OfFederico Fubini
Russian companies are also in Putin’s sights – but foreign ones remain more exposed. The loyalists were rewarded: one acquired 850 McDonald’s restaurants for zero rubles
Even far from the front, in the slightly kitsch living rooms of Moscow’s elite, Vladimir Putin’s war is bringing profound news: triggered the largest plunder of resources since the privatizations of the 1990s.
What remained of property rights in Russia fell apart under the blows of two years of conflict. Any enterprise, of any type of Russian or foreign shareholder, is subject to being nationalized with the stroke of a pen or with a seemingly incomprehensible ruling of a court. At that point it is only a matter of time: soon some old or new oligarch, as long as he is useful to the Kremlin, will take possession of it for a symbolic price.
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Who gets rich through war
Thus the war destroys lives in Ukraine, but fabulously enriches the middle-aged men who constantly jockey for Putin’s favor. Just convince those who control the levers of the state to expropriate, nationalize and then sell off.
In recent days it has happened to the Russian subsidiaries of the Italian Ariston and the German Bosch, but in the last year and a half dozens of other Western companies and hundreds of local companies have experienced the same fate.
Finnish Fortum and its German subsidiary Fortum – revenues in Russia of two billion euros in 2021 – ended up under the control of Rosneft for free: but this is the group in the hands of Igor Sechin, a former KGB man who has always been close to Putin. And even if you are loyal to the president or his party, it is enough to fall slightly into disgrace, to let slip a wrong phrase or even just to find yourself abroad, to have everything taken away from you. Former Chelyabinsk regional governor Mikhail Yurevich fled abroad facing corruption charges and within days the Makfa Group was removed from him, the largest pasta producer in the country. All it took for oligarch Oleg Tinkov to utter a succinct criticism of the “special military operation” in Ukraine was to find himself forced to sell off his bank.
Says Alexandra Prokopenko, former advisor to the Bank of Russia and now a scholar at the Carnegie Russia Eurasia Center in Berlin: “Often behind the seizure of a company there is simply some oligarch who wants to get his hands on those resources, nothing else.”
Western groups held hostage
If it can happen to the Russians, let alone the Western groups who have actually been made very difficult to leave. I’m practically held hostage. To exit they would have to sell at half the value and pay a tax equal, by decree, to 25% of the last year’s turnover.
For banks it is literally impossible: Intesa Sanpaolo tried twice to sell its Russian assets, first to Gazprombank and then to local managers, but faced a Kremlin veto. With large Russian institutions under sanctions, Putin demands that European ones remain on the market.
Those who fled to other sectors did so at a high cost. Arsen Kanokov, former head of the Caucasian republic of Kabardino-Balkaria, took over 850 McDonald’s restaurants at zero rubles. Two obscure car showroom owners, Alexander Varshavsky and Kamo Avagumyan, bought the Volkswagen and South Korean Hyunday factories for around ten million euros, which alone covered a third of the car production in the whole of Russia.
The loyalists to be rewarded
Of course, political calculations are never foreign. Putin wants to show that Russia can also impose sanctions, far beyond blocking gas flows. The confiscation of Fortum and Uniper came after a ruling by a Leipzig court which effectively places Rosneft’s German assets under protection. And then there are always the loyalists to reward: the Danone subsidiary, under expropriation, ended up with a close ally of Chechnya’s strongman Ramzan Kadyrov. Because basically the power system in Russia is like this: half foreign policy and half gang warfare; half imperial ideology, half mafia mentality according to which only the most determined and reliable survive and will be rewarded. Now Ariston will end up in the hands of a man like this. And it won’t be the last kidnapping: just another block of rubble on a civil society that, after Putin, will be very hard to rebuild.
April 30, 2024 (modified April 30, 2024 | 09:06)
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