Russian barriers to re-entry stymie prospects of Western companies' return

Elena Fabrichnaya, Alexander Marrow and Gleb Stolyarov

Thu, Apr 17, 2025, 5:52 AM 4 min read

By Elena Fabrichnaya, Alexander Marrow and Gleb Stolyarov

MOSCOW (Reuters) - Three months after U.S. President Donald Trump returned to the White House promising a swift end to the conflict in Ukraine and sparking an early flurry of excitement that Western companies could come flooding back to Russia, realism has set in.

Moscow is putting up barriers to re-entry for the thousands of companies that halted operations or sold assets in the country after Russia launched its military offensive, according to government officials and four Russian lawyers.

Western companies looking to regain market share face tough negotiations, mountains of paperwork and reputational risks, according to conversations with 12 people in Russia's retail, auto and financial markets.

Companies including McDonald's, Germany's Henkel and Hyundai Motor secured buyback agreements when exiting, but returning will not be simple as the government moves to keep a grip on strategic sectors and promote domestic production and businesses.

"The Russian authorities will not cancel options that outgoing foreigners concluded with Russian companies, but they will put forward additional demands for their implementation," Alexei Yakovlev, head of the finance ministry's financial policy department, said on the sidelines of a Moscow financial forum in early April.

Unilaterally abolishing buyback agreements could spawn waves of litigation, lawyer Ekaterina Drozdova of FTL Advisers told Reuters, suggesting that Russia may introduce an 'entrance fee' to raise budgetary funds.

A handful of firms are making discreet enquiries, said four people working with foreign companies in Russia, but there are no serious plans while widespread Western sanctions remain in place.

Local companies that have filled niches vacated by departed competitors are also lobbying the government to put up obstacles to any return, said another lawyer who asked not to be named.

President Vladimir Putin warned in March that companies that "slammed the door defiantly" when leaving would not be allowed to buy back businesses for small amounts of money or displace local operators.

The finance ministry has said foreign businesses would be required to invest in local production, research and development, and share technology.

People are definitely talking, said a private equity source who works on Russia, but there are no term sheets, let alone deals. Companies that left in 2022 are not coming back any time soon, the person added.

The finance ministry and central bank say no foreign companies have applied to return so far.