Western businesses lost more than 100 billion USD because of leaving Russia

With no more revenue in Russia, Western companies have to sell assets at cheap prices and suffer huge losses when leaving.

Reuters calculations based on reports from companies said that the wave of departures from Russia after the war in Ukraine caused foreign businesses to lose more than 107 billion USD, in both revenue and asset value. Compared to August 2023, this loss has increased by 30%.

"As the war between Russia and Ukraine continues, and the West increasingly tightens sanctions on Moscow, businesses leaving Russia will face more difficulties. They will have to accept greater losses," Ian Massey - in charge Europe, Africa and the Middle East region at global risk consulting firm S-RM said.

Russian President Vladimir Putin has adopted many policies aimed at independence from the West, including confiscating many corporate assets, Massey said. Moscow requires foreign businesses selling assets in Russia to reduce prices by at least 50%. Russia is also gradually tightening regulations for companies that want to withdraw from here.

Drinking water of Western brands in Russia is imported from China. Photo: Reuters

This year, the amount of assets sold by Western businesses - belonging to Shell, HSBC, Polymetal International and Yandex - is about 10 billion USD. They are up to 90% off. Last week, food company Danone also announced that it was allowed to sell assets here, accepting a loss of 1.3 billion USD.

To date, about 1,000 companies have left Russia. The latest is brick manufacturer Wienerberger (Austria), which announced the sale of its factory and withdrawal from Russia on March 28, RBC said.

However, research by Yale University shows that hundreds of other businesses, including French retail giant Auchan and consumer goods giants Nestle and Unilever, are still operating here.

After the war broke out, Western countries blocked about 300 billion USD in reserves of the Russian Central Bank abroad, following the war in Ukraine. Germany also nationalized the factory of Russian gas giant Gazprom and took over Rosneft's oil refinery facility in Germany.

Russia recently said it would retaliate against the European Union's (EU) proposal to use profits from these frozen assets. They warned Europe there would be serious consequences.

"No Western assets in Russia can be considered safe as long as fighting continues," Massey commented. To date, Moscow has also temporarily taken over many assets of Western businesses, such as Fortum, Carlsberg and Uniper.

Russian news agency RIA calculated that if Russia retaliates, the West could lose at least $288 billion in property and investment value. This figure is based on data showing that direct investment capital of the EU, G7, Australia and Switzerland in Russia by the end of 2022 is 288 billion USD.

Lawyer Jeremy Zucker - an expert in sanctions research - said a large number of his company's clients have chosen to leave Russia completely. Even after the tension ended, they were hesitant to return.

Zucker believes that this is preventing Russia from accessing many high technologies. "This will be significant damage to the economy," he said.