Western businesses consulting lawyers on resuming operations in Russia if US sanctions ease
Western commodity traders, insurers, and shipping companies are consulting with legal experts about the possibility of resuming operations in Russia if US sanctions are lifted. This was reported by the British newspaper the Financial Times (FT) on 30 April.
According to the publication, the main concern for businesses is how to act if the US eases sanctions, but the UK and the European Union do not.
US President Donald Trump, following his return to the White House, has expressed a desire to reach a peace agreement between Moscow and Kyiv and has acknowledged the possibility of lifting anti-Russian sanctions “at some point”, though he emphasised that the time for such a move had not yet arrived. EU foreign policy chief Kaja Kallas, meanwhile, stated that EU authorities are developing contingency plans to maintain sanctions against Russia if the US begins to improve relations with Moscow.
“The divergence between the US and Europe is currently a serious issue for businesses”, says Sam Tate of the law firm Clyde & Co, quoted by FT.
According to lawyer Leigh Hansson of Reed Smith, most multinational companies will remain bound by EU and UK sanctions even if the US begins to relax sanctions. She noted that it is more likely that businesses from Asia or the Middle East will take advantage of any easing of US sanctions to expand their existing operations in Russia.
European companies could, in theory, try to establish American subsidiaries staffed by non-European employees to exploit more liberal US rules and resume business with Russia, suggested Daniel Martin, a sanctions expert at Holman Fenwick Willan.
Kirill Dmitriev, special envoy of the Russian President and head of the Russian Direct Investment Fund, stated in early April that US companies are showing interest in returning to Russia, particularly in the energy sector. According to him, there are “numerous enquiries from American firms in the energy industry and many other sectors.” Boris Titov, the President’s special envoy for relations with international organisations for achieving sustainable development goals, also said after meeting with American businesses in New York that many US companies are “eager to return”, but are waiting for the right conditions to do so.
Russian authorities have repeatedly stated that the return of foreign companies to the Russian market must be as transparent as possible, while maintaining advantages for domestic businesses. The government has been tasked with developing a procedure to coordinate the return of companies that previously exited the country. Proposals include mandatory localisation of production to a certain level, ensuring technology transfer, and establishing as much of the supply chain in Russia as possible, including production facilities and engineering/R&D centres.