Russia is reportedly considering ways to seize local assets owned by Western companies that have halted operations in the country.
In recent days, a flurry of international businesses have announced they will pull out of Russia after its invasion of Ukraine.
In the food and beverage industries, McDonald’s has decided to “temporarily” close restaurants and “pause” operations in Russia. Starbucks, Papa John’s and Yum! Brands made similar announcements. Coca-Cola said it, too, was suspending its business in the country.
Among packaged food manufacturers, Norway-based food group Orkla followed in the footsteps of its Scandinavian peers Valio and Fazer by pulling the plug on its Russian operations. On Monday (7 March), Arla Foods said it had “initiated preparations to suspend its business in Russia”, a move that would “cover both its local operations and imports”.
Nestlé, PepsiCo, Unilever, Danone, Mars, Mondelez International and Kellogg are among those to have announced they will suspend their investment in Russia but maintain the manufacturing and sale of certain food products.
Putin was quoted by media outlets including The Financial Times and The Guardian as saying the Kremlin would look at legal avenues to take hold of assets left behind.
“With regards to those who are planning to close their production facilities, we must act decisively … By no means must we allow any harm to local Russian suppliers,” Putin said.
Moscow would look to “introduce external management and then transfer these enterprises to those who actually want to work,” he added. “There are enough legal and market instruments for this.”
Bloomberg reported Russia’s Economy Ministry has outlined a proposal for Moscow to take temporary control of departing companies if there foreign ownership is more than 25%. Under the plans, a court would weigh up requests to bring in external management.
Washington has hit out at the idea. Jen Psaki, the White House’s official spokesperson took to Twitter to outline US opposition.
“Any lawless decision by Russia to seize the assets of these companies will ultimately result in even more economic pain for Russia. It will compound the clear message to the global business community that Russia is not a safe place to invest and do business,” she wrote.