Putin puts Japanese company’s assets under temporary administration

Russian President Vladimir Putin signed a decree on Thursday placing Russian assets of Japan Tobacco International (JTI) under temporary administration.According to the decree, equity stakes linked to JTI's production operations in Russia have been put under the management of Russian company Industrial Assets.JTI, a leading global tobacco producer, has operated in Russia since 1999 and grown into Russia's top tobacco producer. Global cigarette brands such as Winston, Mevius, Camel, Sobranie, Glamour and LD, as well as domestic Russian brands Russky Stil, Pyotr I and Troika, are part of JTI's portfolio.In an emailed statement, the company said it was aware of the decree and it was "assessing the situation and our options, prioritizing our stakeholders, most notably our employees". The presidential decree of the Russian Federation "On the Temporary Administration of Certain Property," adopted in April 2023, establishes a mechanism for placing certain assets owned by individuals and entities linked to countries designated as unfriendly by Russia under temporary administration. Reasons behind the 'temporary management'In recent months, tensions have sharply escalated between the two countries. Russia has classified Japan as an "unfriendly country" due to its participation in Western-led economic sanctions, asset freezes, and trade restrictions following the Ukraine crisis.In October, Moscow explicitly warned of a harsh response after the Russian Foreign Ministry protested a Japanese company's drone sales to Ukraine, alongside heightened friction over reports regarding microchips and dual-use technology flows.In that month, Japan-based drone manufacturer Terra Drone delivered small interceptor drones to Ukraine's Ministry of Defense Procurement Agency, marking Japan's first formal arms supply to the Ukrainian military.Meanwhile, Japan signed a separate acquisition contract with Ukrainian drone developer SkyFall to purchase P1-SUN interceptor drones for Japan's own defense forces.Additionally, separate political and security flash-points also intensified the tension, including Putin's visit to the disputed island – the Far Eastern Kuril Island of Iturup in August and the arrest of a Japanese journalist in Sakhalin on espionage charges in October.The decree also follows Russia's decision to place the assets of Swiss food giant Nestle, German wholesaler Metro ‌AG, and French retailer Auchan under temporary management in September and four more European companies in October.The Kremlin has said placing foreign subsidiaries under the temporary administration is a countermeasure against the freezing or seizure of Russian state assets abroad. According to EU's official data, approximately €210 billion (about $236 billion) in Russian sovereign assets have been frozen in Europe following the Russia-Ukraine conflict.(With input from agencies)