Western Firms in Russia Face Asset Seizure Risk Amid US-Russia Tensions, Warns Expert

In June 2024, a report emerged detailing the potential risks faced by Western firms operating in Russia, shedding light on the power that the Kremlin holds over these companies. According to experts, the US's interference with Russia's frozen reserves could have significant repercussions for Western businesses.

The report highlighted that if the US accessed Russia's frozen foreign funds, the Kremlin could retaliate by targeting Western companies' assets in Russia. This move could leave these firms vulnerable to costly expropriation risks, as Moscow seeks to offset the impact of the frozen reserves.

Threat of Seizure

Experts emphasized that the Kremlin's decree, signed in May 2024, allowed for the confiscation of various assets, including securities, real estate, and property rights held by US-owned entities in Russia. This posed a significant threat to Western companies and individuals with assets in the country.

The report also pointed out that Russia had imposed increasing restrictions on firms looking to leave the country. Exiting companies were required to sell their holdings at a 50% discount and were subjected to a 15% exit tax, making the process both challenging and costly.

Western Response and Support for Ukraine

Despite these challenges, Western leaders refrained from directly tapping into Russia's frozen reserves and instead focused on utilizing the profits accrued from these funds. Moreover, in a show of support for Ukraine, the European Council agreed to transfer a significant portion of this revenue to Ukraine, potentially amounting to over $3 billion annually. This move aimed to provide financial support to Kyiv, with expectations of the first tranche of funding to be received by the summer of 2024.

It is evident that the dynamics between Russia and Western firms operating within its borders carry significant implications, with the potential for escalating tensions and financial risks.