Russia is carrying out a massive plan to nationalize private companies and then sell them to its most loyal partners. Thus, it reduces the number of participants in the Russian market and concentrates the assets in the hands of the usual ones. In this way, the proceeds from the sale of public companies also serve to finance the war against Ukraine, increase control over key resources for the Russian economy and blackmail the West for Russian assets frozen as sanctions.
Since the start of the war in 2022, companies and assets worth more than €50 billion have been confiscated, according to the Russian law firm NSP, equivalent to 2% of the country’s GDP. Some of these assets belonged to companies such as the British oil company Shell, the German energy company Uniper or the Danish brewery Carlsberg. Others, owned by Russians, were arbitrarily nationalized.
Revenge and protection
The Russian president, Vladimir Putindisguised this execution process for the “theft of public property” that took place in the nineties, as declared last year. The Russian president is referring to the massive privatization process that occurred after the collapse of the Soviet Union, but in which he himself participated when he worked at the City Council of Saint Petersburg, his hometown.
The president was always at odds with the so-called “old oligarchs”, those who rose with the former president. Ilways and who challenged Putin on several occasions. As happened with Mikhail Khodorkovskywho was imprisonedy Pguachev Serguéiwho fled Russia, and against whom he still harbors suspicion.
Another pretext is that the confiscations are carried out for national security, although fish farms and even macaroni factories were finally nationalized. One of the most talked about was the Moscow Domodedovo airport, valued at more than 10 billion euros, which they hope to sell before the end of the year into private hands. It also affected the gas pipelines of the Far East, where Shell and ExxonMobil had assets.
Response to sanctions
This week, the Kremlin spokesman, Dmitri Peskovassured that the nationalization of Western assets in Russia is a response to sanctions. According to him, the expropriations “were taken in the context of the hostile climate that has been created around Russia and other adverse actions in the economic sphere,” so “Russia is taking the measures it considers necessary to safeguard its interests.” In this way, these assets serve to blackmail the European Union and the United States in the face of new sanctions and the situation of Russian assets frozen abroad.
But at the same time, this ensures a limit to confiscations and new privatizations, as they could leave Moscow without a weapon with which to negotiate.
For this reason, the most indiscriminate nationalizations occur with the heritage of Russians. Tourism, logistics, construction companies and even gold mines have been expropriated from businessmen who have been denounced for corruption. This comes against the backdrop of another wave of trials against public and military officials for corruption before and during the war.
On the other hand, this has also hampered the investment climate itself in the interior of the country. The Russian Central Bank has already warned that this creates a negative environment for investors, and this week it came to recognize that the State violates the rights of shareholders with the nationalizations. Specifically, he gave the example of the Yuzhuralzoloto gold mining company, valued at 2.12 billion euros, and assured that in this way the right to private property in Russia is undermined.
The new owners
Actually, it is not so much a nationalization as a redistribution of assets at the will of the State and the different influence groups that exert pressure seeking their benefit. Most of the assets have been concentrated in the hands of the same old faces or their relatives, such as the clan of Nikolay Patrushevformer director of the Federal Security Service, or Putin’s oligarch brothers and personal friends, Arkady y Borís Rotenberg. This is also how those who remained loyal during these difficult years for Russia because of its initial failure in the invasion of Ukraine are rewarded.
Among these companies is Danone’s Russian subsidiary, which this week was renamed Lógica Láctea. In 2023, the company, previously nationalized, was transferred to the clan of the Chechen leader Ramzan Kadyrov by Putin’s decree. This year, the new owners announced an investment of 1 billion euros to develop its business in Russia, where it occupies a huge market share.
There is also a concentration of assets within other public companies.
By Putin’s decree, one of the largest transport and logistics companies, FESCO, was nationalized in 2024, which became part of the state nuclear energy company Rosatom. Rosatom has come to control more and more entities, now expanding its domain to transportation and taking responsibility for part of parallel imports, those that evade international sanctions.
At the recent international nuclear energy forum in Moscow, FESCO publicly boasted about how its products come to Russia from anywhere in the world. Like butter, for example, which leaves from New Zealand and stops at the port of Algeciras before arriving in Russia, evading sanctions.
But Russia plans even more privatizations, as demonstrated by a recent decree signed by Putin to accelerate these processes and the new budgets presented by the Ministry of Finance for 2026.
“The strategic priority is to guarantee the financing of the country’s security and defense needs”states the document, which also plans to increase public coffers, emptied by the war in Ukraine, through the sale of state companies. Russia prepares for another year of war as investors hang a “danger” sign.