Russian President Vladimir Putin has granted a domestic manufacturer of paints permission to acquire BASF Vostok, a subsidiary of the German chemical giant BASF, following their withdrawal from the country in response to the Ukraine conflict.
The domestic enterprise, Lakra Sintez, can buy out 100 percent of BASF Vostok shares thanks to a presidential decree allowing special measures due to the “unfriendly actions of some foreign states and international organizations.” Among the measures allowed by this decree are the temporary seizure of foreign assets by Russian state agencies in cases where the assets are considered critical for energy security and the acquisition of foreign assets by Russian businesses.
Lakra Sintez is the biggest producer of paintwork materials in Russia, and it owns numerous brands in the paintwork and construction materials sphere. It has been operating since 1993 and has 1,300 employees. BASF Vostok was founded in 1999 and focuses on producing paints, varnishes and printing inks.
The move is believed to be a response to similar ones taken by a number of Western countries, particularly against Russian energy giant Gazprom, which is majority-owned by the Russian government and is the world’s biggest natural gas exporter. For example, Warsaw seized a 48 percent stake owned by Gazprom in the joint venture Europol Gaz, which owns the Polish part of the Yamal-Europe pipeline. Similarly, German authorities took over Gazprom Germania in June 2022.
BASF is the largest chemical company in the world, racking up revenue of nearly $94 billion last year and employing 112,000 people across its 234 global production facilities.
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The company announced in March of 2022 that it would be withdrawing from both Russia and Belarus on account of Russia's invasion of Ukraine. At the time, it noted that it “strongly condemns the Russian attack on Ukraine” while declaring that the two countries made up around one percent of their total sales in 2021.
EU to send profits from frozen Russian assets to Ukraine
Meanwhile, the European Union has reached a deal that will allow them to seize the profits earned by Russian assets they have frozen to fund aid and weapons for Ukraine’s war efforts.
Senior diplomats gave the green light to use the profits, which are estimated to total around 4.4 billion euros, to aid Ukraine. The EU was reportedly concerned about the potential legal ramifications of seizing all the assets but decided that Moscow had no right to the profits and that giving them to Ukraine would be an acceptable move.
The bloc’s member states have decided to spend 90 percent of the profits on weapons for Ukraine, while the remaining 10 percent will be used on non-lethal aid. This split was made to appease countries that are not willing to fund arms, such as Hungary, Austria and Ireland.
European Commission President Ursula von der Leyden tweeted: “There could be no stronger symbol and no greater use for that money than to make Ukraine and all of Europe a safer place to live.”
EU ambassadors are now discussing restricting the flow of Russian liquefied natural gas through Europe in what will be the 14th round of sanctions against them.
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