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A precautionary step: Putin signed a decree on countermeasures in case of withdrawal of Russian assets abroad

Photo by Sam Korovich on Unsplash

Russian President Vladimir Putin signed a decree “On Temporary Management of Certain Property” in response to the illegal actions of the United States, as well as countries that joined them. The document was published on the official Internet portal of legal information.

Now, in the case of confiscation or blocking Russian property in unfriendly countries, Moscow will introduce temporary management of assets related to companies of such states in Russia. In particular, the measures can be applied to movable and immovable property, securities and shares of foreigners in the authorized capital of Russian legal entities.

The Federal Property Management Agency will act as interim manager. The agency will be able to exercise the powers of the owner of foreign assets, carry out an inventory and ensure their safety.

“Financing of expenses related to the temporary management of assets is carried out at the expense of income from its use. Temporary management of the property is terminated by the decision of the President of the Russian Federation”, – says the decree of the Russian leader.

As follows from the document, external management already includes 83.73% of shares of Unipro (owned by the German concern Uniper) and 98% of the securities of Fortum (a subsidiary of the Finnish holding company Fortum). In the future, the list of such organizations may be expanded, the Federal Property Management Agency noted.

“The decree … does not deprive owners of their assets. External management is temporary in nature and means that the original owner no longer has the right to make management decisions. The external manager receives powers that allow him to ensure the efficiency of enterprises in accordance with their importance for the economy of Russia”, – explained in the agency.

At that, as it was pointed out at the agency, external management is introduced specifically in respect of those assets which are of paramount importance for stable functioning of the industry. The initiative must help to save investment climate in Russia and reduce capital outflows from the country, added the Federal Property Management Agency.

In many ways the decision approved by the President was expected, according to investment strategist of MC “Arikapital” Sergey Suverov. According to him, in the conditions of wrongful actions of Western countries, the Russian leadership had to take a mirror response.

“Undoubtedly, this is a forced measure and at the same time an insurance mechanism for Russian companies, whose assets have fallen under restrictions in the West. We can say that this is a kind of a warning step for those who are thinking about confiscating our property,” the interlocutor explained to .

Alexander Abramov, head of the Laboratory for Analysis of Institutions and Financial Markets at the Institute of Applied Economic Research of the Russian Academy of National Economy and Public Administration, holds a similar point of view. The expert stressed that so far we are not talking about the nationalization of foreign assets unilaterally, but only about temporary management, which can be called “a mechanism of preventive warning.

“This is important because any nationalizations are remembered for a long time and are an extremely powerful constraint when the time comes for foreign investment. From the point of view of the long-term interests of business, caution was needed in taking administrative measures by the authorities. In the form in which it was taken now, it is quite a balanced measure that is important for maintaining the investment climate,” Abramov said.

It is noteworthy that the news of the introduction of external management of foreigners’ property was received positively by investors. Thus, during the trades on Wednesday, April 26 the shares of Unipro at the Moscow Stock Exchange went up 5.19% at once to 2.25 rubles per share. The value reached was the highest since February 2022.

However, according to Sergey Suverov, the decision on temporary management of foreign assets is still an interim solution. The expert believes that in the future these measures in respect of foreign property may be abolished or – depending on the policy of the West – such property will be permanently withdrawn..

“I think actions will be taken on a case-by-case basis. Everything will depend on what decisions regarding our property abroad will be taken by this or that country,” added Sergey Suverov.

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