A Follow the Money investigation reveals that Western companies paid Russia at least €40 billion in taxes over the past three years, a sum nearing one-third of Russia’s 2025 defense budget. This significant revenue stream, primarily from G7 and EU firms, directly supports Russia’s war effort despite Western sanctions and military aid to Ukraine. Many companies, citing various justifications, remain in Russia, despite challenges to exiting the market, including low asset sale prices and potential asset seizures. While Russia’s rhetoric suggests punitive measures against these companies, the Kremlin also indicates plans for their eventual return.
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In response to a proposal to restrict remaining Western companies in Russia, President Putin advocated for aggressive retaliatory measures, calling for these companies to be “strangled” due to perceived Western attempts to cripple the Russian economy. This follows the departure or scaling back of numerous Western firms after the invasion of Ukraine. Putin’s directive targets companies still using Western software, reflecting a hardening stance against foreign businesses. While Russia has seized assets from some companies and employed harsh rhetoric, it concurrently explores potential pathways for re-engagement with Western firms in the future.
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Despite some Western companies considering a return to Russia post-war, the Russian government is prioritizing domestic businesses and isn’t eagerly awaiting their return. Officials have stated that there will be consequences for past decisions, emphasizing a focus on domestic and Eurasian Economic Union companies. While some Western firms may be tempted by potential opportunities, concerns about staff safety, rule of law, and reputational damage remain significant deterrents. The current Russian economic climate, marked by high inflation and a challenging energy market, further complicates the appeal of re-entering the market.
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John Q. Hosedrinker