Trump's Return Complicates Western Firms’ Exit Plans from Russia

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The dilemma facing Western companies still operating in Russia grows as Donald Trump returns to the White House with promises to end the Ukraine conflict, while Moscow’s tougher exit conditions make leaving increasingly costly.

Since Russia’s invasion of Ukraine in February 2022, many companies, including Renault, McDonald's, and Heineken, have exited Russia, often taking significant financial losses and selling assets at steep discounts demanded by the Kremlin.

However, some companies have chosen to remain, such as PepsiCo, Procter & Gamble, and Mondelez, citing humanitarian reasons. European banks Raiffeisen Bank International and UniCredit are also stuck with profits in Russia and are waiting for Moscow’s approval to exit.

In October, Russia imposed stricter exit terms, requiring companies to accept at least 60% discounts on their sales and contribute 35% of the deal price to Russia’s budget as an "exit tax." With Trump’s upcoming inauguration, companies that are still in Russia are closely watching what changes his presidency might bring, as some believe he could ease sanctions, giving them the opportunity to leave or stay.

Experts predict that Trump’s administration may reduce the costs of staying in Russia, potentially leading to a standstill for companies that are uncertain about their next steps. While Trump’s second term is unlikely to resolve the Ukraine conflict quickly, his election might provide political cover for companies looking to stay or leave.

If Trump succeeds in negotiating a settlement, some companies could see the chance to regain foreign assets stuck in Russia, prompting a new wave of exits.

However, exit deals are now more complex, with stricter regulations and higher financial barriers. Russia has also placed foreign-owned assets under temporary local management, increasing the risk of asset seizures.

Some large companies, such as Unilever, have successfully exited, but the broader trend indicates that companies are increasingly hesitant to sell their assets under current conditions.

Overall, with escalating exit costs and the looming threat of asset seizures, Trump’s return introduces more uncertainties for companies operating in Russia. The situation remains fluid, with many businesses uncertain about whether to stay, leave, or wait for further developments.

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.