How the Russian President "magically" turned the Western boycott into a gold mine

How Russian leader Vladimir Putin turned Western boycott into super profits for the elite?

Cách Tổng thống Nga biến sự tẩy chay của phương Tây thành ‘mỏ vàng’

How the Russian President turned the Western boycott into a 'gold mine'. (Source: AP)

Observers say that Russian President Vladimir Putin has turned the trend of Western companies leaving the domestic market into a “gold mine”. If a company wants to leave Russia, the Kremlin will not stop it, but it must pass the conditions set by the government. Of course, those conditions must be beneficial to the Russian government and elite - this is the content of a report by Globo.

As reported by international media, after Moscow launched its military campaign in Ukraine in February 2022, hundreds of foreign companies announced their withdrawal from the Russian economy. Politicians and activists predict that this wave will have a significant impact, holding back the Russian economy and weakening the Kremlin's military efforts.

However, President Putin always had another plan. He turned the “wave” of large Western companies leaving Russia into a super-profitable “bargain” for the Russian elite loyal to the state.

Moscow has forced companies wanting to sell their businesses in Russia to offer the “best possible” price, sometimes as low as $0, according to observers.

According to the NYT , Western companies that have announced their withdrawal from Russia have reported losses of more than $103 billion since the start of the Russia-Ukraine conflict. Moscow has sought to extract “as much as possible” from companies that want to stop operating and leave the country’s market, by dictating the terms of their withdrawal, according to a financial analysis conducted by the NYT .

The Kremlin has also reportedly imposed increasing tariffs on these “exits,” which brought in at least $1.25 billion to Russia’s military coffers last year, the NYT report notes.

At the same time, according to the NYT 's commentary, no deal is truly "safe." For example, Dutch beer company Heineken, although valued and found a buyer in the spring, the Russian government did not accept the deal and then required the company to redirect the transfer of assets to a loyal local producer.

Overall, Moscow has succeeded in overseeing one of the largest redistributions of assets in Russia since the collapse of the Soviet Union, with huge industries – elevators, tires, industrial paints, etc. – now all being transferred to Russian companies, the Globo report concluded.

In a recent case, on December 24, President Putin signed a decree paving the way for Russia’s leading capital market development bank Rosbank to buy stakes in leading Russian companies from French bank Societe Generale (SocGen). According to the decree, Rosbank can buy SocGen’s stakes in energy companies such as Rosneft and Gazprom, metal producers such as Norilsk Nickel and Severstal, and other leading Russian companies.

According to the European Banking Authority, SocGen had assets worth 22.4 billion euros ($24.6 billion) in Russia as of the end of June 2021. SocGen's stakes in Russian companies are relatively small, with 0.04% in Gazprom and 0.02% in Alrosa, the world's largest diamond producer. However, the total value of the assets under review is still in the billions of rubles.

French bank SocGen withdraws from Russia and completes sale of its branch in the country in May 2022.

Or Moscow’s order to revoke the multibillion-dollar stakes of Wintershall Dea (WINT.UL) and OMV (OMVV.VI) in Russian Arctic gas projects. According to a presidential decree published late on December 19, the stakes held by Austria’s OMV and Germany’s Wintershall Dea in the Yuzhno-Russkoye field and in the Achimov projects will be transferred to newly established Russian companies.

President Putin's decree formalizes the loss of control that OMV and Wintershall had signaled since January 2023.

“President Putin's decree is further confirmation that Russia is no longer a reliable and unpredictable economic partner in every respect,” Wintershall's spokesman said in a written request for an interview with Reuters .

Explaining Russia's use of strong measures against foreign assets, Kremlin spokesman Dmitry Peskov once said that this was a response move by Moscow, but not a move originating from Russia. "We are just reacting to the situation created by many European countries."

Hundreds of billions of dollars worth of Russian state assets, as well as the assets of a number of Russian businessmen and investors, are currently frozen in the West. Last year, Germany took control of the Russian-owned Schwedt refinery, which supplies 90 percent of Germany’s fuel needs.

According to the report, since February 2022, about $300 billion of Russia's foreign exchange reserves have been frozen by the West under sanctions imposed since Moscow began a special military operation in Ukraine.

The Russian Central Bank's reserves fell by 8.4% in 2022, according to 2022 statistics. In July 2022, the EU's Belgium-based clearing house Euroclear revealed that in the first half of this year, it had earned about €2.28 billion ($2.4 billion), of which more than €1.7 billion was accumulated from assets frozen in Russia.

Some European countries intend to use frozen Russian assets to cover the costs of rebuilding Ukraine.

In October 2023, Russian Finance Minister Anton Siluanov warned that Moscow would respond in kind if the West used the revenue from frozen Russian assets. "Russia has also frozen the assets of unfriendly countries. So if the West does that, we will do the same," Siluanov said.

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