Hundreds of foreign companies have left Russia after 2022 Invasion of UkraineIncluding large American companies such as Coca-Cola, Nike, Starbucks, Exxonmobil and Ford Motor Co.
But after more than three years of war, President Donald Trump held the prospect of restoring American-Russia trade if there is never a peace regulation. And Russian President Vladimir Putin said foreign companies could return in certain circumstances.
“Russia wants to trade on a large scale with the United States when this catastrophic” bloodbath “is over, and I agree,” Trump said in a statement after a telephone call with Putin. “There is a great opportunity for Russia to create massive quantities of jobs and wealth. Its potential is unlimited. “
The president then moved his tone towards Putin after attacks of drone and heavy missiles against kyiv, Say poutine “has gone absolutely crazy” and threatening new sanctions. This and recent comments by Putin warning Western companies against the recovery of their old issues seemed to reflect reality more precisely – that it will not be a fluid process for companies that return to Russia.
Indeed, the commercial environment of Russia has changed considerably since 2022. And not in a way that promotes foreign companies.
And with the growing Putin of attacks and clinging to the requirements of the territory that Ukraine will probably not accept, a peace agreement seems distant.
Here are factors that could dissuade American companies from going back:
Risk of losing everything
Russian law classifies Ukraine allies as “hostile states” and requires serious restrictions on businesses in more than 50 countries. These include the limits of withdrawal of money and equipment as well as allowing the Russian government to take control of the companies deemed important. The votes of foreign owners on boards of directors can be legally ignored.
Companies that have gone have to sell their businesses for 50% or less of their valued value, or have simply struck them while groups of convivial companies in Kremlin have taken cheap assets. As part of a presidential decree in 2023, the Russian government took control of the Finnish energy company Fortum, the German electricity company Unipro, the French dairy company Danone and Danish brewer Carlsberg.
Even if a peace agreement removed the United States from the list of unmistful, and if the massive Western sanctions restricting business in Russia were deleted, the history of losses would remain lively. And there is little sign of all this will happen.
Although the Russian government has generally spoken of companies that come back, “there is no specific evidence of a single company saying that they are ready to come back,” said Chris Wefer, CEO of Macro-Advisory Ltd. Consultancy. “Everything is at the political narrative level.”
Russia’s actions and legal changes have left “sustainable damage” to its commercial environment, explains Elina Ribakova, a non -resident researcher at Bruegel Research Institute in Brussels.
She said that a return of American companies was “not very likely”.
‘We have to strangle them’
During a meeting in Kremlin on May 26 to mark the day of Russian entrepreneurs, Putin said that Russia needed to strangle large technological companies such as Zoom and Microsoft, which had restricted their services in Russia after the invasion of Ukraine by Moscow, so that domestic technology can rather prosper.
“We have to strangle them,” said Putin. “After all, they try to strangle us: we have to do the same. We have not expelled anyone; we did not interfere with anyone. We have provided the most favorable conditions possible here, on our market, and they try to strangle us.”
He reassured a representative of VKUSNO-I TOCHKA (Tasty -period) – The Russian company which took over McDonald’s restaurants in the country – that Moscow would help them if the American fast food giant tried to buy its old stores. Asked commentary, McDonald’s referred to their 2022 declaration that “the property of the company in Russia is no longer tenable”.
Not much up
In addition to the difficult commercial environment of Russia, the economy is likely to stagnate due to the lack of investment in sectors other than the military, according to economists.
“Russia has one of the low -term long -term growth rates and one of the highest risk levels in countries in the world,” said Heli Simola, principal economist at the Bank of Finland in a blog article. “Only Belarus offers an equally ugly combination of growth and risk.”
Most of the possibility of earning money is linked to military production, and it is unlikely that US companies would work with the Russian military-industrial complex, said Ribakova. “It is not clear where exactly we could connect and expect disproportionate yields that would compensate for this negative investment environment.”
Buyout agreements
Certain companies, including Renault and Ford Motor Co., are part with buyout agreements allowing them to buy their issues from years later if the conditions change. But given the unstable legal environment of Russia, it is difficult to count.
Russian buyers can try to modify the conditions, find more money or ignore agreements, said Weafer. “There is a lot of uncertainty about how these buyout auctions will be applied.”
But what about oil and gas?
Multinational oil companies were one of those who have suffered losses that have left Russia, it is therefore an open question if they would like to try again, even given the vast oil and gas reserves in Russia. United States .. Major Exxonmobil saw its participation in the Sakhalin oil project ending unilaterally and has struck $ 3.4 billion.
The main oil companies in Russia need less foreign partners than in the immediate post-Soviet era, although the smallest petroleum land services can return given the size of the Russia oil industry. But they are expected to face new requirements in terms of local presence and investment, said Weafer.
Some have never left
According to the Kyiv School of Economics, 2,329 foreign companies are still doing business in Russia, many countries in China or other countries that are not allied in Ukraine, while 1,344 are leaving and 494 are completely out. The Institute of Leadership Managing Director of the Yale School of Management lists a dozen American companies that still do business in Russia, while some 100 others have reduced by interrupting new investments.
EU sanctions could remain even if we opened
American sanctions are considered to be the most difficult because they carry the threat of being cut off from the American banking and financial system. But the EU always takes off new series of sanctions against Russia. Even if the American sanctions are abandoned, EU sanctions would continue to present a head of compliance for any business that also wants to do business in Europe.