Efforts by Ukraine and its Western backers to convince, shame, and sanction companies into leaving the Russian market have backfired, placing lucrative enterprises in Russian hands at discount prices and pumping more than a billion dollars worth of exit taxes into Moscow’s coffers, the New York Times reported on Monday.
Within days of Russian troops entering Ukraine last February, a host of Western corporations began pulling out of the Russian market. Ukrainian activists and officials hounded those who refused to leave, and US and EU sanctions prohibited the export of goods from, and import of raw materials to, Russia.
Companies that sold up their Russian operations lost a combined $103 billion, the New York Times reported on Sunday, citing financial reports. These firms have also handed over at least $1.25 billion in exit taxes to the Russian state, the newspaper added.
As of last March, Western companies looking to sell their assets in Russia such sales must have the sales approved by a Russian government commission, which often works to ensure that local buyers snap up these assets at bargain basement prices.
Citing the minutes from a commission meeting, the Times claimed that the commission rejected the sale of factories owned by Honeywell, an American electronics firm, until the company agreed to sell at a 50% discount. As of earlier this year, companies are legally bound to sell their assets at this 50% markdown.
“In all, [Russian President Vladimr] Putin has overseen one of the biggest transfers of wealth within Russia since the fall of the Soviet Union. Huge swaths of industries – elevators, tires, industrial coatings and more – are now in the hands of increasingly dominant Russian players,” the Times wrote.
“Those who are leaving are losing their position,” Kremlin spokesman Dmitri Peskov told the newspaper. “And of course, their property is being bought at a serious discount and taken over by our companies, which are doing it with pleasure.”
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