooting itself in the feet as this will just further signal to international business that Russia is a terrible place to do business,” regional economic analyst Timothy Ash wrote of the seizures of Auchan and Nestlé. “Why would any business ever return to Russia, under Putin?”From Paris, French conservative politician Marine Le Pen and National Rally president Jordan Bardella, sometimes accused of being soft on Putin, issued a statement condemning the seizure of French operations in Russia as a ‘hostile act.’ Facing elections in six months, they said: “”We will never tolerate a foreign power, in this case Russia, hoping to dictate our country’s policy.” Since Mr. Putin launched his full bore assault on Ukraine, in February 2022, 1,028 foreign companies have pulled out of Russia in full or in part, according to a running tally maintained by the Yale School of Organization and Management. One year ago, Russia officially designated Yale as an “undesirable organization.” This means that Yale students or professors who visit Russia risk arrest or deportation.The Yale list — a parade of blue chip multinationals — highlights how Russia has unraveled as an investment destination since the gogo years of the early 2000s. Exiting companies include: ExxonMobil, BP, McDonald’s, H&M, Carlsberg, Danone, Renault, Nissan and Volkswagen. Moscow-based law firm Nektorov, Saveliev & Partners estimated this month that the value of seized private assets — foreign and national — totals $90 billion. In a process that recalls the ‘telephone justice’ of the Stalin era, the law firm said the average nationalization is decided in two months and on the basis of one meeting with company owners.The campaign is designed to raise cash for the war and to reward regime loyalists. As Russian oligarchs see properties confiscated right and left, they decide to ‘voluntarily’ contribute to the war effort. Among the 800 Russian companies seized in the last four years are: the country’s largest grain trader, the largest winery, the largest warehouse operator, Moscow’s second busiest airport, three sea ports, Russia’s ‘crab empire,’ a leading agro-business, a major gold producer, and the nation’s largest car dealer. Recently, after Mr. Putin’s annual meeting with leading business executives, the Kremlin recorded $3 billion in ‘voluntary’ donations for the war effort. After a separate, closed door meeting with Russia’s President, billionaire Suleiman Kerimov offered to give to the war effort $1.2 billion — about 10 percent of his net worth.While paying lip service to Mr. Putin’s war, many business leaders squirrel away money overseas. According to Russia’s central bank, Russians invested $17 billion in foreign companies from January to July. Yesterday, leading state banker Andrei Kostin complained to a forum in St Petersburg of the Association of Banks of Russia: “Many people are investing, including major entrepreneurs, but not in their core business. They are trying to put money somewhere off to the side.” Some nationalizations amount to payoffs to political supporters. Danone’s yoghurt business was placed under the management of Yakub Zakriev, a nephew of Chechen leader Ramzan Kadyrov. Danish brewer Carlsberg ended up under the control of Mr. Putin’s longtime judo partner, Taimuraz Bolloev. Last week, Nestlé, employer of 7,000 Russian workers, went under the control of AO L.E.V. Menedzhment. According to Bloomberg, the company was registered in 2024, has a charter capital of $177 and one employee, a former police general.Auchan, with 229 stores and 24,000 employees in Russia, will be run by Ilya Berdnikov, a former official at Russia’s state property management agency. Lemana PRO will be run by Denis Isayev, the son of a former Duma member.Reviewing the seizures, the Kyiv Post predicted: “By weaponizing Western assets against Ukraine’s allies, Russia has poisoned its business climate for long after the war ends.”

Putin Rivals Lenin in Seizing Foreign Investment in Russia

Putin Rivals Lenin in Seizing Foreign Investment in Russia

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