ua en ru

Putin gives selected businesses to pro-Kremlin businessmen - UK intelligence

Putin gives selected businesses to pro-Kremlin businessmen - UK intelligence Vladimir Putin is creating a pro-war "elite" (Getty Images)
Author: Maria Kholina

Confiscated enterprises near Russia are being distributed to pro-Kremlin businessmen as Vladimir Putin cultivates a new "elite" from supporters of the war with Ukraine, citing the UK Ministry of Defense.

Since the onset of the invasion into Ukraine in February 2022, Russia has taken about 180 companies worth around $11.5 billion under state control.

Priority is reportedly given to companies owned by foreigners, including Russians living abroad. This move is likely aimed at reducing external (especially Western) influences on the Russian economy, as stated in the report.

British intelligence indicates that the Russian state is reallocating assets to pro-Kremlin businessmen who support the war against Ukraine. This deprivatization likely aligns with President Putin's call to create a new nationalist elite, forged by the war against Ukraine, in his February 2024 address to Russians.

"Increased defence spending has almost certainly increased financial pressures on the Russian state, alongside economic sanctions and flows of capital out of Russia since the start of the invasion," the UK Ministry of Defense writes.

Losses of Western companies due to business operations in Russia

According to analysis from the Yale School of Management, around 1000 companies have exited business operations in Russia, although hundreds still operate or have suspended activities.

Among the companies still operating or doing business in Russia are Mondelez International, PepsiCo, Auchan, Nestle, Unilever, and Reckitt. Others, including Intesa Sanpaolo, face bureaucratic hurdles in attempts to leave.

Moscow demands discounts of no less than 50% when selling foreign assets and consistently ramps up exit demands, often agreeing to nominal commissions of just one ruble.

Financial Times reports that the largest European companies have incurred at least €100 billion in direct losses from their operations in Russia following President Vladimir Putin's full-scale invasion of Ukraine.