Turchak's idea of nationalizing foreign assets: you can take it, but it will be painful

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Turchak's idea of nationalizing foreign assets: you can take it, but it will  be painful
Turchak's idea of nationalizing foreign assets: you can take it, but it will be painful
10 March, 10:20BusinessPhoto: dp.ru
Secretary of the General Council of the United Russia party, First Deputy Chairman of the Federation Council Andrey Turchak made a radical proposal - "to nationalize the production of foreign companies that have announced their withdrawal from Russia."

In the expert community, "Novye Izvestia" was advised to replace the term "nationalization" with "expropriation".

Sergey Kron

Turchak stressed that Russia does not intend to endure "stabs in the back", but will act "according to the laws of war".

The West, RIA Novosti quotes the politician, unleashed a sanctions war againstRussia , which included governments and private companies. Many of them have announced that they are going out of business in Russia and closing enterprises. The government, in turn, approved the list of countries unfriendly to Russia

Such actions, Turchak believes, can be qualified as premeditated bankruptcy.

“In all cases, we are talking about a purely political decision, the price of which is a large number of Russian workers and employees dismissed overnight. Not to mention the fact that by such actions these companies undermine their own economy, existing on the principle: "bees against honey."

Несмотря на угрозу уйти, завод "Форда" пока работает в России
Photo:drivenn.ru

Don't run ahead of the horse

NI asked leading Russian experts how they reacted to Andrey Turchak's initiative to begin the process of seizing property from foreign companies fleeing the country?

Georgy Satarov , sociologist, publicist, president of the INDEM Foundation for Applied Political Research:

- Turchak made his statement about nationalization from a growing sense of helplessness and an approaching collapse. From my point of view, they do this when they want to somehow annoy those who are on the other side of the border. The higher the position of an official, the more annoyance that everything around is collapsing. It is possible that United Russia, in a difficult stressful situation, took up populism.

Такой популярности как в России у McDonald’s нет нигде в мире
Photo: sunhome.ru

Anton Zharov , international lawyer:

- Today in the world there is a process of destruction of the law. This is a wartime imperative. Lots of politics, lots of emotions. Therefore, it does not surprise me personally that at the level of the Federation Council, responsible persons actually call for violation of the law. I understand that Andrei Turchak proposes to scare the enemy - to nationalize the production of foreign companies that have announced their withdrawal from the Russian market. He threw trial balloons, so to speak, to see the reaction of the West, the world community. This does not mean that someone in the Kremlin will follow his instructions. After all, today nationalization in Russia could look like confiscation on the principle of "take away and divide." In this case, international law rests.

Alexey Malashenko , Doctor of Historical Sciences, political scientist:

- Large companies are leaving Russia for political reasons, but at the same time they emphasize through the media: “temporarily”. All, with rare exceptions, expect to return to the Russian market. What kind of nationalization can there be! Mr. Turchak apparently forgot the story - Venezuela and Cuba once nationalized enterprises owned by American corporations and fell under "perpetual sanctions."

The expert believes that Andriy Turchak is ahead of events, "running ahead of the horse."

- One gets the impression that this politician is always ahead of the curve, he wants to stand out, show his loyalty. It seems to me that he is not always aware of the danger that can harm the state interests. Times are tough right now. Nevertheless, there is, I emphasize, a mutual search for a compromise. "Scarecrows" of the West about nationalization only interfere with those who are looking for a compromise on the path to peace, - the expert noted.

Stepan Demura , financial analyst:

- Article 35 of the Constitution of the Russian Federation states: "The right of private property is protected by law." However, in practice, it turns out exactly the opposite. There is an illusion in our bosses that if they seize the assets of a particular company or its existing production, then it will be possible to compensate for the damage from the sanctions imposed on us by the West. But factories without components, without ingredients that came to us from abroad are dead. What United Russia Turchak proposes is not nationalization, it is expropriation. However, whatever you call it, the essence of the matter does not change. Remember, the recent "night of long buckets" in Moscow, when private tents were demolished all over the city, by order of the mayor's office. Sergei Sobyanin then said that the documents establishing the title to property are just pieces of paper. Why do you, they say, some court decisions. And you ask me about the legality of a possible nationalization, - said the analyst.

Sergey Zhavoronkov , Senior Research Fellow at the Institute for Economic Policy. E. Gaidar:

- Turchak is not the first to propose nationalization. Deputy Prime Minister of the Russian Federation Andrey Belousov spoke about the same thing. Late guys! In fact, nationalization in Russia has already taken place. The fact is that today foreign residents are prohibited from repatriating profits and cannot sell shares. And why then do business in this country! Well, to pay taxes, save jobs. Foreigners don't care! They are interested in two options: either to work here and take the money earned in the form of dividends to their homes, or to raise the capitalization of the business and, accordingly, sell the shares that have risen in price. The Russian authorities at the same time say that neither one nor the other can be done. It is clear that even now there are few foreigners who want to stay in Russia, and in time there will be even fewer.

Русские офицерв ратовали за национализацию
Photo: rusvst.ru

Has history taught Russia anything?

Few people remember that one of the key goals of the First World War (1914-1918) for tsarist Russia was getting rid of "German dominance" in all areas, including the country's economy.

As historian Konstantin Pakhalyuk told NI , the “Society of 1914” was even established, which included many well-known politicians, public figures, and entrepreneurs who actually called for the nationalization of foreign property in the territory of the empire. Initially, the government was rather negative about this very idea. After all, it is known that Russia, starting from the Patriotic War of 1812, never violated the property rights of subjects of enemy powers, no matter what wars it waged. Meanwhile, in the front line and in the provinces, primarily in the west, the existing military legislation gave the right to liquidate, arrest or confiscate those firms and companies of German citizens that were seen in hostile activities. Denunciations, spy mania began, suspicious ones were identified among the Germans, arrests and deportations deep into Russia were carried out. By the autumn of 1914, this had assumed such proportions that the Ministry of the Interior began to send out circulars demanding a more thorough understanding of all matters. It was proposed to punish "really hostile elements", but simply to confiscate German property and land was forbidden.

By mid-1915, about 3,000 German firms and companies were closed in Russia. At the same time, if the owner was a Slav and Orthodox by origin, but a subject of Germany, his property was not touched.

Russia was the only country in the world that forbade German owners of factories and land allotments to have judicial protection.

What is nationalization in Cuban

There have been very few precedents of nationalization over the past 100 years in the world. As an international expert, historian Yevgeny Bai told NI , world practice knows at least two examples of mass expropriations of foreign companies. The first happened in August 1990, when the rabid leader of the Cuban revolution, Fidel Castro, nationalized all the properties of foreign companies on the island without exception. The list includes such giants as Coca-Cola, Colgate-Palmolive, oil sharks EXXON and Texaco.

Subsequently, other American companies also announced their legitimate demands to return the enterprises. They now number 5,913 in total and have sued the Cuban government for $7 billion.

The Helms-Burton Act passed in 1996 by the US Congress allowed these companies to seek damages from the Cuban authorities in US courts. However, the possibility of satisfying these claims is practically zero.

The Cuban government itself is demanding a gigantic $100 billion in compensation from the United States for allegedly suffering from America's economic embargo, referred to in Cuba as a "blockade."

Фидель Кастро отобрал у американцев все предприятия
Photo: politobzor.net

With other countries, primarily with European ones, Cuba has concluded agreements on compensation. First of all, we are talking about Spain, which was paid 32.5 million euros as compensation for the nationalization of property six decades ago. This was not done by chance: Spain is Cuba's largest trading partner, this country built many 4 and 5 star hotels on the coast of the island hotels, which are still in great demand among tourists.

By the way, large American companies are also not too persistent in their attempts to receive compensation. The same Exxon and Texaco prefer to wait for time, so that later, when Cuba undergoes reforms (and this will happen sooner or later) to invest in its economy, and I think that this is better than engaging in useless lawsuits against a country that does not have any money.

The second example, according to Yevgeny Bai, can be considered the nationalization carried out by the Venezuelan leader Hugo Chave in 2006-2007. Verizon, AES Corp., CMS Energy, Conoco Phillips and ExxonMobil were thrown out of the country without any compensation.

Conoco is now seeking $1.5 billion in damages, but the case is complicated by the fact that the lawsuit is brought against the Venezuelan oil company Petroleоs de Venezuela, and it is formally transferred to the possession of Juan Guaidó , whom the US recognizes as the legitimate leader of Venezuela.

Today, a very difficult discussion regarding a Canadian gold mining company in Kyrgyzstan continues and it is not clear how it will end. She was expelled from the republic without any hope of compensation.

Centerra Gold President and CEO Scott Perry recently wrote an open letter to workers at the Kyrgyz government-seized Kumtor mine in which he accused Bishkek of lies used for "unreasonable actions." He expressed the hope that the differences could be resolved "through negotiations and compromises." But the Kyrgyz are not going to return the "nationalized" mines to the Canadians.

According to the expert, if the Kremlin goes for a direct expropriation of Western companies that have left the Russian market in protest against actions in Ukraine, then this may be a completely different picture. Unlike such poor countries as Cuba and Venezuela, the Russian state has significant foreign property in the form of land, buildings, ships and much more. In response to the nationalization, the authorities of the United States and Western European countries may take retaliatory measures that will be very destructive for the Russian economy, Yevgeny Bai believes.

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