- Russian authorities are scrutinizing and micromanaging corporate exit plans, per The New York Times.
- A swathe of foreign companies announced departures from Russia following its invasion of Ukraine.
- But many foreign firms are still operating there, and stuck in the process of exiting the Russian market.
Western companies clamored to announce their exits from Russia following Moscow’s invasion of Ukraine — but many are still operating in the country.
It’s not that they aren’t trying to get out. The Kremlin, however, is scrutinizing and micromanaging nearly every corporate exit plan before approving it, The New York Times reported on Sunday.
The Times’ report comes nearly 22 months after Russia invaded Ukraine. It showed how the Russian authorities make companies jump through hoops, imposing high hurdles on firms trying to exit a market hit by sweeping sanctions, including a 12th round of trade restrictions from the European Union on Monday.
While companies pulling out from the market early in the war, like McDonald’s and Starbucks, managed to make quick exits in a matter of months, Russia has made it much more difficult to leave.
Now, not only do foreign companies departing Russia have to pay donations to the state and sell their assets at a steep discount before they can exit the country, but their departure plans must also be approved by a government commission.
Companies operating in strategically important sectors — such as energy and resources — also need President Vladimir Putin’s sign-off before any asset sale.
Russian authorities are being so exacting with their scrutiny of companies wanting to get out that Nokian, a Finnish tire company, even had to seek approval to sell an apartment for $59,000, according to the Times, citing internal minutes. Nokian did not immediately respond to a request for comment from Business Insider sent outside regular business hours.
It’s not just red tape and hoops they must jump through. Moscow has also probed exiting companies, interrogated employees, and even arrested local executives, the Times reported.
A recent Business Insider analysis showed that most foreign firms have not fully exited the Russian market — although many major international names have already left.
Foreign companies still operating in Russia have cited various reasons for not leaving the market, including operational, ethical, and policy challenges. Some are also concerned about the fate of their assets and technology in Russia.
Meanwhile, the Kremlin appears to be unconcerned about the Western corporate exits.
“Those who are leaving are losing their position,” Kremlin spokesperson Dmitry Peskov told The Times. “And, of course, their property is being bought at a serious discount and taken over by our companies, which are doing it with pleasure.”
