Russia said it could seize the assets of Western companies that have suspended operations in the country.
Dozens of American, European and Japanese companies from almost every sector of the economy have abandoned joint ventures, factories, stores and offices in the last two weeks in response to Russia’s invasion of Ukraine and the ensuring sanctions.
The sanctions have hit most of Russia’s financial sector, including its central bank, trashed the Russian currency and are likely to trigger a sovereign debt default and deep recession. And there may be more to come: US Treasury Secretary Janet Yellen said Thursday that Russia’s economy will be “devastated” as a consequence of existing Western sanctions, “but we … continue to consider further steps we can take.”
President Vladimir Putin had promised a response. Speaking Thursday at a meeting with government officials, he backed a plan to introduce “external management” of foreign companies leaving Russia.
“We need to act decisively with those [companies] who are going to close their production,” Putin said according to a video posted by the Kremlin and aired on state media. “It is necessary, then … to introduce external management and then transfer these enterprises to those who want to work,” he added.
Russian Prime Minister Mikhail Mishustin said earlier that legislation had been drafted.
“If foreign owners close the company unreasonably, then in such cases the government proposes to introduce external administration. Depending on the decision of the owner, it will determine the future fate of the enterprise,” Mishustin said, according to the Kremlin.
“The key task will be to preserve … the activities of organizations and jobs. Most businesses are announcing a temporary suspension while maintaining jobs and wages, and we will be closely monitoring this situation,” he added.
The exodus of companies includes iconic consumer and tech brands such as McDonalds (MCD), Coca-Cola (COKE) and Apple (AAPL), as well as leading Big Oil groups such as BP (BP) and Shell (RDSA). They were joined Thursday by Goldman Sachs (GS), the first major bank since the war started to say it was winding down its activities in the country entirely. Other banks are likely to follow, leaving billions in outstanding debts behind them.
Russia’s consumer rights organization has drawn up a list of companies that have decided to leave and could be nationalized, according to a report in Russian newspaper Izvestiya later cited by state news agency TASS.
The document that was reportedly sent to the Russian government and the Prosecutor General’s Office, includes 59 companies, including Volkswagen (VLKAF), Apple, IKEA, Microsoft (MSFT), IBM (IBM), Shell, McDonald’s, Porsche, Toyota (TM), H&M (HNNMY) and can be updated with more brands, Izvestiya said.
The Russian government earlier Thursday issued a list of goods and equipment previously imported Russia that companies would be banned from transferring out of the country.
According to a statement published on the government’s website, the list includes over 200 items, including “technological, telecommunications, medical equipment, vehicles, agricultural machinery, electrical equipment” as well as “railway cars and locomotives, containers, turbines, metal and stone processing machines, monitors, projectors, consoles and panels.”
Those restrictions will remain in effect until the end of 2022.
– CNN’s Chris Liakos contributed to this article