(CNN Business) –– Russian President Vladimir Putin is trying to stem the flow of Western companies are leaving the country after his decision to start the war in Ukraine.
Along these lines, Russian Prime Minister Mikhail Mishustin announced capital controls designed to stop the exodus, state news agencies TASS and RIA reported on Tuesday. The official noted that Western companies were making decisions due to “political pressure.” And he added that they would be prevented to sell Russian assets until that pressure subsides.
“To allow companies to make informed decisions, a draft presidential decree has been prepared that imposes temporary restrictions on the outflow of Russian assets,” Mishustin said. “We hope that those who have invested in our country can continue working here,” he added.
Companies that have left Russia
Oil giant BP is one of the most prominent companies to have left Russia since its forces invaded Ukraine last week. The company said on Sunday it planned to exit its 19.75% stake in Russia’s largest oil firm, Rosneft, and its joint ventures. Which represents one of the largest foreign investments in Russia.
Since then, others have followed suit, including Norway’s Shell and Equinor.
France’s TotalEnergies said on Tuesday it would not provide new capital for Russian projects. He also mentioned that assessed the impact of Western sanctions on their existing investments in the country.
Big global investment funds are joining companies in trying to offload Russian assets. Norway’s $1.3 trillion sovereign wealth fund will sell shares in 47 Russian companies. Also Russian government bonds, the country’s prime minister said on Sunday.
Moscow tries to avoid collapse
Russia has been struggling to avoid financial collapse ever since the United States, the European Union and other Western allies imposed sanctions on much of the country’s banking system. Among them was the freezing of hundreds of billions of dollars in foreign exchange reserves that Moscow had been building up for years to protect Russia’s economy. Analysts say the measures could lead to a banking crisis.
The ruble plunged about 25% on Monday and is now worth about a penny on the dollar. It has lost about half its value since Russia first invaded Ukraine in 2014, annexing Crimea and triggering much more limited sanctions. The Russian stock market has not opened for trading this week. But, shares of Russian companies listed abroad have plummeted.
Russian officials have already taken emergency measures to try to stabilize the financial system. The central bank has more than doubled interest rates to 20% and temporarily banned Russian stockbrokers from selling securities held by foreigners. The government ordered exporters to exchange 80% of their foreign currency earnings for rubles and banned Russian residents from making bank transfers outside the country.
“I am sure that the pressure of the sanctions will eventually subside. And those who do not scale back their projects in our country, succumbing to the slogans of foreign politicians, will win,” Mishustin said.