Withdrawal from Russia since its invasion of Ukraine cost foreign companies $107 billion - Reuters
Kyiv • UNN
The withdrawal of corporations from Russia following its invasion of Ukraine in 2022 has cost foreign companies more than $107 billion in write-downs and lost profits, with losses increasing by a third since the last estimate in August last year.
The withdrawal of corporations from Russia since its 2022 invasion of Ukraine cost foreign companies more than $107 billion in write-offs and lost profits, Reuters reports, citing an analysis of company documents and reports, UNN writes.
Details
The volume of losses has increased by one-third since the last count in August last year.
"As Russia's invasion continues amid weak Western military assistance and the granularity of Western sanctions regimes increases, companies still seeking to exit Russia are likely to face further difficulties and be forced to accept large write-downs and losses," said Ian Massey, head of corporate intelligence for Europe, Middle East and Africa at global risk consultancy S-RM.
Putin, who has just secured re-election in a victory that many in the West condemn as unfair and undemocratic, now has a renewed mandate to further isolate himself from the West, including through additional asset confiscations and political pressure, Massey added.
Moscow requires a discount of at least 50% on the sale of foreign assets and is constantly tightening its exit requirements, often accepting a nominal fee of only one ruble.
"This year, sales of assets belonging to Shell, HSBC, Polymetal International and Yandex NV have been announced for a total of nearly $10 billion and at discounts of up to 90%. Last week, Danone announced that it had received regulatory approvals to sell its Russian assets, incurring a total loss of $1.3 billion," the newspaper writes.
Reportedly, "about 1,000 companies have pulled out". Austrian brick producer Wienerberger reportedly sold its Russian plants and left the market.
However, according to an analysis by the Yale School of Management, "hundreds of companies, including French retailers Auchan and Benetton, are still operating or have suspended operations.
A 2022 Russian decree prohibits investors from "unfriendly" countries-those that have imposed sanctions on Russia for its war against Ukraine-from selling shares in key energy projects and banks without presidential approval.
Meanwhile, many producers of FMCG and consumer goods are refraining from pulling out of Russia entirely, arguing that ordinary people in Russia rely on their products.
"Companies that still operate or do business in Russia include Mondelez International, PepsiCo, Auchan, Nestle, Unilever and Reckitt. Others, such as Intesa Sanpaolo, are facing bureaucratic obstacles in trying to leave," the newspaper writes.
Addendum
After the Russian invasion, Western countries froze about $300 billion of the Bank of Russia's foreign exchange reserves. Germany nationalized the Gazprom Germania plant, renaming it Sefe, and placed the Rosneft refinery in Schwedt under German tutelage.
russia has vowed to take action in response to EU proposals to redistribute billions of euros in interest earned on its frozen assets, warning of catastrophic consequences and saying any attempt to take its capital or interest is "banditry." Western banks are also worried about the lawsuits that any confiscation could trigger, the newspaper said.
"There are no Western assets in Russia that can be considered safe or secure as long as the Kremlin continues to wage war," Massey said.
"Moscow has already taken temporary control of assets belonging to several Western companies, including Fortum, Carlsberg, OMV and Uniper," the publication notes.
One Russian state news agency has calculated that the West would allegedly lose assets and investments worth at least $288 billion if Moscow retaliates. The figures are based on data that, according to Russian media, show that direct investments by the EU, the Group of Seven countries, Australia and Switzerland in the Russian economy amounted to $288 billion in 2022. Reuters was unable to verify the data.
At the same time, the publication notes that Moscow's tough approach is harmful to Russia.
Lawyer Jeremy Zucker, an expert on sanctions, said that a surprisingly large number of his firm's clients from various industries have decided to leave Russia entirely and will probably not want to return even after the end of hostilities.
As a result, significant technology has left the country, and Russia may no longer be able to support some high-tech industries, said the head of the national security practice at the US law firm Dechert Zucker.
"This certainly indicates a significant degree of damage to the economy," he said.
