Putin seizes Japan Tobacco assets, further straining relations with Japan

Russian President Vladimir Putin has issued a decree to temporarily seize Japan Tobacco Inc.’s (JTI) Russian assets, further straining relations with Japan.

The Thursday move drew an immediate response from Tokyo, with trade minister Ryosei Akazawa and other officials calling on Russia to withdraw the measure.

“We have repeatedly requested that the Russian side ensure that the legitimate interests of Japanese citizens and companies are not harmed,” Akazawa said Friday, adding that the government had been on alert for such a move by Russia, which has been widening its push to take control of local businesses from Western countries it calls unfriendly.

The seizure comes amid following increased tensions between Tokyo and Moscow over Putin’s August visit to Etorofu, one of four Russia-held, Japanese-claimed islands off the east coast of Hokkaido, and Russia’s detention of Hokkaido Shimbun journalist Yuki Imai last month on espionage charges.

Putin’s order directly impacts four JTI manufacturing plants, including two cigarette factories in St. Petersburg, Rostov-on-Don — owned by JT International — as well as two others in the Lipetsk and Leningrad regions. JTI employs about 4,000 people in Russia.

The JT Group in Tokyo released a statement Friday saying its Russian business operations are in compliance with all applicable regulations and sanctions, and that it is currently gathering more information and considering next steps.

Russia’s TASS news agency said that Putin’s order is based on a decree issued in April 2023 that established a mechanism for temporarily seizing assets belonging to entities from unfriendly countries. It was a response to sanctions placed on Russian nationals and the seizure of their assets by other countries, TASS said.

Following Russia’s invasion of Ukraine in February 2022, the United States, Japan, the European Union and other nations placed economic sanctions and restrictions on Moscow.

JTI has been operating in Russia since the establishment of the company in 1999 and has been the top company in the Russian tobacco market since 2007. The JT Group’s largest shareholder is the Finance Ministry, which owns 37.55% of the firm. By law, the Japanese government must always own at least one-third of JT’s issued shares.

It was not clear how long JTI’s assets would be under temporary control. Akazawa did not comment Friday on the details of diplomatic efforts with Russia over the issue, but said Japan would continue to work with Russia to protect the assets of Japanese companies there.