Putin stole their businesses, but now they want them back

Vladimir Putin has done something that at first glance seems wholly out of character.

The Russian president last year signed a decree authorising the seizure of the Russian subsidiary of Italian heating systems manufacturer Ariston. The order transferred control of the company to Gazprom Household Systems, an arm of the state-owned Russian energy giant.

But on Wednesday, Putin signed another presidential decree reversing this decision and transferring ownership of the company back to the Italians.

Paolo Merloni, Ariston Group’s executive chairman, said: “We intend to resume activities with our Russian local leadership, adhering fully to existing sanctions, and continue our legacy in the country.”

At face value, it looks like a door is opening for Western companies to get back assets seized by the Kremlin after Russian troops poured over the Ukrainian border in 2022.

Western companies have suffered $167bn (£129bn) of losses in Russia since Putin launched his full-scale invasion, according to the analysis by the Kyiv School of Economics (KSE) Institute.

Sanctions on trade sparked a wave of corporate exits, while multinationals also had their assets seized and staff arrested. Many others have been forced to sell at 80pc discounts.

Putin’s tactics have triggered a wave of corporate fights and legal claims as companies try to get their money back. Until recently, there seemed little hope of businesses managing to extract anything from Russia.

Now, however, the chances of a return to Russia – if not the extraction of proper payment for stolen assets – has risen with Donald Trump in the White House and new messaging from US officials about reopening economic ties with Russia.

Kirill Dmitriev, the head of the Russian Direct Investment Fund, said last month he expected “a number of American companies will return to the Russian market as early as in the second quarter of the year”.

Some Western businesses have already laid the groundwork to return.

French carmaker Renault sold all of its shares in Renault Russia and its 67.69pc interest in Russia’s AvtoVAZ in May 2022, but this agreement includes an option for Renault to buy back its interest in AvtoVAZ that is exercisable for six years.

Luca de Meo, the Renault chief, last month refused to rule out a return to Russia. However, officials have since said the carmaker would need to pay $1.3bn to do so.

Executives should also be wary: analysts warn that Putin is using Western businesses as a pawn in his games with Europe and the US. Lost Western assets and cash have become a bargaining chip in negotiations over a potential peace deal on Ukraine – and a way of dividing Europe.

“As sanctions have proliferated, the Kremlin has increasingly come to the view that Russian assets of multinational firms are useful collateral for frozen assets abroad,” says Ian Massey, at S-RM consultants.

Europe and the US have frozen some $300bn in Russia’s overseas assets, something that has irked the Kremlin. Austria’s Raiffeisen Bank International (RBI) is battling a €2bn (£1.7bn) fine imposed by a Russian court in January, which officials said was compensation for frozen assets in Austria.

“We had only 10 minutes to make our case in court,” says RBI spokesperson Christof Danz. The defendant was flanked by armed people wearing balaclavas. RBI is appealing the ruling and has its next court hearing on April 24.

“The presence of Western businesses in Russia and the kind of leverage that gives [Putin] over certain European countries has been one of the most useful tools in the Kremlin’s toolbox for years,” says Patrick Sewell, who runs consultancy Control Risks’ and oversees Russia.

With the Ariston decision, Putin may also be trying to divide Europe by signalling that countries that take a softer line to Moscow may get their assets back, he says.

“I think it’s quite plausible that Putin would be happy to allow certain Western companies to take back their assets in a way that drives a wedge between different members of the EU.

“Italy has sometimes been a kind of soft target for Russia. They’ve typically been among the more Russian friendly-countries of the EU, the Italian business community has always been very active in Moscow.”

Putin’s response to the tidal wave of Western sanctions that hit Russia after the war began was a vicious attack on foreign businesses operating in the state. Of the $167bn lost since 2022, $57bn has been lost by 30 companies who have had their assets forcibly seized, according to the KSE Institute.

These included French yogurt maker Danone and Danish brewer Carlsberg, both of which have since sold their Russian assets and cut their losses.

Putin also imposed blocks on companies trying to escape. Until last autumn, businesses selling assets in Russia had to take a 50pc hit on the sale price and pay an exit tax on the proceeds of 15pc. In October, Russia raised the discount to 60pc and the exit fee to 35pc.

Transactions are also subject to a protracted approval process involving the finance ministry. It can take 12 months and is often unsuccessful. In other words, many businesses are effectively held to ransom.

Western firms are fighting back. Ariston’s case was backed by major lobbying from the Italian Foreign Ministry. More companies are trying to attack through the legal system.

German oil and gas producer Wintershall Dea has begun two arbitration proceedings against the Russian Federation after Putin signed decrees booting the company out of all of its five Russian joint ventures, including in the Nord Stream pipeline.

Finnish energy company Fortum similarly initiated arbitration proceedings against Russia in February 2024 for compensation for unlawful seizure after it had its assets seized by presidential decree in 2023.

“Fortum has since lost all oversight and control over the assets, and we are unaware of who runs these assets nor do we have any other information regarding the assets,” says Esa Hyvärinen, at Fortum.

These tactics can be legally successful. In June 2024, German energy company Uniper won a $14bn arbitration ruling against Russia’s state-owned energy giant Gazprom. But there is a big difference between winning a court ruling and enforcing it.

“It looks good, it sounds good, but in practice awards of that nature in the current environment are likely to be more symbolic in nature,” says Massey. “Enforcement and recovery are very challenging exercises in hostile circumstances.”

If Western businesses cannot get paid for businesses they have lost, would returning to Russia be a viable option?

There are still $194bn worth of foreign assets in Russia, and Trump has suggested he will give businesses the green light to resume operations there.

Marco Rubio, the US secretary of state, said in February there could be “incredible opportunities” for US business in Russia.

“All the way up to the election of Donald Trump, companies were lining up to get approvals [to exit Russia],” says Alan Kartashkin, who formerly ran the Moscow office of law firm Debevoise & Plimpton and now oversees its Eastern European business.

“So much has changed. Now, you have a US president saying we should develop economic ties with Russia and investors take notice. No leader in the Western world has said that since [Putin’s invasion of Ukraine in] February 2022.”

Hedge funds are exploring how they can make investments in the Russian stock market, he adds. “They want to place a bet on a potential peace deal.”

Sewell says other companies are looking at the feasibility of selling non-sanctioned goods, such as food, in Russia again.

Just three years after losing billions in Russia, Western businesses are considering going back.

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