Named the main motive for the decree on external management for foreign assets in Russia

“A mirror measure and at the same time preventive”

In the event of the seizure of Russian property abroad, the assets of “unfriendly states” in the Russian Federation will be transferred to temporary management. There is no question of expropriation: the interim manager in the person of the Federal Property Management Agency will not be able to deprive the owners of their property. The corresponding decree, signed by President Putin, currently concerns the shares of two Russian energy companies owned by Germany’s Uniper and Finland’s Fortum.

These two companies were the first to be “under distribution”. According to the document, 83.7% of the shares of the Russian Unipro (owned by Uniper) and 98% of the shares of Fortum are transferred under the temporary management of the Federal Property Management Agency. Unipro owns five thermal power plants in the Russian Federation, its revenue last year increased by 20%, to 105.8 billion rubles, net profit – 2.6 times, to 21.2 billion rubles. In the spring of 2022, the German owner decided to suspend investments in Russia and sell Unipro. This was prevented by another decree of Vladimir Putin, which prohibits “unfriendly” shareholders from making purchase and sale transactions of shares in strategic enterprises until December 31, 2022.

As for the Finnish concern Fortum, one of the largest foreign investors in the Russian power industry, in May 2022 it announced plans to leave the Russian market by selling its Russian company Fortum. The deal didn’t go through either.

“If necessary, the list of enterprises will be expanded,” Presidential Press Secretary Dmitry Peskov said, calling the main goal of the current April decree “the formation of a compensation fund for mirror measures for the illegal expropriation of Russian assets abroad.” “External management is being introduced pointwise,” the spokesman added. In turn, the Federal Property Management Agency noted that the decree does not deal with property issues and does not deprive the owners of their assets: “External management is temporary and means that the original owner no longer has the right to make management decisions.”

We talked to the leading expert of the Center for Political Technologies Nikita Maslennikov about the extent to which this measure is justified, what is its meaning, and what the consequences may be.

– The measure is mirror and at the same time preventive. The risks must be balanced, – says the interlocutor of “MK”. – There are already clear precedents from the West, including the confiscation of the assets of businessman Konstantin Malofeev and the initiative of US congressmen to transfer $52 billion worth of Russian assets to Ukraine. The vector is obvious, the threat is real. The Europeans, by the way, have a more balanced, calm position: they realize that the frozen reserves of the Central Bank will still have to be returned. Nevertheless, in the European Union, more precisely, in Germany, external management was introduced at a number of Gazprom enterprises. Our presidential decree does not provide for either nationalization or confiscation. It clearly states that the interim manager does not deprive the owners of their property. The costs associated with its activities are financed from the income from the use of these assets. Accordingly, it costs nothing to the budget or taxpayers.

– How widespread can the practice of the “mirror response” eventually take?

– It’s not clear yet. I think there is no question of inclusiveness: Russia will respond pointwise to each specific case of encroachment on its assets in other countries. In this sense, the decision is more businesslike and softer than that of our opponents in the West. It is very important that the rights of private property, private property will not be affected. The list of foreign companies whose property in Russia is threatened by external management seems to have been approved, but it is not known who was included in it.

– Why was it decided to start with securities owned by Uniper and Fortum?

– It seems that this is due to the attempts of companies to dump their assets in Russia as quickly as possible, which ran into a blocking presidential decree. Or they didn’t want to sell the property at a 50 percent discount. Further clarifications from the management of Uniper and Fortum may bring some clarity to the situation. Their facilities in the Russian Federation are strategic backbone enterprises, on which the reliability of the country’s energy supply largely depends. It’s definitely not worth the hassle here.