Media reports on Russia's mechanism to nationalise foreign companies
Russia may nationalise and quickly sell off the assets of foreign companies under a special privatisation mechanism approved by President Vladimir Putin on 30 September. This was reported by Bloomberg news agency, citing a source close to the Russian government.
The signed decree states that in cases specified by a presidential decision, "in order to safeguard the defence capacity and security" of the country, property owned by the federal government may be sold under a special procedure: in particular, where market value is swiftly determined - within 10 days - and with a curtailed timeline for state registration and the recordation and transfer of rights to the property. The decree was signed as part of potential measures to counter "the unfriendly actions of the United States of America and other foreign states".
The Bloomberg source said that the special order could be activated if the European Union starts seizing Russian sovereign assets. At the same time, the decree is designed to accelerate the sale of both Russian and foreign companies, the agency's source said.
Bloomberg recalls that Russia still has hundreds of Western companies operating in various sectors, from banking to consumer goods, including UniCredit, Raiffeisen Bank International, PepsiCo, and Mondelez International.
To date, there have been no precedents for the nationalisation of foreign assets in Russia, but a number of subsidiaries of Western companies have been placed under the interim management of Rosimushchestvo (the Federal Agency for State Property Management) or Russian companies. These include the assets of Fortum, Uniper, AB InBev Efes, and Air Liquide.
After the launch of the military operation in Ukraine, the EU, the USA and other G7 countries froze about $300bn in Russian Central Bank assets in the form of securities and cash deposits. Of this, about $5bn is in the US, while most of the balance is in Europe.
The EU is discussing a €140bn loan to Ukraine secured by Russia's frozen reserves. To this end, the Bank of Russia's assets could be transferred from the Belgian central depository Euroclear to a special purpose vehicle (SPV) owned by all the European governments and possibly also by the G7 states. The European Commission says the plan does not mean confiscation of the Russian assets. The possible seizure of Russian sovereign assets will not go unanswered by Russia, presidential spokesman Dmitry Peskov warned on 2 October.