Russian nationalisation of western assets

Friday 16 January 2026

The slow but deliberate nationalisation of Western business assets in the Russian Federation has become one of the least remarked yet most consequential economic phenomena to emerge from the war in Ukraine. While attention has focused upon sanctions, energy flows and battlefield developments, the steady absorption of foreign-owned enterprises into Russian state or quasi-state hands has unfolded with little ceremony, reshaping the country’s economic order and redefining the meaning of property rights within her borders.

From Moscow’s perspective, these nationalisations are framed as necessity rather than ideology. Following the imposition of Western sanctions after the full-scale invasion of Ukraine in February 2022, a large number of Western companies announced their withdrawal from the Russian market. Some exited quickly, others sought to suspend operations or sell assets in an orderly fashion. The Kremlin responded by erecting a legal architecture that made normal divestment increasingly difficult. Exit taxes, mandatory discounts to approved buyers, presidential decrees requiring state approval for sales and, in some cases, the outright seizure of assets under the guise of temporary management all became part of a new economic reality.

The formal language has often avoided the word nationalisation. Instead, Russian authorities have spoken of external management, strategic necessity or the protection of employment and supply chains. Yet the substance has been unmistakable. In sectors deemed critical to national security or economic sovereignty, ownership has passed from Western shareholders to Russian state entities or politically connected firms. Energy, brewing, food processing and transportation have all been affected. What distinguishes this wave from earlier post-Soviet expropriations is not merely its scale but its explicit linkage to geopolitical confrontation.

The energy sector provides the clearest illustration. Foreign participation in Russian hydrocarbons had long been tolerated, even welcomed, so long as it aligned with the Kremlin’s interests. That tolerance evaporated with the war. Western energy companies found themselves pressured into unfavourable exits or stripped of operational control. Projects painstakingly developed over decades were effectively repurposed for Russia’s domestic needs or for partnerships with non-Western actors. The message was clear. In a time of confrontation, foreign capital is no longer welcome (at least from the West).

Outside energy, the pattern has been similar if less strategically dramatic. Well-known Western brands in food and consumer goods have seen their Russian subsidiaries transferred to local management or sold under compulsion to Kremlin-approved buyers at deep discounts. These transactions are often presented as commercial deals, but the asymmetry of power renders the distinction largely academic. The Russian state sets the terms, approves the buyers and determines the price. The original owners’ consent is frequently nominal.

This process has been underpinned by a broader ideological shift. The Kremlin has increasingly portrayed Western companies as political actors rather than neutral economic participants. Withdrawal from Russia is characterised as hostile behaviour, justifying retaliatory measures. Nationalisation, in this narrative, becomes an act of economic self-defence. The invocation of sovereignty is central. Russia is presented as reclaiming control over assets that, in official rhetoric, should never have been allowed into foreign hands in the first place.

For the Russian economy, the short-term effects are ambiguous. On paper, nationalisation preserves employment and continuity of supply. Factories continue to operate, shelves remain stocked and the appearance of normality is maintained. In practice, the loss of foreign management expertise, access to international finance and integration into global supply chains imposes a steady erosion of efficiency and innovation. State or politically connected ownership may secure loyalty, but it rarely incentivises excellence.

The longer-term consequences are more severe. Property rights are the foundation upon which investment rests. By demonstrating that ownership can be overridden by political decree, Russia has effectively signalled that all assets within her jurisdiction are contingent upon the Kremlin’s favour. This deters not only Western investors but also domestic ones, who are acutely aware that today’s beneficiary may become tomorrow’s target. Capital flight, already substantial, is reinforced by the lesson that legal title offers limited protection against political necessity.

Internationally, these nationalisations deepen Russia’s economic isolation. Even if the war were to end tomorrow, the memory of expropriation would linger. Re-entry into the Russian market would require not merely political reconciliation but the rebuilding of trust in legal institutions that have been visibly subordinated to executive power. For many Western firms, the calculus will be simple. Markets where assets can be seized in retaliation for geopolitical disagreement are markets best avoided.

There is also a reciprocal dimension. Russian assets abroad have been frozen or placed under various forms of legal constraint by Western states. Moscow presents its domestic seizures as symmetrical responses. Yet the symmetry is imperfect. Western measures have generally targeted state assets or individuals linked to the regime, while Russia’s nationalisations have encompassed ordinary commercial enterprises whose primary offence was compliance with their home governments’ laws or ethical expectations. This asymmetry further undermines Russia’s claim to legal equivalence.

Ultimately the nationalisation of Western business assets marks a decisive turn in Russia’s post-Soviet economic history. The tentative accommodation with global capitalism that characterised the previous three decades has been replaced by a model in which political loyalty outweighs legal certainty and economic integration is subordinated to strategic confrontation. For the Russian state, this may appear to offer control and resilience. For Russian society, it risks entrenching stagnation. For Western businesses, it serves as a stark reminder that in an age of renewed great power rivalry, the boundary between commerce and politics has become perilously thin.

In that sense, these nationalisations are not merely acts of economic policy. They are declarations of intent. Russia is signalling that she is prepared to sacrifice long-term prosperity and international integration in pursuit of strategic autonomy and political defiance. The cost of that choice will not be paid all at once. It will be measured over years, in foregone investment, diminished innovation and the quiet realisation that sovereignty asserted through expropriation is a brittle substitute for prosperity built upon trust.