German economy
Concerns about imminent expropriations in Russia
03/12/2022, 2:20 p.m
Because of the Russian war of aggression in Ukraine, numerous companies, including German ones, have stopped doing business in Russia. The Russian government is threatening to expropriate international companies. This is cause for concern.
German business has expressed concern about possible expropriations of international companies in Russia. “Many German companies have been active in Russia for decades and are responsible for around 280,000 employees there,” said Michael Harms, Managing Director of the Eastern Committee of German Business, the German Press Agency. “At the moment, however, there is no reliable information on this, and we are not yet aware of any corresponding draft legislation. That is why we are not currently making any recommendations for our companies, but are monitoring developments closely.”
Because of the Russian war of aggression in Ukraine, numerous companies, including German ones, have stopped doing business in Russia. The Russian government has threatened to expropriate international companies that suspend operations in the country. The Russian government is therefore working on steps to initiate bankruptcy of the companies in Russia and then nationalization of the property, said Deputy Head of the Russian Security Council, Dmitry Medvedev.
Federal government is required
The Federal Association of Small and Medium-Sized Businesses was also concerned. Federal Managing Director Markus Jerger said: “Announcements by the Russian government to nationalize the ownership of foreign companies that are suspending their business in the country due to a sham bankruptcy as part of an abbreviated insolvency procedure concerns us as a trade association very much.” First of all, it can be assumed that companies that do not withdraw from the country will be allowed to continue doing business. “Nevertheless, we strongly recommend that all German companies consult law firms operating in Russia in order to prepare for all eventualities. The German government is called upon to represent the interests of German companies operating in Russia vis-à-vis the Russian government.”
As the Association of German Chambers of Industry and Commerce (DIHK) reported on request, around 3,650 German companies were still active in Russia before the outbreak of the Ukraine war. Due to the trend and often the need to localize, German direct investments in Russia have increased in recent years. At the same time, more and more companies have left the Russian market.
According to a nationwide Chamber of Industry and Commerce survey, the companies active in Germany with a connection to Russia had already given very negative feedback on the development of economic relations before the outbreak of the war. Half of the German companies with economic ties to Russia had already assessed the situation and prospects of their respective businesses negatively at this point in time.