Russian President Vladimir Putin is making good on a threat to nationalize assets of Western companies that suspend business over the war. This week, he took the first step by signing a law allowing the seizure of more than 500 foreign-owned planes worth around $10 billion.
The planes are leased to Russia’s airlines by foreign companies, which canceled the contracts following sanctions against Russia. Legally, airlines are required to return the planes to the owners, but that has been made increasingly difficult by Russian restrictions and this new law, which endorses stealing the planes and reregistering them under Russia’s aircraft registry.
Sanctions are keeping other countries from certifying these planes as safe to fly, and Western companies like Boeing and Airbus are unable to provide maintenance. Russia’s seizure of the aircraft allows it to domestically stamp approval to fly the planes, but without replacement parts or proper records, continuing to fly them could become increasingly dangerous.
This latest law marks Putin’s first major move to seize assets of foreign companies that pull up stakes or suspend operations. Some of the companies in question include McDonald’s, Coca-Cola, IBM, Apple, BP and Exxon. Dozens of firms throughout the U.S., Europe and Japan have voluntarily pulled out of the country over the past few weeks, either in protest of Russia’s invasion of Ukraine or because sanctions have made supply chain conditions too difficult to work.
Putin reportedly favors a draft law that would essentially nationalize assets left behind by these companies, selling operations to Russians to conduct business without the corporations behind them. The outlook is murky on how successful that could be in some cases. For instance, they could sell all of Apple’s existing merchandise in the country, but it’s not like they could make new iPhones. It may be a more realistic threat to companies like Exxon, which left $4 billion in assets behind.
Russia’s embassy in the U.S. claimed this draft law is “fake news,” writing in a tweet, “The decision whether to continue entrepreneurial activity in our country is entirely up to the Americans.”
White House Press Secretary Jen Psaki also responded to the reports, tweeting, “Any lawless decision by Russia to seize the assets of these companies will ultimately result in even more economic pain for Russia.”