Russia tries to stop Western companies from fleeing

Capital controls designed to stop the exodus were announced by Russian Prime Minister Mikhail Mishustin, state news agencies TASS and RIA reported on Tuesday. Western companies were taking decisions because of “political pressure,” he said, and they would be prevented from selling Russian assets until that pressure subsides.

Oil giant BP (BP) is one of the most prominent companies to abandon Russia since its troops invaded Ukraine last week. It said Sunday it was planning to exit its 19.75% stake in Russia’s biggest oil company, Rosneft, and their joint ventures — amounting to one of the biggest foreign investments in Russia.

Others have since followed suit, including Shell (RDSA) and Norway’s Equinor.

Big global investment funds are joining companies in trying to dump Russian assets. Norway’s $1.3 trillion sovereign wealth fund will divest shares in 47 Russian companies as well as Russian government bonds, the Norwegian prime minister said on Sunday.

Russia has been scrambling to prevent financial meltdown since the United States, European Union and other Western allies imposed sanctions on much of the country’s banking system, including freezing hundreds of billions of dollars worth of foreign reserves Moscow had been stockpiling for years to shield the Russian economy. Analysts say the measures could lead to a banking crisis.

The ruble plunged by about 25% on Monday, and is now worth about one US cent. It has lost about half its value since Russia first invaded Ukraine in 2014, annexing Crimea and triggering much more limited sanctions. Russia’s stock market hasn’t opened for trade this week, but shares in Russian companies listed overseas have crashed.

Russian officials have already taken emergency measures to try to stabilize the financial system. The central bank more than doubled interest rates to 20%, and temporarily banned Russian brokers from selling securities held by foreigners. The government has ordered exporters to exchange 80% of their foreign currency revenues for rubles, and banned Russian residents from making bank transfers outside Russia.

“I am sure that the sanctions pressure will eventually subside, and those who will not curtail their projects in our country, succumbing to the slogans of foreign politicians, will win,” Mishustin said.