Key Points and Summary – Russia has nationalized approximately $50 billion worth of private assets since its 2022 invasion of Ukraine, a move designed to both fund its war effort and reshape the country’s business elite.
According to a new report by a Russian law firm, over 100 private companies, including foreign firms like Danone and Carlsberg, have had their assets seized.
The Kremlin justifies these seizures by claiming the companies were “illegally privatized” or to prevent “corruption.”
This strategy, however, is a symptom of a Russian economy teetering on the brink of recession, plagued by high interest rates and a growing “bad debt” crisis.
Russia Seizes $50 Billion In Private Assets to “Reshape” Economy
According to a new report by Russian law firm Nektorov, Saveliev and Partners, Russia has confiscated $50 billion USD worth of assets since the invasion of Ukraine began.
According to the analysis, Russian authorities have seized more than 100 private assets over the course of three years from various key industries. In some instances, the Russian authorities have then resold the assets to their owners or the state.
The assets reportedly seized by the Russian state are equivalent to the annual Russian budget deficit, or roughly one-third of its annual military expenditure.
How Seizure Is Justified
While the Russian state argues the asset seizures were not arbitrary, the majority of companies impacted operate in industries seen as vital to sustaining the Russian war effort in Ukraine.
The move was described by Harvard University’s Andrei Yakovlev, a fellow at the Davis Center for Russian and Eurasian Studies, as “solving two problems at once.”
Speaking to Bloomberg, Yakovlev said that reselling nationalized businesses not only generates revenue, but also “reshapes” the country’s biggest companies “so their fate is tied to the regime’s survival.”
The Nektorov, Saveliev and Partners report describes how Russian authorities justified some of the private asset seizures by claiming businesses had “illegally privatized” in Russia by seeking approval from regional, not federal, authorities.
“Another basis for property seizure has become illegal privatization,” the report explains. “According to prosecutors, illegal privatization occurs when it is organized and approved by regional authorities instead of federal ones.”
The authors further claimed that just because regional authorities approved doesn’t mean that the Russian Federation, as the “rightful owner,” knew or could have known that its “property rights were violated.”
Who Was Affected?
Asset seizure affected more than just domestic companies, with French food company Danone and Danish brewer Carlsberg reportedly affected.
Russian authorities reportedly seized the firms’ assets, justifying it as a necessary move to prevent “corruption” and “extremism.”
“By Decree No. 302 dated April 25, 2023, the President of Russia, in response to unfriendly actions by European states, introduced temporary management over a number of subsidiaries of foreign organizations. The responsible body (temporary administrator) appointed was the Federal Agency for State Property Management (“Rosimushchestvo”),” the report explains.
About the Author:
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society. His latest book is The Truth Teller: RFK Jr. and the Case for a Post-Partisan Presidency.
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