As Russia’s invasion of Ukraine leads to a procession of Western businesses leaving the country, President Vladimir Putin is implementing countermeasures to force them to stay put.
According to CNN Business, Putin has ordered capital controls be put in place against foreign businesses. The measure, announced by Russian Prime Minister Mikhail Mishustin on Tuesday, would prohibit companies from selling Russian assets.
State news agencies RIA and TASS reported that Mishustin said Western businesses were attempting to leave the country due to “political pressure” and that until that pressure goes away, they would be subject to capital controls and unable to sell their Russian assets.
"To enable businesses to make informed decisions, a draft presidential decree has been prepared to introduce temporary restrictions on exiting Russian assets," Mishustin said.
He added: “We expect that those who have invested in our country will be able to continue working here."
British multinational oil and gas company BP is one of the largest companies to announce its departure from Russia since the Ukraine war began. In leaving Russia, BP reportedly took a $25 billion loss and lost a third of its oil output, according to media reports.
BP was reportedly one of the largest foreign investors in Russia, with stakes in the energy sector.
Since BP’s announcement, other energy companies have made similar movies, including Shell and Equinor, Norway’s state-owned energy multinational. On Tuesday, French energy producer TotalEnergies announced it was limiting its oil investment in Russia, the New York Times reported. The global firm will not provide additional capital for new projects in Russia and was said to be weighing its current involvement in the country.
International investments funds are also working to drop Russian assets. According to a report in the Wall Street Journal, Norway’s Prime Minister Jonas Gahr Støre said that his country’s $1.3 trillion sovereign wealth fund will divest all its Russian holdings, amounting to nearly 50 companies along with state bonds.
Since Western countries announced tough new sanctions, Russia has been doing whatever it can to prevent its economy from crashing. On Monday, the ruble lost nearly a quarter of its value, and is currently worth less than one American cent.
The United States also announced on Monday that it was taking measures to block American dollar transactions from Russia’s central bank.
The move will cut off Russia’s direct investment fund from US dollar transactions. CNN reported that the prohibition will deny Russia one of its main methods of working around new sanctions by accessing an American dollar “rainy day fund” that Moscow had been planning to use to shore up the falling ruble while the invasion of Ukraine took place.
Russian officials, scrambling to keep the country afloat, have already doubled the central bank interest rate to 20 percent and have temporarily stopped the sale of stocks held by foreign parties.