Foreign companies are exiting Russia en masse. The Kremlin said it could seize their assets and nationalize them.

• Russia could seize and nationalize the assets of foreign companies leaving the country.
• Russia's Economy Ministry said the move is to protect productive assets and workers.

Russia said it could seize the assets of foreign companies that leave the country as sweeping sanctions and a corporate exodus cripple its economy.

Russian President Vladimir Putin said the Kremlin is trying to find "legal solutions" to take over the foreign assets of international companies that are pulling out of its market, the Financial Times reported.

At a meeting on Thursday, Putin told government officials the Kremlin would seek to "introduce external management and then transfer these enterprises to those who actually want to work," according to the Guardian.

"With regards to those who are planning to close their production facilities, we must act decisively . . . By no means must we allow any harm to local Russian suppliers," said Putin, according to the FT.

Policies allowing the state to take temporary control of companies leaving the country would apply to those with over 25% in foreign stakes, Bloomberg reported, citing the Russian Economy Ministry. Among the proposed moves are a freeze in the shares of foreign-owned companies to safeguard property and workers, per Bloomberg. Company owners have five days to restart business activity or be compelled to take other measures like selling their shares, per the media outlet.

"The project is aimed at encouraging organizations under foreign control not to abandon their activities on the territory of the Russian Federation," said the Economy Ministry, per Bloomberg.

On Thursday, White Press Secretary Jen Psaki warned that "any lawless decision by Russia to seize the assets of these companies will ultimately result in even more economic pain for Russia."

"It will compound the clear message to the global business community that Russia is not a safe place to invest and do business," she added in a Twitter thread.

—Jen Psaki (@PressSec) March 11, 2022

Nationalizing foreign companies will likely involve changes to the branding of the businesses, but "the factories and shops will engage in same business," Bo Zhuang, an economist with Boston-based investment management firm Loomis Sayles, told Insider.

Former Russian President Dmitry Medvedev first disclosed the plan to seized foreign firms' assets on February 26 after the invasion of Ukraine prompted Western sanctions.

"We would need to respond in kind by freezing the assets of foreigners and foreign companies in Russia ... and possibly by nationalizing the assets of those who come from unfriendly jurisdictions," Medvedev said at the time, per the Associated Press. "The most interesting things are only starting now."

Russia has already started other retaliatory moves against Western sanctions, including banning the export of over 200 items through the end of this year. The products include medical and telecommunication equipment, according to news agency Interfax.