The Plunder of Europa. How the West can counter the nationalization of its Russian assets • The Insider • RIMA

The Plunder of Europa. How the West can counter the nationalization of its Russian assets

Vladimir Putin’s special decree in mid-July transferred the Russian assets of two European food and beverage giants, Danone (France) and Carlsberg (Denmark), to the Federal Agency for State Property Management “for temporary stewardship”. The companies had two common traits. Firstly, they had a more significant Russian presence than most transnational corporations, with Russia accounting for 5% of Danone’s and at least 10% of Carlsberg's revenue. Secondly, both had found buyers for their Russian assets and were about to finalize the divestment deals. With Danone's aggregate investment since the company’s arrival in Russia netting at around $2 bn and that of Carlsberg exceeding $1 bn, this daring expropriation marks a new turn in the process I defined as the most flagrant plundering of foreign investors in history back in spring.

Some four months ago, I offered a brief recap of the previous episodes. The Kremlin used to squeeze investors out of the country by forcing them to sell their assets to its appointees for a tiny fraction of their real value and charging a humiliating tax on the minuscule earnings. As of April 2023, this technique yielded $30-34 bn in seized assets (30 times as much as the government earned in the notorious “loans for shares” auctions in 1996 and five times as much as transnational corporations lost in Venezuela as a result of Chavez’ and Maduro’s policies).

The Kremlin can rightfully claim the scheme as its know-how: using the nationalization framework, they presented the deals as “voluntary”, thus making it impossible for the ex-owners to challenge them in court (a common practice in the event of nationalization allowing business owners to receive court rulings on compensation from the government; the issue of enforcement is another story). However, the more Putin got, the more Putin wanted, and seized assets proved so useful in appeasing his courtier businessmen that the transition to the current forms of expropriation was a matter of time.