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Putin's decree targets assets of European companies still active in Russia

2025-10-08 08:54:00, Kosova & Bota CNA

Russian President Vladimir Putin signed a decree last week that appears to target assets of foreign companies that continue to operate in Russia and that have not yet been seized by the Russian government.

The decree calls for accelerating the privatization process of state property to ensure the country's defense capacity, but directly refers to the hostile actions of the United States and other countries and organizations associated with them, which are aimed at imposing restrictive measures against citizens of the Russian Federation and Russian legal entities.

This decree also establishes a special procedure for the registration, sale and transfer of assets, including an accelerated deadline, and appoints PSB Bank (formerly known as Promsvyazbank) as the sole organizer of property sales.

Putin signed the decree in response to the EU's review of a scheme to provide Ukraine with billions of dollars in loans based on frozen Russian assets in the EU, which have been blocked since Moscow began its invasion of Ukraine in early 2022.

European Commission President Ursula von der Leyen raised the idea of ??a reparations loan in the European Parliament in early September.

With the United States hinting that it may not be willing to fund Ukraine's defense needs for the long term, the European Union is considering ways to cover a larger share of the costs in 2026 and 2027, assuming the war continues.

Von der Leyen made her case to EU leaders, who met with Ukrainian President Volodymyr Zelensky at an informal summit in Copenhagen on October 1 to discuss Ukraine.

EU finance ministers are expected to discuss more details about this plan when they meet in Luxembourg next week.

Although not all the mechanisms of the loan have yet been defined, some elements are already clear.

Russian assets frozen since the full occupation in 2022 will be used to issue bonds. The proceeds from these bonds will be used for the reconstruction of Ukraine in the form of a reparations loan.

Ukraine would be obliged to return the money only after Russia has paid war damages, according to a UN General Assembly resolution.

Ukraine would repay the EU the reparations loan to repay bondholders, and then the assets would be unlocked. If the scheme is implemented, Ukraine could receive 170 to 180 billion euros in installments over 2026 and 2027, according to a discussion paper prepared by the Commission for EU member states, which Radio Free Europe (RFE/RL) has seen.

The Kremlin has called the European initiative a form of confiscation and threatened a "symmetrical response."

However, there are fundamental differences between the EU plan for a reparations loan and the confiscation of the assets of European companies that continue to operate in Russia, along with their immediate privatization.

While the European measure does not include any nationalization of Russian federal assets, Putin's decree appears to aim at nationalizing the properties of private companies.

It is estimated that around 800 Western European companies continue to operate in Russia.

Several of them are named in the decree, including the Russian branch of Austria's Raiffeisen Bank International, Italy's UniCredit and German chocolate maker Ritter Sport.

European regulators have been pushing Raiffeisen Bank to exit the Russian market since 2022, but it has been reluctant to give up the huge profits it has enjoyed until recently as a near-monopoly financial institution that enables payments from Russia to Europe.

It has also been reluctant to miss the opportunity to count its Russian branch as a loss.

A sale initiated by the bank itself is virtually impossible due to conditions that define how foreigners can sell their assets in Russia. Another decree signed by Putin requires a 50 percent write-off and a mandatory 10 percent contribution to the Russian budget./ REL