Foreign firms lose $107 billion after exiting Russia: Reuters
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Since the last tally in August last year, the volume of losses incurred by foreign firms has increased by one-third, highlighting the magnitude of the financial blow to the corporate world following the conflict.
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People line up to visit a newly opened restaurant in a former McDonald's outlet in Bolshaya Bronnaya Street in Moscow, Russia, Wednesday, January 25, 2023. (AP)
Following the mass corporate exit from Russia after the start of its conflict with Ukraine in 2022, a Reuters analysis of company filings and statements has revealed that the exit has cost these foreign companies more than $107 billion in writedowns and lost revenue.
Since the last tally in August last year, the volume of losses has increased by one-third, highlighting the magnitude of the financial blow to the corporate world since the start of the conflict, while also shedding light on the sudden loss of Western expertise from Russia's economy, Reuters added.
The head of Corporate Intelligence EMEA at global risk consultancy S-RM, Ian Massey, said: "As Russia's invasion continues amid faltering Western military aid, and the granularity of Western sanctions regimes increases, companies still aiming to exit Russia will likely face further difficulties and have to accept greater writedowns and losses."
Massey added that President Vladimir Putin, who has recently been re-elected in the process of an election that Western allies claim to be "unfair and undemocratic", now has a renewed mandate to seek further isolation from the West also, as claimed by Massey, using additional asset seizures and political pressure.
You reap what you sow
Reuters' analysis added that Russia is requesting discounts of at least 50% on foreign asset sales, and has steadily made exit requirements more difficult.
So far this year, sales of assets owned by Shell, HSBC, Polymetal International, and Yandex NV, have been declared, totaling almost $10 billion and at discounts as high as 90%.
Danone, revealed last week that it lost $1.3 billion after the disposal of its Russian assets was accepted.
According to an analysis by the Yale School of Management, even though hundreds of companies like French retailers Auchan and Benettin are either functional or have only paused operations in Russia, about 1,000 companies have completely stopped operations in the country.
The West started the fight with Russia, and Russia fought back
Following the start of the conflict in 2022, Western allies have frozen around $300 billion of the Bank of Russia's gold and foreign exchange reserves, with one nation, Germany nationalizing Gazprom's plant, changing its name to Sefe, and placing Rosneft Schwedt refinery under German trusteeship, the Reuters analysis said.
Russia has stressed that it will retaliate against the EU's grave proposals to redistribute billions of euros in interest earned on its frozen assets, warning of catastrophic consequences, and labeling any attempt to seize its capital or interest as "banditry", Reuters stated, adding that even Western banks are worried the legal connotations accompanying any potential confiscation.
"There are no Western assets in Russia that can be considered safe or ringfenced so long as the Kremlin continues to wage war," Massey stressed.
RIA news agency said that if Russia were to fight back, it estimated that the West would risk losing assets and investments worth at least $288 billion.
This calculation by the Russian news agency is based on data indicating that direct investment by the EU, the G7 nations, Australia, and Switzerland in the Russian economy was at a total of $288 billion by 2022.
It also revealed that EU nations held $223.3 billion of the assets, of which $98.3 billion was formally seized by Cyprus, $50.1 billion by the Netherlands, and $17.3 billion by Germany.
Reuters reported that could not confirm the data cited by RIA.
