Hey America….As thou hast done — Russia’s Latest Retaliation Against Sanctions Puts American Multinationals In Crosshairs

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Russia’s Latest Retaliation Against Sanctions Puts American Multinationals In Crosshairs

Russia is known for playing hard ball. A new bill announced on Thursday threatens the assets of multinationals doing business there.

The bill is part of an ongoing sanctions battle pitting Russia against the U.S. and E.U. The most recent round of sanctions, announced by Washington and Brussels in July, went for the Russian jugular: energy firms. On Thursday morning, financial news wires reported that the Russian legislature was working on a bill that would empower the Russian government to seize foreign assets. This does not bode well for a number of American companies. Although this is all speculation, history has shown that the Russian government is not shy about seizing energy assets owned by companies deemed to be enemies of the state.

Yukos Oil, for instance, once owned by Russian billionaire Mikhail Khodorkovsky, was taken over by Rosneft . It’s CEO was put in prison for alleged tax fraud.

Russia has been known to confiscate private assets of local firms that have run afoul of the Kremlin. On Sept. 25, national lawmakers introduced a bill that would allow the government to confiscate assets of multinationals. It’s another weapon Putin can use against the West in the ongoing sanctions battle of Ukraine.

It’s not that Russia is going to seize the Alpha One oil rig drilling in the Kara Sea with Exxon’s help, but the threat exists. And that will keep American lawyers on their toes.

“No company wants to run afoul of these sanctions. Companies are still trying to understand the implications,” said Andrey Goltsblat, a Moscow based lawyer for Goltsblat BLP. Goltsblat was the chief of staff of the constitutional commission in Russia between 1989-93, when the new constitution was passed in a referendum.
News of the foreign asset seizure bill weakened the dollar and spooked equities in Europe, as gold jumped $9 to $1,224 from $1,215 and the Frankfurt stock exchange declined 0.8% during the remaining 30 minutes of trade.

Thursday’s rise in the gold price is all due to the so-called Ukraine variable – and the threat it poses to trade and global economic growth. Ukraine has been a significant impediment to the ongoing price to earnings multiple expansion in emerging markets and even in the S&P 500 since March, said Vladimir Signorelli, founder and chief economist for Bretton Woods Research, a macro investment research firm based in New Jersey….MORE HERE

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