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What Putin's Danone and Baltika takeover signalled
Summary
A retrospective on the decree of 16 July 2023 placing two foreign-owned companies under temporary Russian state control.
What did it mean when Russia's president authorised a temporary state takeover of two foreign-owned businesses? The decree, reported on 16 July 2023 and looked at here on 17 July 2023, covered the shares of French agribusiness Danone and of Baltika, the brewer owned by Carlsberg.
A response to companies scaling back
The step was presented as part of a wider response to private companies reducing their business operations in Russia during the war in Ukraine. Danone and Baltika were named among them, but not as the only ones. The measure was described as temporary, yet it put the shares of both firms under state control.
The background to this is the broad corporate reaction to Russia's seizure of Ukrainian territory in 2014 and 2022. Many private companies ceased operations in Russia, or donated, or matched donations, to the Ukrainian government and Ukrainian organisations. Others applied various sanctions. Moscow's decree can be read as the state answering that corporate retreat with its own control over assets left behind, though the reports of the time did not spell out further intentions.
The same weekend, a wider regional picture
The decree came amid other regional developments. On 15 July 2023, South Korea's president, Yoon Suk-yeol, made an unannounced visit to Kyiv, met Ukraine's president, Volodymyr Zelenskyy, and announced a further US$150 million in aid for Ukraine. The same day, Russia said it would investigate whether North Korea's Hwasong-18 missile had landed in its exclusive economic zone. On 16 July 2023, Transnistrian communist and opposition leader Oleg Khorzhan was killed in a stabbing attack in his office.
These items were not formally linked in the reports. Together, though, they show how many parts of the region were being touched by the war and its diplomacy within a single weekend.
What the decree showed
For foreign businesses, the main lesson of 16 July 2023 was that leaving or shrinking operations in Russia could bring state intervention rather than a quiet exit. Danone and Carlsberg's Baltika were the clearest cases at that moment. The decree's description as temporary left open how long the control would last, and the reports available on 17 July 2023 did not answer that.
