Amid a noticeable warming in relations between Moscow and Washington and discussions about a possible deal to end military actions in Ukraine, speculation has emerged about the imminent return of Western businesses to Russia. Kirill Dmitriev, head of the Russian Direct Investment Fund (RDIF), even predicted that this process could begin as early as the second quarter of 2025. Meanwhile, the government acknowledged that no foreign company that has left the Russian market has «yet raised the issue of returning,» but the idea sparked such a strong reaction in Russia’s political and business circles that Vladimir Putin instructed the government to address the matter in a way that ensures domestic companies «retain their preferences» and do not lose their «acquired potential.» Russian Foreign Minister Sergey Lavrov stated that foreigners should only be allowed into sectors «where they won’t harm Russia’s economy,» while Moscow Mayor Sergey Sobyanin, commenting on the possibility of Renault returning to the site of Moskvich, emphasized that the French automaker «is unlikely to have much of a chance.»
Russian officials need not rush to shield themselves from Western corporations, nor should consumers dust off their Visa and Mastercard cards just yet. Foreign investors continue to leave the country even now. The largest international companies with significant assets in Russia, beyond the reputational costs tied to returning to the Russian market, are also factoring in three key considerations.
Sanctions
The primary reason for the exodus of Western companies from the Russian market has been sanctions. Since 2022, Russia has faced unprecedented and multi-layered sanctions, making it the most sanctioned country in the world, surpassing Iran, Syria, and North Korea. The European Union alone has approved 16 sanction packages to date, covering trade and financial operations, exports of critical technologies, equipment, and dual-use goods, purchases of raw materials, investments in energy, transportation, metallurgy, and other key sectors. U.S. sanctions are even more extensive: thousands of Russian individuals and entities have been added to the highly restrictive SDN list, which has extraterritorial reach. Sectoral restrictions from the EU and U.S. target strategic sectors of the Russian economy, including banking and finance, defense, oil and gas, and metallurgy.
Lifting sanctions is an extremely complex process tied to legal and political procedures in the countries that imposed them. For instance, decisions on European sanctions are made at the EU Council level and are formalized through numerous regulations and directives tailored to specific political and economic objectives, creating a unique «sanctions architecture.» Reversing them would require not only a revision of the legislative framework and a phased implementation of corresponding measures but also unanimous approval from all 27 EU member states—a predictably lengthy and politically sensitive process.
To regularly assess the effectiveness of these measures and adapt them to changing circumstances, the EU Council extends the sanctions regime against Russia every six months. On January 27, 2025, the EU Council once again extended sanctions for another six months, emphasizing that it is appropriate not only to maintain all measures but also to adopt additional ones if necessary.
As for U.S. sanctions, contrary to popular belief, the political will of President Donald Trump is insufficient to lift them. Many sanctions are enshrined in legislation—most notably the 2017 Countering America’s Adversaries Through Sanctions Act (CAATSA), passed during Trump’s own administration. This law limits the president’s authority, requiring Congressional approval to lift sanctions against Russia. Even today, influential Republican senators in Congress advocate for a hard line against Moscow. Moreover, the U.S. Treasury Department, State Department, and intelligence agencies play a key role in sanctions policy, capable of delaying or blocking attempts to ease sanctions by demanding detailed reviews, monitoring, and compliance verification. Despite initiatives from U.S. authorities to soften sanctions against Russia, Trump nonetheless extended them for another year.
It’s also worth noting that international companies are likely to consider the risks of sanctions being reimposed after the next U.S. election or if Russia violates any agreements reached. The case of Iran illustrates that U.S. sanctions are not just a punitive tool but also a lever of political pressure that can be applied based on the current situation. After the 2015 nuclear deal (Joint Comprehensive Plan of Action) was signed, anti-Iran sanctions were gradually eased as Tehran met its obligations. However, in 2018, the U.S. withdrew from the deal, and sanctions returned in an even harsher form. This instability cost Western companies dearly: PSA Peugeot Citroën and Renault invested hundreds of millions of dollars to reenter the Iranian market and develop their businesses, only to be forced to abandon their projects and suspend investments shortly thereafter.
Another factor that may hinder efforts to lift sanctions is their use as a tool to promote economic interests and squeeze out competitors from attractive markets. U.S. sanctions against Russian energy companies like Arctic LNG 2 effectively opened up market niches in Europe, which were then filled by American suppliers. In 2024, the U.S. accounted for 45% of Europe’s LNG market, with EU countries comprising 43% of U.S. LNG exports. In pre-war 2021, the U.S. share of the EU market was 28%, and the EU’s share of U.S. exports was 23%. In 2025, the U.S. presence in Europe’s gas market is likely to grow further, especially given the cessation of Russian pipeline gas transit through Ukraine to Europe as of January 1 this year. Easing sanctions could significantly harm U.S. interests in this market.
Sanctions against Russia have also been imposed by dozens of other countries, including Canada, Japan, the United Kingdom, Switzerland, South Korea, Taiwan, and Australia. These nations typically align their actions with the EU and U.S. In July 2024, the EU further harmonized its sanctions rules with those of the U.S.
All of this means that even if a diplomatic resolution to the conflict and a hypothetical deal on Ukraine are reached, lifting most restrictions will be extremely difficult, rendering the prospects of Western businesses returning to Russia highly uncertain, especially in the short term. Major U.S. oil companies, whose swift return RDIF head Kirill Dmitriev had hoped for ahead of talks in Riyadh, have already hinted at this.
Obstacles
During the full-scale war, the Russian government has built a system that has made exiting the market prohibitively costly for companies from «unfriendly» countries. Companies choosing to leave Russia are forced to either sell their assets at a fraction of their value or lose them through coerced deals structured with massive discounts and additional contributions to the state budget. They face increasingly stringent procedural and legal requirements, under which asset sales now mandate a discount of at least 60% off market value and additional payments to the budget of up to 35%. As a result, foreign investors often receive just 5% of their assets’ true market value. Some strategically important enterprises, such as car factories or food production facilities, are «voluntarily» transferred to state control—often for symbolic sums (e.g., Renault’s Moscow plant was sold for two rubles)—or outright nationalized, as seen with the assets of Danone and Carlsberg.
A special mechanism of alienation without formal expropriation has also been introduced, affecting energy giants like Fortum and Uniper. The Russian government imposed external management over their assets in the country, causing the companies to lose control of their Russian subsidiaries despite billions in investments in the energy sector. Fortum is now pursuing a case against Russia in international arbitration, seeking compensation for the value of its shares, while Uniper has exhausted all legal avenues to challenge a Russian court ruling transferring its assets to Gazprom.
For Western businesses, leaving the Russian market comes with significant losses. Volkswagen’s subsidiary invested around € 2 billion in Russian production but faced asset freezes after the full-scale war began, followed by a forced sale for just € 125 million. Similar losses were incurred by other international corporations: McDonald’s wrote off $ 1.3 billion in assets, Fortum lost $ 2 billion, IKEA lost about $ 200 million, Heineken over $ 300 million, and companies like Inditex, Uniqlo, H&M, and Decathlon collectively lost around $ 900 million.
By creating such conditions, Russian authorities have placed international companies with significant assets in the country in a dilemma: either stay in Russia despite sanctions, reputational risks, and financial uncertainties, or leave the market with colossal losses. However, they overlooked a critical point: companies that have endured this grinder are unlikely to risk returning to the Russian market, fearing a repeat of losses and difficulties in divesting or selling assets. Thus, despite conditions emerging for the war’s end, the Kremlin is not receiving signals from departed companies about a desire to resume operations in Russia.
The Market
Before the full-scale war, the Russian market, despite its scale, investment appeal, and growth potential, was fraught with high political risks and specific challenges for international business. Even for companies that operated in Russia for years, it accounted for only a small fraction of global revenue (e.g., for Apple, the Russian market made up just 0.9% of worldwide sales in 2021).
The lack of a critical economic impact from doing business in Russia allowed many Western corporations to exit the market without hesitation. German automakers—BMW, Daimler Truck, Mercedes-Benz, and Volkswagen—despite their departures, posted record financial results in 2022: BMW and Daimler Truck reported record profits, Mercedes-Benz achieved a record-high profit margin, and Volkswagen paid out record dividends. Daimler Truck halted decades-long cooperation with Kamaz, exited joint ventures, and wrote off € 220 million in assets, noting that the Russian market accounted for less than 1% of its global turnover. BMW ceased both exports and car production in Kaliningrad, while Mercedes-Benz shut down premium car manufacturing in the Moscow region and sold its stakes in all local subsidiaries.
Since 2022, most of Russia’s consumer markets have undergone significant changes. The new passenger car market has recovered to pre-war levels, but growth has been driven primarily by Chinese imports: the share of Chinese brands rose from 6.9% in 2021 to 60% in 2024, while local production volumes dropped from 1.36 million to 756,000 vehicles. Similar trends are evident in other sectors: markets for household appliances, electronics, agricultural machinery, industrial equipment, clothing, and other goods are recovering largely through imports rather than increased Russian production. The vacated niches are being actively filled by companies from China, India, Turkey, Serbia, Kazakhstan, and other «friendly» countries, which, as they establish themselves, gain access to infrastructure and technological solutions left behind by Western brands.
The legalization of «parallel imports» has played a key role in market recovery, enabling the import of a wide range of original goods without the rights holders’ consent. Russian authorities have weakened intellectual property protections for certain product categories. These changes have helped thousands of local companies stay afloat by ensuring uninterrupted supplies of critical components and spare parts. Deregulation has also led some Russian manufacturers to produce near-identical versions of Western brand products as «generics,» often without informing consumers. Meanwhile, previously robust mechanisms for ensuring compliance with technical standards and quality—overseen by agencies like Rosstandart, Rospotrebnadzor, and Rostekhnadzor—have been significantly weakened.
Together, these factors—the relatively small scale of Russia’s domestic market, the active occupation of vacated niches by companies from «friendly» countries, and the degradation of legal regulation—contribute to Russia’s declining appeal for Western businesses.
The circumstances outlined will remain a significant barrier to the return of departed international corporations to Russia for a long time. Even potential political warming and the cessation of hostilities cannot restore trust between Western businesses and Russian authorities. Until this reality is acknowledged by the country’s political leadership—which, for instance, wonders «why Volkswagen left the Russian market» and seems to cling to Leninist notions that «capitalists will sell us the rope with which we hang them”—the departed businesses are certainly in no hurry to return to Russia, despite all the rumors and speculation.
