The Nationalisation State: Russia’s New War on Foreign Business

By Matthew Parish

Friday 18 September 2026

For much of the period since the collapse of the Soviet Union, foreign companies entering Russia understood that they were accepting an unusual degree of political risk. They nevertheless generally assumed that the Russian state wanted their capital, technology and managerial expertise and that, provided they remained outside politics, their property would ultimately be respected. That assumption has now become extraordinarily difficult to maintain.

On 17 September 2026, President Vladimir Putin placed the Russian businesses of Swiss food group  ⁠Nestlé and French retailer ⁠Auchan under temporary administration. The decree represents the latest development in a process that began after Russia’s full-scale invasion of Ukraine in February 2022 and that has gradually transformed the relationship between the Kremlin and private property.

The word temporary is important, but it should not necessarily be reassuring. Under the mechanism Russia introduced in 2023, legal title is not immediately transferred to the state. Instead a state-appointed administrator assumes effective control of the business. Earlier applications of the procedure to the Russian operations of Danone and Carlsberg subsequently resulted in those businesses passing to Russian purchasers, in circumstances in which their Western owners had little effective bargaining power.

What Russia is constructing therefore deserves examination not merely as a sanctions countermeasure, nor even as conventional nationalisation. It is part of the creation of a wartime political economy in which the distinction between public and private ownership is becoming increasingly contingent upon the requirements of the state.

The Nestlé and Auchan seizures

The immediate cases are particularly striking because neither company can readily be described as having abandoned Russia. Nestlé has operated there since the 1990s and maintains six factories producing such goods as coffee, pet food and infant formula. It employs approximately 7,000 people. After the invasion of Ukraine, the company curtailed its activities, suspending advertising, capital investment and much non-essential trade, while continuing to manufacture foods it regarded as essential. Analysts estimate that Russia now represents approximately one per cent of its worldwide sales.

Auchan presents an even more interesting case. She entered Russia in 2002 and, unlike a great many Western companies, did not withdraw following the invasion. At the end of 2025 she employed more than 24,000 people and operated 229 stores, while recording approximately 127 billion roubles in Russian sales during the first half of 2026. Remaining in Russia nevertheless proved insufficient protection against political intervention.

The decree places the companies’ assets under L.E.V. Management, a Moscow company established only in 2024 and possessing a limited public profile. Kremlin spokesman Dmitry Peskov connected the measure to the fact that the companies originated in countries Moscow regards as “unfriendly”. In Nestlé’s case, Russian reporting has also suggested dissatisfaction with the company’s reluctance to expand investment and resume exports from Russian factories.

That last possibility is especially revealing. If accurate, the Russian position is no longer simply that Western companies choosing to leave Russia must bear the consequences. A company may remain, continue employing Russian workers and continue producing goods for Russian consumers, yet nevertheless find its property exposed to state intervention because it is insufficiently enthusiastic about investing additional capital. This represents an entirely different conception of private enterprise.

Nationalisation without calling it nationalisation

Strictly speaking, describing every such intervention as “nationalisation” simplifies the legal position. The September decree imposes temporary administration rather than formally transferring ownership to the Russian state. Peskov has emphasised that temporary administration, rather than expropriation, is presently contemplated.

Yet ownership consists of more than a name appearing on a share register. The economically important attributes of property include control over management, disposition, investment and the ability to realise the value of an asset. If the nominal owner cannot exercise those powers, the distinction between formal ownership and effective confiscation becomes progressively less meaningful.

Experience since 2023 illustrates the difficulty. Russia previously placed Danone’s Russian operation and Carlsberg’s interest in Baltika Breweries under temporary management. Danone’s business was subsequently associated with a heavily discounted sale, while Carlsberg ultimately disposed of Baltika through a management buyout in December 2024.

Russia has simultaneously imposed increasingly onerous conditions upon companies wishing to leave. Foreign businesses may face mandatory discounts, exit taxes and requirements that purchasers receive Kremlin approval. Temporary administration can therefore become one component of a wider mechanism through which the state controls not merely whether foreign investors may remain but also the price at which they may depart.

There is a certain grim ingenuity to this arrangement. Conventional nationalisation requires the state openly to declare that it is taking private property. The contemporary Russian model permits something subtler: ownership may nominally survive while virtually every economically useful incident of ownership disappears.

The war economy expands

The phenomenon is not confined to Western corporations. Russia has also embarked upon a much broader redistribution of domestic property. Chatham House estimates that forced nationalisations since 2022 have transferred approximately 6.5 trillion roubles of assets into state ownership, with the process accelerating dramatically during 2025. Russia’s Federal Agency for State Property Management reportedly took over at least 805 companies in that year alone.

The justifications vary. Prosecutors have invoked corruption, fraud, supposedly unlawful privatisations dating from the 1990s, foreign control of strategic enterprises and offences associated with support for Ukraine. In June 2026, assets worth approximately 550 billion roubles belonging to agricultural businessman Vadim Moshkovich were confiscated in connection with a fraud case.

The legal machinery has continued to expand. A presidential decree of 24 August 2026 permits temporary management to be imposed over property, securities, corporate interests and other rights belonging to businesses that fail to comply adequately with requirements for protecting critical infrastructure. The decree expressly refers to threats associated with unmanned aerial vehicles and encompasses industries ranging from energy and transport to communications and logistics.

This places the nationalisation campaign within the architecture of the war itself. Businesses increasingly exist subject to duties defined by national security. Failure to satisfy those duties can expose control of their assets to the state.

Russia is consequently moving away from the post-Soviet model in which private ownership was recognised, albeit imperfectly, as an independent legal institution. Property increasingly resembles a conditional privilege whose continuation depends upon conformity with the priorities of the Kremlin.

The sanctions argument

Moscow does possess an argument for what it is doing, and it should be understood even where one rejects it. Western governments have frozen hundreds of billions of dollars in Russian sovereign assets, sanctioned Russian companies and individuals and progressively developed mechanisms under which income generated from immobilised Russian assets can support Ukraine. Russia characterises measures against Western property partly as retaliation for those policies.

From Moscow’s perspective, the distinction between Western sanctions and Russian seizures can therefore be portrayed as hypocrisy: Western governments insist upon the sanctity of property while immobilising Russian assets, whereas Russia is condemned for responding against Western property inside her jurisdiction.

There are nevertheless substantial differences between the two processes. Western measures are generally imposed pursuant to published sanctions regimes and remain subject, to varying degrees depending upon the jurisdiction and measure concerned, to judicial review. Freezing an asset also does not necessarily transfer beneficial ownership of the underlying capital. Russian temporary administration, by contrast, can deprive an owner of operational control and has in previous cases preceded transfers to Russian purchasers under conditions in which the original owner possessed severely constrained negotiating power.

The comparison is therefore real, but it is not exact. What matters most for investors is less the philosophical debate over retaliation than the practical conclusion: property has become an instrument of geopolitical confrontation on both sides of the divide.

Who benefits?

Nationalisation also creates winners inside Russia. A Western company that spent decades developing factories, distribution networks, brands, employees and market share represents an exceptionally valuable asset if it can subsequently be acquired at a politically determined discount.

This produces opportunities for Russian businessmen possessing the appropriate political connections. The state does not necessarily need to retain confiscated enterprises indefinitely. It can redistribute them. In that sense, the process resembles neither classical socialism nor traditional Soviet nationalisation. It is closer to a politically managed reallocation of capital.

The distinction matters. Vladimir Putin is not abolishing capitalism. Russia still has businesses, shareholders, profits, banks, entrepreneurs and markets. What is changing is the ultimate source of security for ownership. In a liberal capitalist system, the theoretical answer is law. In contemporary Russia, the increasingly important answer is political acceptability.

That creates a peculiar form of wartime patrimonial capitalism. Private fortunes may remain enormous, but they are held subject to an implicit understanding that political sovereignty outranks proprietary rights.

The destruction of investment confidence

The longer-term economic consequences may be greater than the immediate value of the assets seized. Capital investment depends upon expectations extending many years into the future. A factory may take decades to repay its construction costs. Investors therefore require confidence not merely that today’s government welcomes them but that tomorrow’s government will continue respecting the rules under which they invested.

Russia spent much of the period between the collapse of communism and 2022 trying, with mixed success, to establish precisely this confidence. Western companies invested enormous sums in Russian factories, supermarkets, oilfields, automobile plants and consumer brands because a country of more than 140 million people represented an enormous market.

That institutional capital is now being consumed. Even were the war to end tomorrow and sanctions gradually to disappear, multinational companies considering returning to Russia would have to calculate an additional risk that scarcely existed in comparable form before 2022: whether their assets might again become bargaining counters in a future dispute between Moscow and their home governments.

Capital remembers confiscation. Corporate boards remember factories that disappeared from their control. Insurers remember claims and lawyers remember decrees. The cost of rebuilding confidence is therefore likely to persist long after whatever political circumstances originally produced the seizures have passed.

A trap for those who stayed

There is also an uncomfortable lesson in the fate of companies such as Nestlé and Auchan. Western businesses faced intense criticism after 2022 if they remained in Russia. Yet withdrawal could itself be enormously expensive because Moscow progressively tightened the terms upon which foreign companies could sell.

Companies were therefore caught between two governments. Their home political environments encouraged departure while the Russian state made departure financially punitive. Some businesses stayed because they supplied food, medicine or other goods they regarded as socially necessary. Others stayed because abandoning billions of euros of investment seemed commercially irrational.

The September 2026 intervention demonstrates that staying did not necessarily preserve those investments either. This is perhaps the most significant message Russia has now transmitted to foreign capital. There may no longer be a reliable strategy for protecting an investment once it falls within the Kremlin’s geopolitical calculations. Leaving can produce enormous losses. Staying can produce temporary administration. Investing more may reduce political pressure today but creates additional assets vulnerable to intervention tomorrow. Under those circumstances the rational response of international capital is straightforward: do not invest in the first place.

From globalisation to economic sovereignty

Russia’s policy should finally be understood as part of a larger retreat from the assumptions of the globalised world that followed the Cold War. During that period, multinational companies behaved increasingly as though capital possessed no nationality. A French supermarket operating in Moscow was primarily a supermarket. A Swiss food manufacturer was primarily a manufacturer.

War has restored nationality to corporations. Nestlé may consider herself a multinational enterprise, but the Kremlin sees a Swiss company. Auchan may employ tens of thousands of Russians, sell predominantly to Russians and own physical assets situated in Russia, but Moscow nevertheless sees a French enterprise originating in an “unfriendly” state. Corporate identity has been subordinated to geopolitics.

The implications extend beyond Russia. Governments everywhere are reconsidering supply chains, strategic industries, foreign ownership, semiconductor production, energy security and the nationality of capital. The distinction between economic policy and national security policy is steadily dissolving.

Russia represents an extreme manifestation of this trend because war has accelerated it so dramatically. Yet the underlying phenomenon is international. The global economy is fragmenting into political blocs in which governments increasingly ask not simply whether an investment is profitable but who owns it, where the owner comes from and upon whose side that country might stand in a future confrontation.

The price of nationalisation

Russia can certainly acquire valuable assets through these policies. She can place factories under Russian management, transfer foreign businesses to domestic purchasers and extract revenue from companies seeking permission to leave. In the short term, there are obvious attractions for a state financing an expensive war and for politically connected businessmen offered opportunities to acquire established enterprises.

But states can confiscate physical capital more easily than they can confiscate confidence.

The machinery, warehouses and supermarkets remain in Russia. The knowledge that encouraged international companies to build the next generation of them may not. A government can transfer ownership of yesterday’s investment by decree; it cannot issue another decree requiring foreigners voluntarily to make tomorrow’s investment.

This is the paradox at the heart of Russia’s new nationalisation state. The Kremlin is asserting ever greater sovereignty over the capital physically located within her borders precisely by making that capital less attractive to outsiders. It is acquiring control over assets while sacrificing part of the institutional environment that caused those assets to be created.

The September 2026 seizures should therefore be understood as more than another episode in the economic struggle surrounding the war in Ukraine. They represent another stage in Russia’s transformation from an imperfect market economy integrated with the wider world into a wartime political economy in which commerce, property and geopolitics have become inseparable.

The immediate question is what eventually happens to Nestlé’s factories and Auchan’s supermarkets. The larger question is what sort of Russian economy will remain when ownership itself depends upon political permission. The answer may matter long after the last sanctions are lifted and the last temporary administrator has ceased to be temporary.