Russia’s President Vladimir Putin approved a proposal on March 10 to confiscate the assets of Western businesses and nationalize them if they leave the country or suspend their operations.
During the meeting on March 10, Putin said that Russia would emerge stronger and more independent following what he believes to be illegitimate sanctions imposed by the West.
“The economy will, without doubt, adapt to the new situation,” said Putin to his cabinet. “We will continue import substitutions. And all of this will lead to the strengthening of our independence, self-sufficiency, and sovereignty.”
Putin’s plan is to obtain a court order to allow the government to continue running the companies through external management, preventing the establishment from bankrupting and preserving jobs.
“If foreign owners close the company unreasonably, then in such cases, the government proposes to introduce external administration,” said Russian Prime Minister Mikhail Mishustin to the Kremlin. “Depending on the decision of the owner, it will determine the future fate of the enterprise.”
Government management of a nationalized business would last for a duration of 3 months, at which point the company would go up for auction. The new ordinance would apply to businesses that are 25% owned by foreign nations and affect operations in Russia.
In response, the White House forewarned Russia that the new protocol would backfire on the country.
In a tweet, White House press secretary Jen Psaki said, “Any lawless decision by Russia to seize the assets of these companies will ultimately result in even more economic pain for Russia.” She added, “It will compound the clear message to the global business community that Russia is not a safe place to invest and do business.”
Businesses can stop the nationalization protocol if they restore their operations within five days of the court order or sell their assets in a way that preserves business activity and jobs.