Russia's Seizures: A Cautionary Tale for Western Firms Eyeing a Trump-Inspired Return

As discussions between Moscow and Washington on ending the war in Ukraine continue, one question remains: will the corporate exodus from Russia in opposition to the February 2022 invasion be reversed? While the Trump administration's efforts to ease restrictions could open the door for some companies to return, the recent asset seizures by the Russian government serve as a stark warning for Western firms considering a comeback.

In the last three years, more than a thousand companies have left Russia, with many selling their assets or handing them over to existing managers. However, some, like Danone and Carlsberg, had their assets seized and were forced to sell at huge discounts. The total value of these seizures is estimated to be around $107 billion, including lost revenue, according to a Reuters analysis in March 2024. Kirill Dmitriev, head of the Russian Direct Investment Fund, claims that US companies have lost $324 billion by leaving Russia.

The Russian government's recent seizures of Western-owned businesses, as well as Russian-owned ones, have raised concerns about the rule of law and property rights in the country. These seizures have also created uncertainty and instability for companies operating in Russia, making it difficult for them to plan and invest in the long term.



For Western companies considering a return to the Russian market under a Trump-inspired deal, the threat of asset seizures by the Russian government could significantly influence their decision-making process. The uncertainty, risk, reputation damage, legal challenges, investor concerns, and geopolitical risks associated with this threat could make it more difficult for companies to operate in Russia and could lead to a decrease in their willingness to return to the market.

Moreover, the Russian government's ability to retaliate against Western asset seizures has been eroded by dwindling foreign investment. However, officials and economists warn that Russia still has ways to strike back, such as confiscating foreign investors' financial assets and securities currently held in special "type-C" accounts. This could further deter Western companies from returning to the Russian market.

In conclusion, the recent asset seizures by the Russian government have created significant challenges for Western companies operating in Russia and serve as a cautionary tale for those considering a return under a Trump-inspired deal. The threat of asset seizures, along with the uncertainty, risk, and other challenges associated with operating in Russia, could make it difficult for companies to decide whether to return to the market. Western governments must balance the desire to seize Russian assets to fund Ukraine's reconstruction with the need to protect their own companies' interests in Russia, while companies must carefully evaluate the risks and benefits of a potential return.