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Analysis: Russia Prepares To Seize Western Firms Looking To Leave (reuters.com) 191

"Russia is advancing a new law allowing it to take control of the local businesses of western companies that decide to leave in the wake of Moscow's invasion of Ukraine," reports Reuters, "raising the stakes for multinationals trying to exit." The law, which could be in place within weeks, will give Russia sweeping powers to intervene where there is a threat to local jobs or industry, making it more difficult for western companies to disentangle themselves quickly unless they are prepared to take a big financial hit. The law to seize the property of foreign investors follows an exodus of western companies, such as Starbucks, McDonald's and brewer AB InBev, and increases pressure on those still there.

It comes as the Russian economy, increasingly cut-off due to western sanctions, plunges into recession amid double-digit inflation.... The bill paves the way for Russia to appoint administrators over companies owned by foreigners in "unfriendly" countries, who want to quit Russia as the conflict with Ukraine drags down its economy. Moscow typically refers to countries as "unfriendly" if they have imposed economic sanctions on Russia, meaning any firms in the European Union or United States are at risk.

The European Commission proposed toughening its own stance on Wednesday to make breaking EU sanctions against Russia a crime, allowing EU governments to confiscate assets of companies and individuals that evade restrictions against Moscow.

Thanks to long-time Slashdot reader schwit1 for submitting the story.
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Analysis: Russia Prepares To Seize Western Firms Looking To Leave

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  • by rantrantrant ( 4753443 ) on Sunday May 29, 2022 @04:48AM (#62574274)
    ...in the Russian federation & other corrupt, authoritarian regimes. Multinationals have policies to rent rather than buy, hire as many locals as possible but keep senior management "international," etc.. They're essentially set up to leave within a moment's notice with the minimum possible financial hit when they do. They'll want to stay as long as they can to keep making money but that's about it.
    • by markdavis ( 642305 ) on Sunday May 29, 2022 @06:57AM (#62574456)

      >"Multinationals have policies to rent rather than buy, hire as many locals as possible but keep senior management "international," etc.. "

      That was my thought. I doubt foreign companies own any "land" there and what assets are there that can be seized probably don't matter that much. Further, without mothership support (IT, finance, supply, training, etc, etc) I doubt Russia could continue to operate such businesses in any meaningful way.

      • and what assets are there that can be seized probably don't matter that much

        It's not insignificant though it can be weathered by pretty much all. Companies with the largest risk tend to have insurance covering this kind of thing.

        Companies will be careful to not leave any relevant IP or trade secrets in Russia, but many of those pulling out are taking huge writedowns. Oil companies leading the way with $5bn from Shell, bp even worse with it's $25bn thanks to Rosneft ownership, McDonalds wrote off $1.4bn, Citi $1.5bn, Société Générale $3.3bn, Carlsberg $1.4bn (I d

        • >"These companies will live on, but let's not pretend that such financial hits aren't meaningful. "

          That is true. Those are still costs, and those costs will be passed onto consumers and investors, so it will still hurt us some. Piled on top of crazy inflation due to endless creation and spending of money we don't have.

          I am far more worried about Taiwan...

    • As long as they qualify the brand with 'Under Administration' or under 'Sanctioned Administration' and rubber stamps to ink the old containers and stuff. And keep up hygene Totally idle assets should be put to work, people employed under larger numbers, until normality resumes. Just you try to get a Bacon and anything in Saudi or Malaysia. Or rice is added in Indonesia and Philippines. Apparently, besides back to back loans, these franchises inflate 'rentals' that cost more than buying outright. Unless the
  • Whilst I support any form of leverage other than direct military engagement, I wonder whether the sanctions will actually dethrone the number 1 cause of the Russian war with Ukraine. Sanctions are hurting the economy and the people of Russia as a whole, but are they hurting the Dictator Putin? Or the Russians?
    • No. That's already established. What could work is to cut off Russia's income from oil and gas, but that's probably be too costly for everyone else involved, too.

      • by dryeo ( 100693 )

        How do you deal with countries such as China and India who slurp up all the cheap Russian oil and gas?
        And even locally, how long will the population put up with sky high oil prices and the inflation that follows, which will get worse if and when China opens back up.

        • On the one hand, Chinese or Indian companies that deal with Russians can be sanctioned individually - for example, block their financial transactions, which will add delays and extra costs, making it. On the other hand, having to sell at a low price still hurts Russia's economy. Moreover, anything Russia needs from imports will be more expensive, as any sellers would use the opportunity to squeeze .

          Today, Russia is looting Ukraine of wheat, metal and anything they can get their hands on (including people ge

          • by dryeo ( 100693 )

            Hopefully, still China and India are big enough that sanctions don't work as well as against smaller entities and Russia is currently making a lot of money on selling gas and oil. Even if they do have to take a 20% price hit, with current prices and I assume cheap to produce gas/oil, Russia is still doing well in some ways.
            With luck the sanctions will work, I just can't see it being cut and dry.

        • I'm pretty sure they'd love to slurp up that cheap gas, but there are currently no pipes (to speak of) leading that way. You can't just carry gas across the border.

    • by TheNameOfNick ( 7286618 ) on Sunday May 29, 2022 @05:36AM (#62574374)

      Even the Uvalde PD could take on Putin. He's an old delusional man. His power comes from the people, and these people will give their power to the next Russian madman too. If you want to eliminate the threat, you have to take their power away or make them to use it responsibly. Stop this "head of state bad, people good" nonsense. It's never just the leaders, not in Russia, not in Uvalde, not in Texas, not in the US.

      • by gravewax ( 4772409 ) on Sunday May 29, 2022 @09:32AM (#62574716)
        His power comes from 200,000 very well paid and loyal guards.
      • by Darinbob ( 1142669 ) on Sunday May 29, 2022 @10:49AM (#62574856)

        His power isn't really from the people. The people could take it away, though unlikely in the current climate. His power comes from controlling the Duma, the oligarchs, and especially the press.

        The Russian people are living in an information bubble. Many of them are solidly in the "my country right or wrong" mindset, just like the blowhards in the US, except without the possibility of dissent, protest, or alternative views. Most I think are just in a fantasy world that Putin and his propaganda engineers have created - they truly and honestly believe that Ukraine is being run by nazis, that Zelenskyy is in charge of genocide against Russians there, and this special military operation is a glorious battle for freedom and democracy against a terrible evil. It is ridiculous, but when that is the only story they have heard...

        Remember in the US the zealousness to get weapons of mass destruction away from Saddam Hussein? Now imagine that again, but with a single united political party, and anyone arguing against invasion being jailed.

        There is also a national Russian personality of cynicism. They may know or strongly suspect that deep down it was Putin who had the FSB blow up apartment buildings so that he could fight the fake terrorists and come to power. But on the other hand the cynic side says that at least crime is down and the economy is up, so they push down and suppress those negative thoughts about the dictator.

        • they truly and honestly believe that Ukraine is being run by nazis, that Zelenskyy

          Zelensky the jew is leading a nazi nation? I get that that Russians might not have unlimited internet but sorry, once in a while you have to think for yourself. They know Zelensky is jewish. I would pity them were they not behind a brutal and entirely unnecessary invasion that is destroying a country and thousands of its citizens.

          Sooner or later Russians will have to pull their heads out of their asses and step down from their "we beat Hitler (after supporting him for years)" pedestal which they think

          • by ukoda ( 537183 )
            I think you over estimate people. In the USA you have people with full unrestricted information access and yet still believe there is microchips in vaccines. In Russia the older generation get 100% of their news from state media and a younger generation with censored Internet access. Under those conditions people may never even know Zelenskyy a Jew or have been told it a lie.
      • If and when yhis becomes a world war; as a result of putin losing and launching attacks on the west; i think Russias surrender needs to come with the following demands: much like WWII we combine both japans stipulation and germany. His crime is land greed and he is trying to blackmail the world to steal land that isnt his. So 1) mandatory stance of Pacifism, disarm the entire country, whats left of it. Never again can they be allowed to blackmail the world with threats of nuke strikes for not getting picke
        • If this becomes a world war, there will not be anything left.

          If this punishment is just for invading the Ukraine, how exactly are you going do this? Russia is a nuclear power, it will not give that power up, and the attempt will probably result in nuclear war.

          What you will end up with is a smoldering example of a planet.

    • As long as they are hurting Russia's ability to wage war, which they are since they impair their ability to get parts and such, they are useful. The Russians are responsible for their leadership so frankly any amount of collateral damage is acceptable to stop Russia from raping Ukraine.

      • >"As long as they are hurting Russia's ability to wage war, which they are since they impair their ability to get parts and such, they are useful."

        Agreed.

        >"The Russians are responsible for their leadership so frankly any amount of collateral damage is acceptable to stop Russia from raping Ukraine."

        The reality is that they already have "raped" Ukraine and will continue to do so, regardless of sanctions. And they can escalate at any time and finish the takeover. If China steps in to supply aid and/or

        • The reality is that they already have "raped" Ukraine and will continue to do so, regardless of sanctions.

          True and false respectively. Russia has withdrawn significantly and will likely continue to do so because they cannot afford to keep doing this. Defaulting on their debts is going to destroy their currency for real.

        • The Putin regime's ego and pride will ensure the continued aggression, unless they are given some "saving face" compromise.

          There isn't any way for Putin to save face that Ukraine & the West will agree to.

          I expect him to pretend to save face by unfurling his Mission Accomplished banner and announcing annexation of the occupied territory. But there's one problem with that...

          No, there are a lot of problems. After Bucha, Ukraine won't stop trying to liberate their occupied territories. The West won't remove their sanctions, and in fact will keep trying to squeeze harder. Finland and Sweden will join NATO - and Ukraine as we

          • I don't expect Putin to last much longer. He has simply cost Russia too much.

            I wish that were true but every poll shows he's still very popular and the majority of the country isn't turning against the war. I think we underestimate Russia's willingness to send their sons to die. They lost 11 MILLION soldiers in WWII. What's a hundred thousand if the Nazis are really at the gate again? So far they're only down ~20k.

            Unfortunately I think the only way out is to destroy Russia's armed forces via proxy war with Ukraine. Keep training and equipping Ukraine so that the industrial a

    • by peppepz ( 1311345 ) on Sunday May 29, 2022 @06:36AM (#62574428)
      The fact that the dictator is asking with insistence for the removal of the sanctions, all the while saying that they actually don't hurt Russia at all, should give a first answer.
    • They're definitely hurting the war effort directly.
      I've seen multiple stories of arms factories ramping down or shutting down completely because they don't have access to foreign components.
      Existing hardware that can't be repaired and maintained.
      And while people signing up for the military might not have had many alternatives in the first place, they might think a little bit harder when the chance of losing a limb, or your life, allows your family to buy half what it did a few months ago.

  • Most western companies are selling product that Russia can't reproduce. If you take over Ikea or Apple stores you basically can't reproduce the product line within Russia. Perhaps they can keep running McDonalds, though it wouldn't shock me if they can't even figure that out.

    • Since the only 3 foods at McD that don't contain sugar are the fries, the salad (sans dressing) and the diet coke, I think the menu would be awfully short.

      • by tlhIngan ( 30335 )

        Since the only 3 foods at McD that don't contain sugar are the fries, the salad (sans dressing) and the diet coke, I think the menu would be awfully short.

        I think even the fries have sugar in them. It's not used for flavouring but more for browning - the sugar caramelizes to give that nice brown coloring.

      • Pretty much everything on the menu would be better for you without the sugar and, aside from the ice cream and apple pies, would likely taste better too. And that goes double for Starbucks. I mean... dear god... the last time I had a frappuccino, I felt like my next stop should have been a trip right to my dentist. Closing out all of the McDonalds and Starbucks in the country is doing a *favor* to them, not a sanction.

    • Most western companies are selling product that Russia can't reproduce. If you take over Ikea or Apple stores you basically can't reproduce the product line within Russia. Perhaps they can keep running McDonalds, though it wouldn't shock me if they can't even figure that out.

      Exactly. Foreign companies will be no more useful to them than Russian companies when none of them have a supply chain.

      As Russian Central Bank chief Elvira Nabiullina said recently, the manufacturing plants, where “practically every product” depended on imported components, were beginning to run out of supplies, while reserves of imported consumer goods were dwindling, too. “We are entering a difficult period of structural changes,” she told parliamentary deputies. “The pe

  • "conflict with Ukraine" - it is not a conflict, it is blatant aggression on a sovereign state in the aim of total destruction and genocide, with the safety lining, now becoming clear: let them go clean, otherwise they will proceed arranging campaign of hunger in the world. While these terrorists still do find some bodies in Europe to buy this! Cynical kagebist bastards. Stop being soft to them, it's laughable.

  • by burni2 ( 1643061 ) on Sunday May 29, 2022 @05:40AM (#62574384)

    Keeping the analysis short:
    1.) Multinationals will pull out -> must be -> reputation

    2.) Assets will be seized / most assets are rented -> meaning leave some furniture and in case of industry some production facilities

    3.) After war and so on: getting those companies back - that actually helped their own economy -> hard to achieve -> trust demolished

    Why 3? Because Russia is not the US and is economically speaking a lightweight.

    Cutting your own flesh to surprise the opponnt has also gone wrong with the recent nat. gas delivery stops ( Finland, Poland) and will further drive big nat. gas importers (foremost Germany, ..) to a further accelerated exit from Russian imports.

    Why? Because: Reliance - even in times of crisis which Russia claimed from early on - was tainted/contradicted by its own president and its own actions.

    Short: Dumb, short sighted - but actually good for the West, because an economically weak Russia will have an equally weak rebuilt of their heavy hit military, and the Russian federation being put under internal pressure(*) and can lead to parts striving for independence, also having the advantage of strengthened soldiers (from live battle experience right now)

    (* ask which Russians are fighting mostly in Ukraine -> not west Russians, mostly "Lesser Russians" -> yes this is how the west Russians look at the people from the east)

  • Compensation (Score:5, Interesting)

    by Retired Chemist ( 5039029 ) on Sunday May 29, 2022 @06:11AM (#62574408)
    The multinational companies will request compensation for their (undoubtedly inflated) losses. Seize the assets of the Russian kleptocrats and give it to them. Give what is left to help rebuild Ukraine and replace the weapons we have given them.
    • The multinational companies will request compensation for their (undoubtedly inflated) losses. Seize the assets of the Russian kleptocrats and give it to them. Give what is left to help rebuild Ukraine and replace the weapons we have given them.

      There is historical precedent, Ford asked for compensation for damage by Allied bombing to its factories in Germany. Others simply cashed in after the war on products created there, such as Fanta.

  • Ot really does not matter if they take over the companies. Most things run by russians turn in to shit. They have no sense of quality controll and as long as it looks somewhat ok its fine even if the product is utterly garbage. Will be the same with "Fun and Tasty" (McDonalds) they even said it will not be exactly the same but we can just add mustard... I suspect you will have to add alot of mustard to be able to eat it.
  • Russia is an enemy society not a society with an enemy government. Western investors deserve to lose everything for supporting the NeoSoviet empire.

  • Seizing what few assets these companies have in Russia will probably won't affect their decision making much because they don't want to legally be in violation of sanctions, nor be boycotted by consumers for appearing to side with the aggressor.
    Eventually this war will end, and the sanctions will be removed or at least reduced.
    Russia will be known as a country, that when push comes to shove, will nationalize your assets, so if and when a company chooses to return or open a new branch there, that risk will b

  • by Rick Schumann ( 4662797 ) on Sunday May 29, 2022 @11:45AM (#62574990) Journal
    With Russias' current record of behavior, I'd be concerned that they'd take non-Russian citizens hostage if they try to leave Russia.
    • I'd be concerned that they'd take non-Russian citizens hostage if they try to leave Russia.

      I wouldn't. Especially not affluent executives. Russia has gone to great lengths to *not* go to "war". They have been very careful to keep their so called "special military operation" contained to the Ukraine with only a pointless banter coming close to antagonising the rest of the west. If they start effectively kidnapping western citizens things would escalate very quickly.

  • I'd blow my business up rather than let the Russians take it. I'd rig it to blow shortly after I left. Destroying all the stock, the machinery, whatever.

    • by kmoser ( 1469707 )
      It'd be a real shame if the land owned by departing businesses suddenly became contaminated with enough radiation to make them unusable for thousands of years. A real shame, I tell you.
  • They made sure to grab hold of all five or six hundred leased commercial aircraft before they could be flown out of the country, so why should it surprise anyone that they'll do this with anyone else trying to flee from under their thumb?

    • Those planes are going to fly for about 6 months, max, without factory maintenance support.

      Then they will be worth their weight in scrap.

      Russians are not smart people.

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