Media: Putin turns West's boycott into super-profits for his own elite

Written by Jeppe W

Dec.19 - 2023 10:29 AM CET

Photo: Shutterstock.com
Photo: Shutterstock.com

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Russian President Vladimir Putin has ingeniously transformed the exodus of Western companies from Russia into a lucrative opportunity for the Russian government and its loyal elites.

This strategy, reported by Globo and cited by Ukrinform, comes in the wake of Russia's full-scale invasion of Ukraine in February 2022, which prompted a mass withdrawal of companies from the Russian market.

Contrary to expectations that these departures would cripple the Russian economy and impede the Kremlin's military efforts, Putin has instead leveraged this situation to generate substantial profits.

He has strategically dictated the terms of exit for these companies, often forcing them to sell their Russian operations at reduced prices or even seizing their assets outright.

According to a New York Times analysis of financial statements, Western companies withdrawing from Russia have reported over $103 billion in losses since the onset of the war with Ukraine. Putin has capitalized on this by imposing heavy taxes on these exits, which contributed at least $1.25 billion to the Russian military treasury last year alone.

The uncertainty surrounding these deals is evident in the case of the Dutch beer company Heineken. Despite finding a buyer and setting a price, the Russian government reportedly intervened, rejecting the deal and transferring Heineken's Russian assets to a local producer aligned with the Kremlin.

This move by Putin marks one of the largest redistributions of wealth in Russia since the collapse of the USSR, with significant sectors such as elevators, tires, and industrial coatings now controlled by Russian entities. These developments indicate an increasing dominance of Russian players in these industries.

Kyrylo Budanov, head of the Main Intelligence Directorate of the Ministry of Defense of Ukraine, believes that the Russian economy, under these conditions, can sustain itself only until 2025.

As the situation unfolds, the impact of Putin's strategies on the Russian economy and its global relations continues to be a point of significant interest and analysis.

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