Putin: Business Seizure Only Justified When Owner's Actions Harm State Security

Russian President Vladimir Putin has stated that the seizure of business assets by the state is only justified in cases where the actions or inaction of the owners directly harm Russia's national security and interests. He emphasized that a review of privatization deals from the 1990s is not necessary if the businesses are currently operating successfully.

Putin stressed that claims against current owners of assets are inappropriate, especially for those who work to solve social issues and ensure national security. Over the past two years, many foreign-owned assets in Russia have changed hands, with some companies selling off their assets at low prices. Moscow has also taken temporary control of assets owned by several Western companies.

The Prosecutor General's office has reported that over 1 trillion rubles' worth of strategic enterprises and assets were transferred to state ownership last year, with an increase in cases where prosecutors seize assets through the courts. However, Putin noted that this is not a 'privatization review' but rather a response to situations where the owners' actions or inaction pose a direct threat to Russia's security and national interests.

Why this matters: Putin's statement provides clarity on the Russian government's stance regarding business asset seizures, emphasizing that such actions are only justified when national security is at stake. This has implications for both domestic and foreign businesses operating in Russia, as it sets a precedent for when the state may intervene in private enterprise.

Meanwhile, the finance ministry has listed around 30 companies in which the state could reduce its stake while retaining a controlling stake, in an effort to encourage more local private investment and increase budget revenue. In his address to the Russian Union of Industrialists and Entrepreneurs, Putin highlighted the strong performance of the Russian economy despite external challenges, noting that Russia's GDP has demonstrated good growth in the first months of 2024, with unemployment at a historic low of less than 3%. He urged for greater freedom of action for businesses, including through tax system reform and a review of privatization cases where owners' actions harm national security.

Key Takeaways

• Putin says state asset seizures only justified for national security threats.
• Over 1 trillion rubles of strategic assets transferred to state ownership in 2023.
• Finance ministry plans to reduce state stakes in 30 companies to boost private investment.
• Putin touts strong economic growth and low unemployment in Russia in 2024.
• Putin calls for greater business freedom through tax reform and privatization reviews.