In a recent fiasco, Vladimir Putin signed a decree taking control of St. Petersburg's Pulkovo Airport (LED) away from foreign investors, of which German airport operator Fraport and Qatar's sovereign wealth fund Qatar Investment Authority had over 24% ownership.
The new decree establishes a Russian holding company to manage the airport, effectively transferring ownership rights from the previous co-owners. Russian state bank(VTB) retains its 25.01% stake, 25% of which was held by Fraport, 24.99% by QIA, and a consortium of investors including the Russian Direct Investment Fund, Abu Dhabi's Mubadala, and Baring Vostok (25%) will be transferred to separate Russian entities.
"We must first verify the information and examine what this means in future for our involvement in St Petersburg, which we have put on hold since the Russian war of aggression," a Fraport spokesperson said.
This controversial decree specified that foreign shareholders could regain ownership rights under certain conditions. They must apply to the new company and enter into corporate agreements compliant with Russian foreign investment laws. However, the Russian government's involvement raises concerns about transparency in appointing the CEO.
This move follows a string of similar stances by the Russian government throughout 2023, including Danone and Carlsberg, who have all seen their assets under "temporary management" as they attempted to exit the Russian industry following the Russian-Ukraine war.
The aggressive movements from the Russian government are likely to have significant economic and political repercussions. The airport is a major travel hub and a crucial driver of tourism and economic activity in St. Petersburg. The move could lead to job losses and disruption in the aviation industry.
The actions from the Russian government raise more questions about its commitment to respect international investment agreements and property rights, which may lead to further isolation from foreign investors.
While the current situation is still developing, the future of Pulkovo Airport remains dire. The situation will likely evolve in the coming months, with significant implications for the Russian economy and its international standing.
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