Russia Escalates its Economic Standoff with the West, Seizing Assets of Two European Energy Firms

In an escalation in the economic struggle between Russia and the West, Moscow has nationalized the local subsidiaries of two major European energy companies and left open the door to further takeovers of Western assets.

President Vladimir V. Putin authorized the government to take control of local subsidiaries of Germany’s Uniper and Finland’s Fortum in a decree signed on Tuesday, a move that could accelerate the exit of the remaining Western businesses from the country that started after the full-scale invasion of Ukraine last year.

The United States and Europe have led global efforts to prevent Russia from replenishing its war chest and punish companies and businessmen close to the Kremlin. Russia has responded by cutting energy supplies to countries in Europe and taking over the assets of Western companies.

Both sides in the conflict are now calling for the further tightening of the economic screws.

President Volodymyr Zelensky of Ukraine on Tuesday said his advisers have submitted a plan to allied nations to cut off the remaining sectors of the Russian economy from the global financial system. “This is a necessary self-defense of the international legal order,” Mr. Zelensky said in his daily televised address on Tuesday.

For their part, senior Russian officials have threatened to scrap a fragile Black Sea grain deal with Ukraine, after Kyiv’s allies in the Group of 7 were reportedly considering a move to ban all exports to Russia, an idea that was said to be under discussion last week, according to Japan’s Kyodo news agency.

“If they do it, that would be the end of the grain deal, and of many other things that they require,” Dmitri A. Medvedev, the deputy chairman of Russia’s National Security Council and the country’s former president, wrote on the Telegram social messaging app on Sunday.

In Tuesday’s decree, Mr. Putin justified the nationalization by saying it came in response to the “unfriendly steps taken by the United States and allied foreign nations that go against international law.” Although the decree calls for the immediate takeover of only the local assets owned by Fortum and Uniper, it leaves the possibility of further nationalization of assets of Western companies that are based in countries that will impose economic restrictions against Russian firms.

The decree comes months after Germany nationalized a former local subsidiary of Gazprom, saying it was necessary to maintain the country’s national energy supplies. And Russia’s Foreign Ministry has accused Finland of freezing access to some of its diplomatic properties in the Nordic country to comply with European sanctions.

More than a thousand foreign companies have reduced their presence in Russia since the invasion of Ukraine, including many well-known Western multinationals, but some have stayed, for business reasons or because of an inability to divest.

Fortum and Uniper both have tried to sell their Russian subsidiaries, which hold stakes in a network of power plants across the country, but have been unable to find buyers or receive approval from the Kremlin for the sale.

Uniper said on Wednesday that it is reviewing its legal status in Russia, and added that it had already lost operating control of its assets in the country by late 2022. The company wrote off its Russian business last year, incurring a loss of 4.4 billion euros, or about $4.9 billion. In a statement, Fortum said it has yet to be notified of the Russian government’s decision and it is also investigating its legal situation in the country.