January 28, 2023

Raven Tribune

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Special permit for sales: Putin further restricts Western entrepreneurs

Special permission for sale
Putin continues to control Western entrepreneurs

Cryptocurrencies are banned in Russia. To mitigate the effects of Western sanctions, the Kremlin is making a U-turn. In addition, fear of foreign investors’ exodus is prompting Putin to extend the mandate to limit their scope of action.

Western entrepreneurs still need special permission from the government in Russia to sell their shares in large companies. This particularly affects the banking and energy sectors. According to the Interfax news agency, a related decree passed by Kremlin President Vladimir Putin in August was extended by one year, and will now expire on December 31, 2023.

After Russia launched a war of aggression against Ukraine, the West imposed economic sanctions on Moscow. At the same time, many companies and entrepreneurs are trying to reduce their business in Russia because of the increased risks. However, the Russian government halted these efforts months ago and banned the sale of shares in strategically important sectors such as raw material extraction or the financial sector. Such sale is possible only if exemption from Govt. This restriction affects entrepreneurs from “unfriendly countries”, i.e. countries that have introduced economic sanctions against Russia. Through regulation, the Kremlin wants to prevent a mass exodus of Western firms.

At the same time, the government has approved deals in which foreign companies sell their factories to Russian state actors at below-market prices. For example, car makers Renault and Nissan have sold their production facilities in Russia for a symbolic price of one ruble.

Cryptocurrency “can be put to good use”

Russia wants to legalize cryptocurrencies in the coming year, according to reports from the State Duma, to mitigate the effects of Western sanctions. “(Cryptocurrency) can be well used in international payments,” Anatoly Aksakov, head of the finance committee in the Duma, said, according to daily newspaper “Kommersant”. It is a question of legally protecting their use in order to protect “co-importation”. Russian authorities describe the importation of goods without the express consent of the manufacturer as parallel importation.

So far, the use of cryptocurrencies is prohibited in Russia. The central bank has been very skeptical of this phenomenon for years. However, in September, Prime Minister Michel Mishustin signaled a change of heart. He announced that competent authorities would agree on a uniform position by the end of the year. Western sanctions prohibit entry into Russia. In addition to weapons, these are mainly high-tech products and components for the electronics industry, such as semiconductor chips, but also machines and systems. Russia tries to get some goods from third countries.

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