Since the start of the Ukraine war, some 1,050 firms have fled Russia immediately, but about 600 remain. By presidential decree, Russia took control of the Russian subsidiaries of Danish brewer Carlsberg and French food company Danone on July 16, 2023. President Vladimir Putin‘s decree said the Russian state would “temporarily” manage the shares of these Russian subsidiaries.
According to a BBC report, Yakub Zakriev, deputy prime minister and agriculture minister of Chechnya, has been installed after Russia seized control of the French firm’s business. Zakriev is reportedly the nephew of Chechen leader Ramzan Kadyrov – a key ally of Vladimir Putin.
Both companies were presented with a fait accompli, although they had expressed their intention to leave the Russian market after the offensive in Ukraine. It was estimated that the sale of the business would result in a €1bn hit for France-based Danone.
In April, Putin already seized the Finnish and German energy firms Fortum and Uniper. Fortum “sent notices of dispute to the Russian Federation due to the violations of international investment treaty protection” on 13 July, a spokeswoman said.
Many Western companies faced massive criticism last year if they continued to do business in Russia. Now the threat is coming from the other side as well. In the case of Danone and Carlsberg, businessmen close to the Kremlin had apparently expressed interest, as the Financial Times (FT) reports. Then came the seizure – and according to insiders and analysts, this was only the prelude.
Putin’s goal, they say, is to hurt the West by taking over the companies and then reward Putin’s supporters with the assets. “This is a new redistribution of wealth” to Putin’s entourage, a Russian oligarch who has known the president for decades said, according to the FT.
But what does the action with Danone and Carlsberg now mean for other Western companies in Russia? Alexandra Prokopenko, a nonresident scholar at the Carnegie Russia Eurasia Center and former central bank official, tells the FT, “The Kremlin’s action against the two corporations shows that Western assets are no longer safe in Russia.” He said that Moscow can now take assets from foreigners and distribute them to pro-regime individuals. “This is a signal that anything is possible,” Prokopenko stressed.
A month ago, Kremlin spokesman Dmitry Peskov had already announced that Putin would take action against “naughty” companies. “We are saying goodbye to these companies. And what we do with their assets afterwards is our business,” he declared.
