White House warns Russia against nationalizing McDonalds, Apple, other companies pulling out over Ukraine
The Russian government and general prosecutor's office are considering a proposal to nationalize the assets of foreign companies that are suspending operations or pulling out of Russia over its invasion of Ukraine, the Russian newspaper Izvestia reported Thursday. The report included a list of nearly 60 companies, including McDonald's, Apple, IKEA, Microsoft, IBM, and Porsche. "All of these businesses have offices, buildings, factories, storefronts in Russia" that could be "forcibly taken by the state," BBC News reports.
White House Press Secretary Jen Psaki publicly warned the Kremlin last Thursday that "any lawless decision by Russia to seize the assets of these companies will ultimately result in even more economic pain for Russia." She said nationalizing foreign assets would squander any trust Russia has built up since it scared off all foreign investors in the Bolshevik Revolution.
Earlier this week, Russia effectively legalized patent theft, issuing a decree that patent protections will not be enforced for anyone affiliated with its list of "unfriendly" countries.
President Biden, meanwhile, is expected to announce on Friday the removal of Russia's "most favored nation" trade status, in concert with the European Union and G-7 nations. That will allow the U.S. and its allies to slap tariffs on any Russian imports not already blocked by mounting sanctions. Fitch on Wednesday joined the other two major credit rating agencies and downgraded Russia's sovereign credit to junk status, warning of an "imminent" default on Russia's sovereign debt.
"The downgrades are signals to investors to steer clear of Russia," but a default "could have far more sweeping consequences, sending lenders scurrying for financial high ground and fleeing developing international markets that rely on risk-tolerant investors," The Washington Post reports. A default would also create "tremendous economic hardship for ordinary" Russians.
"Over the very short term, Russia is a pariah," said George Ball, chairman of Houston-based financial services firm Sanders Morris Harris. "Whether it's their oil, their economy or their sovereign debt, nobody wants to touch it. ... People who have assets in Russia or deposits in Russia are toast for now and for some time ahead. They can't get their hands on money or securities or goods or services. They are outcast and they will over the shorter term freeze to death."
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