The Russian subsidiaries of foreign companies seized by the Kremlin are helping finance the war in Ukraine waged by Kremlin leader Vladimir Putin. Bloomberg reports, UNN writes.
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According to data compiled by Bloomberg and reports from Russian media, "businesses whose operational management was transferred to local managers by their international owners are spending billions of rubles to finance the army."
Most of the payments went to the "People's Front," an organization founded at Putin's initiative in 2011, which created the relevant project after the start of the war in Ukraine. "Corporate donations were used to purchase drones, vehicles, communications systems, and other equipment for Russian troops," the outlet notes.
The Kremlin's seizure of control over foreign companies gives Moscow leverage in response to the freezing of Russian assets in the West since the beginning of Russia's full-scale invasion of Ukraine in 2022, the outlet writes.
Dozens of international businesses were placed under temporary management by order of Putin. In 2023, Russia created a mechanism allowing the state to take operational control of subsidiaries belonging to companies from so-called "unfriendly" countries, while leaving formal ownership with the foreign parent company.
Although European and Japanese assets have become entangled in a geopolitical confrontation with Moscow, large American businesses in Russia have so far largely avoided confiscation, the outlet notes. This is connected to the Kremlin's desire to build warmer ties with the administration of U.S. President Donald Trump, the outlet writes.
Russian officials, it is noted, also fear retaliation from the United States and Washington's ability to pursue sanctioned individuals and companies worldwide, a person close to the Kremlin said.
"Although the payments for military needs pale in comparison with the enormous state spending on the war, which is expected to exceed 17 trillion rubles ($206 billion) this year, they give business executives a highly visible way to demonstrate support for the state," the outlet notes.
It is unclear whether the new Russian wartime business elite will gain control over more international assets that, in turn, could help support the military, the outlet notes.
The Kremlin has intensified asset confiscations since September, taking control of several foreign businesses, including Nestlé's Russian operations and, this month, the local subsidiaries of Japan Tobacco Inc.
In October, Putin called the temporary takeovers a deterrent against potential Western seizures of Russian assets. He left open the possibility for foreign owners to regain control of their businesses if those assets are returned.