The shopping center “Evropeisky” in Moscow was once a symbol of a Russia integrated into global consumer economy, with atriums named after cities like London, Paris and Rome.
But now large pieces of The seven-story the mall went quiet after Western brands from Apple to Victoria’s Secret shut down their Russian operations in the two weeks since the country invaded Ukraine.
Hundreds of companies have the same announced plans cut ties with Russia, with the pace accelerating over the past week like deadly violence and humanitarian crisis in Ukraine is deteriorating, and as Western governments chain up economic sanctions.
Russian President Vladimir Putin responded Thursday 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 for work.”
A bill could allow Russian courts to appoint outside administrators for companies which cease their activities and which are owned at least 25% by foreigners. If the owners refuse to take over the operation or to sell, the company shares could be auctioned offa ruling United Russia party said so, calling him “the first step towards nationalization.
Chris Weaffer of Macro-Advisory, specialized consulting firm in Russia, said the Russian government “takes a carrot and stick approach abroad business”, with to speak of balanced nationalization out with government help for those who to stay. A key reason said Weafer, 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 won’t take to the streets because they can’t buy a Big Mac,” Weafer said. “But they might take to the streets if they don’t have a job or an income.”
White House Press secretary Jen Psaki criticized “all anarchic decision by Russia to seize assets of these companies,” claiming that he “will eventually result in same more economic pain for Russia.”
“It will aggravate the clear message to global business community that Russia is not a safe place invest and do business,” she says in a tweet, adding that “Russia could also invite legal claims from companies whose property is seized. »
Even before its latest invasion of Ukraine, Russia was already trying to domesticate son food supply following the sanctions it had imposed on the European Union in 2014. With little or no fresh food imported from these trading partners, Russia met more emphasis on domestic foods and importing more user-friendly products countries like Turkey.
Companies like The French food giant Danone, which suspends its capital investments in Russia, but continuing production there, are “essentially Russian companies” with the personnel local and supply chains and can operate more or less independent of foreign owners, Weafer said.
But keep the companies operating in Russia – even with government intervention – will not be easy. Indeed, the conditions that drove foreign companies to leave Russia are still in place: international sanctions, supply chain disruption and pressure from customers in Europe and North America.
the auto industry has been particularly hard hit by his addiction on foreigner-made electronic. Even the companies that remained in Russia like The constructor automobile French Renault, majority owner of Russian producer Avtovaz had to temporarily suspend production.
Without imports, companies like furniture manufacturer Ikea or a lot of fashion retailers cannot work and will probably have to leave Russia market absolutely,” Weafer said.
Some foreign companies suspend their Russian operations, like McDonald’s and the cigarette manufacturer Imperial Brands, have made a point of saying they will continue to pay the personnel even while their workplaces are closed. It can’t last forever, and Weafer predicts that companies need decide at the end of summer whether to resume operations or leave completely.
A voice to push back against confiscating foreign companies” assets is billionaire metals tycoon Vladimir Potanin, who compared to the Russian Revolution of 1917, when the communists took power.
“It would be set us back 100 years to 1917 and the consequences of a step like this one – global mistrust in Russia by investors – would be felt by us for decades,” he said. in statement Thursday on the social media of son company, Nornickel.
