Exodus draws Russian threat to nationalise foreign plants

[March 09, 2022]  (Reuters) - Coca-Cola and McDonald's are among the latest companies to halt sales in Russia where a senior member of the ruling party has warned that foreign firms which close down could see their operations nationalised.

PepsiCo and Starbucks have also joined the dozens of global companies closing stores, factories or exiting investments to comply with sanctions or due to supply disruptions.

Those supply hurdles include the world's top three shipping giants suspending container routes.

Heineken, the world's second-largest brewer, stopped production and sales in Russia and said it was assessing options for its operations there.

Yum Brands Inc, parent of fried chicken giant KFC, said it was pausing investments in Russia, a market that helped it achieve record development last year.

'LAWS OF WAR'

In response to the wave of firms packing up, Andrei Turchak, secretary of the ruling United Russia party's general council, warned that Moscow might nationalise idled foreign assets.

"United Russia proposes nationalising production plants of the companies that announce their exit and the closure of production in Russia during the special operation in Ukraine," Turchak wrote in a statement published on the party's website on Monday evening.

The statement named Finnish privately owned food companies Fazer, Valio and Paulig as the latest to announce closures.

"We will take tough retaliatory measures, acting in accordance with the laws of war," Turchak said.

People wait for their orders outside a Starbucks coffee shop in Moscow, Russia October 29, 2021. REUTERS/Evgenia Novozhenina

SANCTIONS

Moscow, which calls its invasion of Ukraine a "special military operation", has also been hit by sweeping Western sanctions that have choked trade, led to the collapse of the rouble and further isolated the country.

Banks and billionaires have also been targeted, with the European Commission preparing new sanctions targeting additional Russian oligarchs and politicians and three Belarusian banks, Reuters reported.

While the war in Ukraine and the sanctions have bolstered prices for commodities which Russia exports such as oil, natural gas and titanium, those sanctions have largely barred Moscow from taking advantage of the high prices.

On Tuesday the United States banned Russian oil imports.

U.S. oilfield services company Schlumberger, which derives about 5% of its revenue from Russia, said the ongoing conflict would likely hurt its results this quarter.

Global commodities trader Trafigura Group raised a $1.2 billion revolving credit facility from banks to help address soaring energy and commodity prices.

Norway's Yara, a top fertiliser maker, said on Wednesday it would curtail ammonia and urea output in Italy and France due to surging gas prices.

(Reporting by Reuters bureaux; writing by Sayantani Ghosh; editing by Jason Neely)

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