Russia Ramps Up Scrutiny On Western Companies Exiting Country Amid War With Ukraine: Report

In the wake of Moscow’s invasion of Ukraine, Western companies looking to exit Russia are facing stringent scrutiny from the Kremlin.

What Happened: The Russian government is keeping a close watch on all corporate exit strategies, a policy that has been in place for almost 22 months since Russia invaded Ukraine, Business Insider reported on Monday, citing The New York Times. This comes along with the twelfth set of EU trade restrictions imposed on Monday.

Early departures from the Russian market, including giants like McDonald’s and Starbucks, managed to leave swiftly. However, the Kremlin has since tightened the reins on the exit process. Companies now have to meet several conditions before leaving, including making state donations, selling assets at a significant discount, and getting their exit plans approved by a government commission.

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The scrutiny extends even to critical sectors such as energy and resources, where any asset sale requires President Vladimir Putin’s approval. To highlight the extent of this scrutiny, a Finnish tire company, Nokian, was required to obtain approval just to sell an apartment valued at $59,000, according to the Times.

Apart from the regulatory hurdles, Moscow has also been probing exiting companies, interrogating employees, and even arresting local executives. Despite these obstacles, Kremlin spokesperson Dmitry Peskov seems unperturbed by the corporate exodus, stating that exiting companies lose their positions and their properties are bought by Russian firms at a discount.

Why It Matters: This tightening of exit strategies is part of a broader trend that has seen Russia actively seizing assets from Western companies. Major firms, including Danone and Carlsberg, have had their local operations temporarily placed under the control of Russia’s Federal Agency for State Property Management.

Following Russia’s invasion of Ukraine in 2022, a “special operation” as termed by Russia, Western governments imposed sanctions, leading many U.S. conglomerates to align with these sanctions by limiting their products and services in Russia. Among these firms, Netflix Inc. halted all future projects and acquisitions in Russia.

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