Risks, sanctions, reprivatization: What threatens foreign business in russia

The russian federation is actively implementing a policy of nationalization, especially of foreign assets, which creates significant obstacles for the return of foreign investors to the russian market.

This was discussed during the presentation of the research “Reprivatization in russia and sanctions relief: Will putin’s new gamble pay off?” at the Media Center Ukraine.

As noted by Olha Ivaniuk, Candidate of Economic Sciences, the formation of a closed economic system in russia, where clear rules of the game are absent, discourages foreign investors from returning.

“All this will hinder the return of foreign investors, because we understand that a closed economic system is being established. We also understand that all the conditions have been created for the confiscation of assets. Companies that have left the russian market have written off their debts; they are unlikely to want to crawl back into the same loop to have their assets seized again, which is a guaranteed outcome,” she explained.

According to Olha Ivaniuk, it is obvious that russia is creating a closed economic system subordinated to the inner circle, and it is highly unlikely that anyone else will be allowed in.

Moreover, internal restrictions imposed by the russian authorities increase the risks for foreign companies.

“There are no rules. Any foreign asset or anything tied to foreign interests can be seized,” the expert noted.

She also mentioned that the involvement of the FSB and the Federal Service for Technical and Export Control in the nationalization processes, along with the fear of cooperation with foreign companies, creates additional risks.

“And the key point is the fear of working with foreign companies. No one wants to deal with them. Because tomorrow they may not only lose their assets – usually, along with being declared ‘strategic’ or some other label, the authorities add justifications like ‘supporting the armed forces of Ukraine’ or ‘supporting unfriendly governments,’ meaning charges that can land you in jail for a long time. They always make it clear: either you hand your business over or you face a rather lengthy sentence. And this is already a well-established practice,” Olha Ivaniuk explained.

You can review the research in more detail at the link.

Read more: https://mediacenter.org.ua/news