Putin’s commercial friends do not want Western companies to return to Russia

The Russian companies that have taken over brands like McDonald’s, Heinz and Kellogg after the invasion of Ukraine is now lobbying to ensure that these Western companies cannot come back – and Kremlin supports them.

Vkusno I Tochka, which results in “Tople, Full Stop”, the fast food chain replaced McDonald’s After The American giant came out of Russia in 2022.

Speaking at a Kremlin business meeting with President Vladimir Putin at the end of last month, CEO Oleg Paroev said that a return from McDonald’s would cancel years of work to develop the Russian brand.

“We have created our own computer systems, our own cooking equipment, our own innovations-and if the brand returns, all of this becomes foreign,” he said. “The work of our Russian partners would be, to a certain extent, vain.”

Putin replied with a sharp joke: “Only cowards pay their debts. It’s the same thing here.”

New law in progress

A few days before the Kremlin meeting, Russian deputies have advanced legislation that would make companies more difficult – or even impossible – for Western companies to recover the operations they have abandoned.

More than three years after the start of the war in Ukraine, nearly 500 foreign companies have completely left the Russian market, according to the kyiv School of Economics Russia database.

A lot Sold their local operations to Russian buyersOften to deep discounts, sometimes with buyout clauses which allowed a potential return.

The new bill would give authorities the power to Cancel these agreementsEspecially if the buyout price was now lower than the market value.

The legislation would formalize the wider efforts of the Kremlin to definitively lock foreign companies and protect Russian companies.

This “would also undermine the rule of law and strengthen the fears of investors that the Russian markets are not only at high risk but fundamentally unstable and arbitrary,” said Roman Sheremeta, an associate professor of economics at the Wearchehead School of Management of Case Western University.

“Any Western business understands that long-term risks are enormous,” he told Business Insider.

The legislation should be voted later this year.

Who repels the hardest?

The strongest support for the bill comes from Russian companies that have replaced the world brands – and are now taking advantage of their absence.

Vkusno i tochka’s owner, Alexander Govorbought the entire Russian operation of McDonald’s after the American giant left Russia in 2022.

The chain indicates that it now has around 930 points of sale serving 2 million customers per day and generated 187 billion rubles ($ 2.4 billion) of income in 2024 – More than double what McDonald’s has done in his last year in Russia.

CEO Paroev said last month that the company was to start from scratch, without packaging, kitchen equipment or supply chain.

“Our idea is to create a technological center that will produce this equipment not only for us, but, in fact, for the entire Russian market for public catering,” he told Putin.

Paroev may not have too much to fear, since McDonald’s said The Ukrainian Advocacy Group B4ukraine Coalition earlier this year He did not intend to return to Russia.

Other bosses have made protectionist calls similar to the summit. Stanislav Yodkovsky, CEO of IVA Technologies, a Russian videoconferencing and communication company, has put pressure on new import rights and restrictions on foreign technological companies such as Zoom and Microsoft.

Maria Gekht, CEO of Rusido, a Russian seed company, urged the Kremlin to maintain the borders of Western seed imports to help local producers develop.

Protectionism or stagnation?

The Kremlin praised the pivot of Russia to the import of substitution – to replace Western goods by domestic goods – as a growth strategy.

Economists have warned that state protectionism and isolation against foreign competition could Small business innovation and longer -term growth.

“Companies like VKUSNO I Tochka can report short -term gains, but their success is largely due to a monopoly type environment created by the absence of foreign competitors,” said Sheremeta. “It’s not innovation – it’s insulation.”

While the Kremlin said that this strategy would make autonomy, criticisms argued that it was likely to create an inflated, ineffective system supported by the State.

“In the case of Russia, this leads to ineffectiveness, technological stagnation and increased dependence on state subsidies,” said Sheremeta.

“In the long term, this model has significant risks: economic isolation, capital flight, brain flight and a loss of credibility sustained from global investors.”

The Kremlin is everything

Kremlin’s support to try to lock Western companies is political and economic.

“War, sanctionsThe counter -efforts, and the reorientation of a war economy have all contributed to a rejection in time – unless there is market mechanisms and a more government intervention, “said OLOFSGARD, Deputy Director of Stockholm Institute of Transition Economics.

This change, he said, tightened the dependence of companies with regard to the goodwill of the Kremlin-and encouraged them to put pressure for even greater protection.

And Russian politicians did not chop their words.

“We don’t expect anyone with open arms. There will be a price to pay for past decisions“Said the Minister of Industry and Trade, Anton Alikhanov in February reported the TASS press agency.

Dmitry Medvedev, vice-president of the Russian Security Council, echoes this warning In March, saying that a return would be “difficult” but that no foreign company had sought to do so.

Even if the Trump administration has sought a cease-fire agreement in Ukraine with Moscow, stimulating discussions on the return of Western companies in Russia, Putin doubled on this position last month.

“They put everyone in a difficult situation, fled,” he said about the release of Western Brands from Russia. “And now, if they want to come back, should we throw their way? Of course not.”