In Russia, Kremlin-initiated processes of reallocation of private property continue
Businesses can be lost after a court decision on the nationalization of assets due to alleged "violations of legislation" or simply sold at a low price to business partners of the Russian authorities.
In 2024, at least 67 companies were nationalized in the Russian Federation, with total revenues exceeding 9.6 billion USD and asset values above 6.4 billion rubles. In 2023, the total value of assets of nationalized enterprises amounted to about 5.7 billion USD, and in 2022, it was 3.3 billion USD.
The formal reason for nationalization was often violations of anti-corruption legislation, illegal privatization in the 1990s, violations of tax laws, as well as involvement in extremist activities or extremist organizations. Decisions on the nationalization of at least 43 companies were made by the court in a closed session.
The risk groups, against whom the court may decide to seize property, include individuals with dual citizenship, offshore company owners, Russians living abroad but doing business in Russia, and entrepreneurs who lack connections at the federal level or contacts with the highest-ranking state officials.
Additionally, Russia has almost completed the process of seizing assets from foreign owners who decided to leave the Russian market. Apart from Moscow viewing these actions as an effective tool for exerting pressure on Western countries, the feature of this plundering is that the assets of such owners are being bought by Russian companies with government commission approval at undervalued prices (15–35% of the market value). In 2024, the share of such deals accounted for 25–30% of all mergers and acquisitions agreements.
This year, the Kremlin will continue to seize businesses from both its citizens and foreigners, hoping to fill the war-depleted budget by 1.2 billion USD. This is essentially the true reason for the nationalization of assets in Russia.
