Putin signs decree seizing the Russian assets of two foreign energy firms

Russian President Vladimir Putin has signed a decree seizing temporary control of the Russian assets belonging to two foreign energy companies. The move signals that Russia could take the same action against other companies if necessary.

Russia seizes assets of two foreign energy firms

The decree signed by Putin outlines a possible retaliation by Russia if Russian assets abroad were seized because of the heavy sanctions facing the country following the invasion of Ukraine. The recent decree will see Russia taking action against Uniper SE’s Russian division and the assets owned by Fortum Oyj in Finland.

While issuing this decree, the Russian President said that Russia needed to take urgent steps to respond to actions by the United States and other countries. According to Putin, these actions were “unfriendly” and failed to comply with international law.

The shares of Uniper SE and Fortum Oyj have been placed under the temporary control of Rosimushchestvo. Rosimushchestvo is an agency that handles the property owned by the Russian federal government.

In February this year, the US Treasury Secretary, Janet Yellen, issued a statement saying that Russia needed to bear the costs of the damage caused by the country’s invasion of Ukraine. However, Yellen noted significant challenges and legal obstacles to confiscating the Russian assets that have been frozen because of international sanctions.

In February, Uniper valued most of its stake at Unipro, its Russian division, at 1 euro. The valuation hinted that the company was planning a sale to a Russian buyer. On the other hand, Fortum had already sent an alert to warn shareholders about the risk of the Russian government taking over its Russian assets.

More foreign assets could be under Russia’s control

The CRO of Bank VTB PAO, a state-owned financial institution, had earlier said that Russia needed to consider taking over and managing the assets owned by foreign companies like Forum. These assets would only be returned to the companies that own them after the international sanctions have been lifted.

According to Rosimushchestvo, more foreign firms could find their assets under Russia’s temporary control. The agency would ensure that these assets were still managed in a manner that would benefit the Russian economy.

A statement by TAAS noted that the recently signed decree did not pertain to the ownership of these assets and did not take the assets from their owners. Instead, external management was temporary and meant that the original owner no longer had the right to make management decisions.

In October last year, the President of the European Council, Charles Michel, said that the EU wanted to use Russian assets frozen from the Western sanctions to rebuild Ukraine. This move faces legal challenges.

The asset sales by investors from the countries that imposed sanctions against Russia following the invasion of Ukraine need approval from a government commission. In some cases, these assets require approval from the President.