Putin's $1.25 billion windfall. How the Russian budget benefits from foreign company exodus
The "New York Times" cites that the massive departure of Western companies following Russia's full-scale incursion into Ukraine has triggered "one of the largest shifts of assets within Russia since the demise of the Soviet Union".
6:53 AM EST, December 19, 2023
"Massive sectors, such as elevators, tires, industrial coatings, and others, now lie in the hands of increasingly dominant Russian stakeholders," assesses the American newspaper.
Kremlin's growing radicalization
"The New York Times" portrays a progressively restrictive stance by the Kremlin towards departing Western corporations: To exit, they must pay particular and increasingly steep taxes while Vladimir Putin personally steps in when their assets are sold, often compelling companies to sell their assets at considerably slashed prices, generally by at least 50%.
According to "The New York Times" findings, the Russian budget has reaped at least $1.25 billion by these means. The assets of several corporations have ended up in the hands of state-owned entities (as in the case of Toyota and Ikea), or oligarchs tied to Putin. A subcommittee operating within the Kremlin is involved in the process, with the majority of agreements requiring Putin's personal approval.
The newspaper reports on several prominent transactions where the Kremlin directly intervened, lowering the price and dictating the purchaser for the assets. Notably, this took place in the case of Denmark's Carlsberg, whose assets were effectively nationalized, and two of the company's employees were held by Russian authorities. For the German supermarket chain OBI, after being subjected to searches, it was compelled to sell its assets at a nominal cost, eventually passing into the hands of individuals associated with the US-sanctioned Senator Arsen Kanokov.
Kremlin's spokesperson: our companies buy with pleasure
Kremlin spokesperson Dmitry Peskov confirmed to "The New York Times" that our corporations have been buying corporate assets at "significant discounts" with great pleasure.
Simultaneously, the newspaper cautions that not all the assets seized by Russians will bring easy profits. Despite short-term gains, the long-term impact of the Western companies' absence may harm the Russian economy.
"It has sent out a signal that Russia is a business outcast. The economy is under stress and overheated. The handling of Western departures only reinforced the perception of Russia as a risky place to do business. Even some top Russian officials agree that the reduction in competition and foreign investment will affect ordinary Russians and the economy in the long-term," writes the newspaper.
