Putin places Japan Tobacco International's Russian assets under temporary control

The decree

Russian President Vladimir Putin signed an order on Thursday, 5 November, placing the Russian business of Japan Tobacco International (JTI) under the temporary control of a Russian company. The assets are transferred to Promyschlennye Aktivy AG, a joint-stock company named in the decree. Interfax, cited by Jiji Press, described it as the first time assets of a global tobacco maker have been placed under the control of a Russian company. The Japanese group's tobacco operations in Russia have been run through its subsidiary JT International since 1999, and that unit took the top share of the Russian tobacco market in 2007.

Operations at stake

JTI, which is headquartered in Geneva, says it operates four factories in Russia and produces several cigarette brands there. The company employs more than 4,000 people in the country, according to its own figures. Russia was one of its largest markets, generating revenue in the billions. The company says it stopped investing in Russia when the war in Ukraine began, and the Russian business sits within a group that also includes Austria Tabak.

Earlier moves against Western companies

Putin had already placed the Russian operations of several Western companies under external administration. Those include subsidiaries of the food group Nestlé and of the retailers Metro and Auchan. Several of those firms kept working in Russia after the full-scale invasion of Ukraine, unlike many other companies. La Libre also lists the former Russian entity of the French retailer Leroy Merlin among similar decisions, and Russia justified them by pointing to the owners' origin in 'unfriendly' countries that support Ukraine. Brands that stayed have drawn sharp criticism, including from Ukraine, for helping to finance the Russian state's war effort.

Kremlin position on Western assets

In September Putin did not rule out nationalising the property of Western companies, but he said that was not planned. He said Russia would be prepared to return the assets to their owners if the situation improved. External administration, he said, gives Moscow a way to respond in a mirror image to the seizure of Russian companies' assets in the West. Putin called such seizures of Russian state property in the West completely inadmissible and cited Gazprom Germania GmbH in Germany as an example, a company nationalised after the 2022 invasion under the name Securing Energy for Europe GmbH (Sefe).

Tensions with Tokyo

La Libre places the decree against a backdrop of strained relations between Russia and Japan, which have a territorial dispute over a chain of Pacific islands and have been tense since Tokyo joined sanctions against Moscow over the war in Ukraine. In mid-October a Japanese journalist working for the regional daily Hokkaido Shimbun was arrested on Sakhalin island, which raised tensions further. Russian diplomacy accused Japan of using accredited journalists for espionage, a charge that Prime Minister Sanae Takaichi denied. The decree was issued after these recent tensions with Tokyo.