St. Petersburg’s Pulkovo airport

St. Petersburg’s Pulkovo airport

In a move signaling Russia's assertion of sovereignty and amid a backdrop of geopolitical tensions, President Vladimir Putin has directed the transfer of management rights for St. Petersburg's Pulkovo airport from foreign shareholders, including Germany's Fraport AG and Qatar's sovereign wealth fund. The decision consolidates these foreign stakes into a new domestic entity, aligning with Putin's broader efforts to reinforce Russian control over strategic assets.

Shareholdings in the Cyprus-registered concession overseeing Pulkovo airport, Russia's second-busiest, will be centralized in a new Russian company, according to a decree published on Thursday. While existing investors, including Fraport, the Qatar Investment Authority, and Russia's VTB Bank, will retain their stakes, their voting rights will be exclusively held by Russian shareholders in the newly formed entity.

The transfer comes amid a series of retaliatory measures by the Kremlin against "unfriendly countries" following international sanctions linked to Russia's actions in Ukraine. Pulkovo airport's management change aligns with Putin's ongoing efforts to emphasize Russian control, particularly as he contemplates a potential fifth presidential term in March elections.

Pulkovo's current ownership structure includes German airport operator Fraport, the Qatar Investment Authority, and Russia's VTB Bank, each holding approximately 25% of the concession. The remaining shares are controlled by a consortium that includes Russia's sovereign wealth fund RDIF, Abu Dhabi's sovereign fund Mubadala, and Baring Vostok, as reported by Interfax news service.

Despite Germany being labeled as "unfriendly," the decree potentially leaves room for Middle East investors to regain their voting rights, contingent upon their application and adherence to Russian legislation.

The order's rationale cited threats to national interests and economic security, invoking laws predating Russia's invasion of Ukraine in February 2022. This approach contrasts with earlier Kremlin takeovers, which were grounded in legislation signed in April, allowing temporary state control over assets of entities from "unfriendly states."

Fraport, currently evaluating the consequences of the decision, has already written down the holding's value to zero after the Ukraine conflict erupted. Qatar Investment Authority and Mubadala have refrained from commenting on the development.

Pulkovo airport expressed support for Putin's order, stating it would "restore corporate governance mechanisms."  This move highlights the continuing complexities of Russia's relations with foreign investors and the broader geopolitical context.

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