Page 48 - bne IntelliNews monthly country report Russia February 2024

5.3 FDI
In his keynote address at the Russia Calling! Investment conference Russian President Vladimir Putin tried to hit an upbeat tone, saying Russia was still a great place to invest despite the war, The Bell reports.
This is by no means the first time in recent months that Putin has tried to paint foreign investors as his allies – and suggest that they are only leaving Russia due to pressure from their own governments, not because of moral outrage over the war. At the Russian Union of Entrepreneurs’ Congress earlier this year, one such Italian investor was paraded before the president (it quickly emerged that he was also a Russian citizen). This time, Putin struck a similar note. “Investors, unlike those who tell them what to do, are smart people,” he said. When asked if U.S. investment would return to Russia, Putin responded: “They are invisibly present here, I assure you.” It wasn’t immediately clear what he was referring to.
Putin praised Western companies that, in his view, have merely gone through the motions of leaving Russia. “Many foreign organizations, regardless of the pressure from their governments, decided that they wanted to continue working in our country. We only welcome this. Many changed names and maintained their presence on the market, or simply transferred their assets to the existing management – to be honest, with a buy-back option. God give them strength, let them work,” Putin said.
It’s true that many transactions fall under the latter definition: for example, McDonalds sold its Russian business to one of its local franchisees with a buy-out option for 15 years. Local management has bought out at least a quarter of the foreign countries that have left Russia.
Putin appears to be indicating to foreign companies what they should do if they want to stay in Russia. If they are willing to keep doing business, apparently, the authorities will help them cover their tracks and hold open the door for their return at some unspecified later date.
However, there are other possible outcomes for foreign investors who stay in Russia. Ahead of Putin's speech, it emerged that Taimuraz Bolloyev, the head of Russian beer company Baltika who was appointed by the Russian state when it seized the company from Denmark’s Carlsberg, has called for its full nationalization. If such a nationalization did go ahead, it would likely be a response to the fuss kicked up by Carlsberg when it publicly accused Russia of stealing its assets. The counterexample is French food products company Danone, which was also seized by the Russian state. Danone, however, kept quiet and, as a result, remains the owner (at least on paper), and still has hopes of making some money from selling up.
48 RUSSIA Country Report February 2024 www.intellinews.com