In a move that signals Moscow’s intention to protect its assets from potential foreign seizures, Russian President Vladimir Putin has signed a decree establishing temporary control of Russian assets of two foreign energy companies.
Russia responds to unspecified actions by the United States and other countries
The decree covers the Russian division of Uniper SE and the assets of Fortum Oyj of Finland, both of which have been placed under the temporary control of the federal state property agency, Rosimushchestvo. The move comes as Russia seeks to respond to unspecified actions by the United States and other countries that it considers “hostile and contrary to international law.”
The decree was interpreted as a warning to other foreign companies that they too could face similar actions if their assets are seized. It is also seen as a retaliatory measure against the United States, which called on Russia in February to bear the costs of the damage caused by its war in Ukraine. U.S. Treasury Secretary Janet Yellen, however, acknowledged that there are “significant legal impediments” to confiscating key frozen Russian assets.
The decree could have implications for international trade relations
The CEO of state-owned Bank VTB PAO also called on Russia to consider taking over and managing the assets of foreign companies, such as Fortum, returning them only when sanctions are lifted. Rosimushchestvo said that other foreign companies may also have their assets temporarily placed under Russian control. However, she clarified that the decree did not address ownership issues and did not deprive owners of their assets. External management was temporary in nature and meant that the original owner no longer had the right to make management decisions.
The decree is also part of Russia’s strategy to protect its economy from sanctions imposed by “hostile” countries, which is how Moscow refers to those who imposed sanctions against Russia following its invasion of Ukraine. Last October, the president of the European Council, Charles Michel, said the EU was considering using Russian assets frozen under the sanctions against Moscow to rebuild Ukraine.
In sum, this decree of temporary control of Russian assets of two foreign energy companies is a measure taken by Russia to protect its assets from possible foreign seizures. It is also seen as a response to unspecified actions by the United States and other countries that Moscow considers “hostile and contrary to international law.” Rosimushchestvo’s decision to place other foreign companies under temporary control is likely to raise concerns about the protection of foreign investment in Russia.
