The Kremlin Places the Assets of "Nestlé" and "Auchan" in Russia Under Its Control.. What’s the Story?

- The Kremlin has moved to seize the assets of Swiss company "Nestlé" and French retail company "Auchan" in Russia, as part of a broader campaign to nationalize companies, which has seen an increase in government acquisitions of privately owned firms. Kremlin spokesman Dmitry Peskov told reporters on Friday, a day after a presidential decree announcing these measures was issued, that "Auchan" and "Nestlé" are "European companies from unfriendly countries... and are currently actively participating in hostile actions against us."

Under the decree, the assets of the two companies have been placed under the temporary control of the company "El."

"Nestlé," the maker of "Kit Kat" chocolate and "Nescafé" coffee, stated that it is evaluating its options. The world's largest food and beverage company still operates six sites in Russia and employs more than 7,000 people.

Its sales in Russia represented 2% of the group's total sales in 2021, the last year the company reported these figures, amounting to about 2 billion Swiss francs (2.4 billion dollars). The company said in a statement: "Nestlé is committed to taking all necessary steps to protect its rights and ensure the continuity of its business operations in the interests of all stakeholders, especially its employees."

Shares of "Nestlé" fell by 2% on the Zurich Stock Exchange. "Auchan," which sells food, clothing, household goods, and electronics, did not respond to a request from Afaaq News for comment.

The retail chain has 230 physical stores and an online presence in Russia, employing 30,000 people, according to its website. Russia has tightened its grip on companies owned by foreigners since the start of the war in Ukraine in 2022.

A decree signed by Russian President Vladimir Putin the following year granted the government the authority to place the assets of companies from countries considered "unfriendly" under its temporary control. Shortly after, authorities seized the French yogurt maker "Danone" and the Danish brewer "Carlsberg" in Russia.

More than a thousand companies voluntarily left Russia in the months following the full-scale Russian invasion of Ukraine. "Nestlé" significantly reduced the range of products it sells in Russia after the war in Ukraine began, despite facing criticism, including from Ukrainian President Volodymyr Zelensky, for its decision to continue operating in the country.

"Nestlé" defended its decision to continue providing "essential food" to the population, stating that it is not making profits from its Russian operations, which it has "significantly scaled back." The Kremlin's campaign to control private companies has not stopped at foreign-owned businesses; authorities are increasingly tightening their grip on local companies as well, redistributing assets on a scale not seen in Russia since the collapse of the Soviet Union.

Alexandra Prokopenko, a senior fellow at the Carnegie Moscow Center in Berlin, wrote in an opinion piece for the "New York Times" on Friday that "the Russian prosecutor's office is intensively pursuing a range of nationalizations, reopening privatization deals made in the 1990s on the grounds that they violated the country's economic sovereignty." The ruling "United Russia" party led by Putin is expected to win a landslide majority in the State Duma elections scheduled for the end of this week, which is the first nationwide parliamentary election since the Russian invasion of Ukraine in 2022.