Putin escalates economic war, allows seizure of U.S. assets in Russia

Major U.S. brands like McDonald’s, Coke and Procter & Gamble all suspended Russian operations following the invasion, writing off billions in losses. However, ExxonMobil, Boeing and other firms still have significant property holdings and investments inside the country that could become targets.

Russian President Vladimir Putin has signed a decree allowing the confiscation of U.S. assets on Russian soil in retaliation for the seizure of Russian property abroad.

The move, announced by the Kremlin on Friday, grants Moscow expansive powers to seize homes, businesses, stock holdings and other assets from American citizens and companies operating in Russia. It is styled as a “mirror response” to U.S. sanctions that have frozen hundreds of billions of dollars in Russian central bank reserves and oligarch fortunes.

The decree covers any U.S. assets that may already have been seized by Russian authorities, while also authorizing future confiscations should Moscow deem it a “countermeasure” against unfriendly American actions. It tasks the Russian government with determining which specific assets will be seized.

U.S. officials swiftly denounced Putin’s order as a violation of Russia’s international obligations to protect foreign investments, vowing harsh countermeasures of their own.

More broadly, it signals a drastic escalation in the tit-for-tat economic warfare between Russia and Western powers, which had previously centred on financial sanctions and export controls. Kremlin is clearly ready to strike at the assets and investments of American companies still operating in Russia despite the Ukraine crisis.

Major U.S. brands like McDonald’s, Coke and Procter & Gamble all suspended Russian operations following the invasion, writing off billions in losses. However, ExxonMobil, Boeing and other firms still have significant property holdings and investments inside the country that could become targets.

With Russia’s economy reeling from sanctions, seizing US assets provides the Kremlin a new front for inflicting economic pain in retaliation. But by undermining property rights and the rule of law, it could also further isolate Moscow and starve Russia of the Western investment and expertise it needs.

For now, an unpredictable cycle of asset seizures and fuming rhetoric shows no signs of abating – risking ever more damaging shockwaves to an increasingly fragmented global economy.