In a move that could imperil fragile diplomatic progress between Washington and Moscow, the Kremlin has set in motion a plan to repurpose a U.S.-owned food production company — seized under a controversial Russian decree — to provision its armed forces. According to internal documentation reviewed by Reuters, Glavprodukt, a canned food manufacturer taken from its American owner last year, is being positioned to support military logistics by supplying food to Russian troops and paramilitary units.
As the war in Ukraine stretches into its fourth year, Russia continues to escalate its militarization efforts and tighten control over strategic economic assets. The nationalization of foreign-owned companies has become one of the tools Moscow is using to reinforce its wartime economy. But this particular seizure — the first involving an American business — stands apart in both symbolism and potential geopolitical fallout.
The Seizure of Glavprodukt: Strategic and Political Calculations
Glavprodukt, once controlled by Los Angeles-based businessman Leonid Smirnov, was seized in October and placed under the management of Rosimushchestvo, Russia’s Federal Agency for State Property Management. The company, which had long operated within Russia’s food production sector, is notable for being the only American-owned enterprise thus far brought under direct Kremlin control during the war.
While official Russian communications suggest the move was necessary to ensure “stable food production,” a deeper reading indicates the seizure aligns with broader military objectives. A letter from Glavprodukt’s new management, reviewed by Reuters, reveals plans for the company to supply the Russian National Guard and the Ministry of Defense. These developments suggest that Russia views Glavprodukt as a potential asset in sustaining the logistics behind its prolonged military engagement in Ukraine.
The legal justification for the seizure was rooted in accusations that Smirnov and companies linked to him had funneled 1.38 billion roubles — approximately $17 million — out of Russia between 2022 and 2024. A court ruling in March enabled the Russian prosecutor general’s office to freeze Glavprodukt’s assets. A final hearing is scheduled for April 18. Smirnov, however, has strongly denied all allegations, describing the case as a “Russian-style corporate raid.”
Economic Nationalism Amid Wartime Mobilization
The seizure of Glavprodukt is emblematic of a broader trend in Russia: economic nationalism fueled by wartime exigencies. Over the past two years, the Kremlin has taken control of multiple Western-owned businesses under presidential decree. These include subsidiaries of major European firms such as Danish brewer Carlsberg and Finnish energy provider Fortum. Russian authorities have warned that more expropriations could follow, especially in sectors deemed essential to national security.
These moves have raised alarm among foreign investors and governments, who see them as signs of an increasingly hostile business environment in Russia. But from Moscow’s perspective, control over critical infrastructure — including food production — is a strategic imperative in a time of protracted conflict. Russia’s invasion of Ukraine, initially envisioned as a swift campaign, has instead turned into a drawn-out war that has required significant increases in defense spending and a reorganization of supply chains.
In this context, food is not merely a civilian commodity but a crucial element of military logistics. Russia’s experience in the early stages of the war — when it scrambled to find adequate supplies for its rapidly mobilized troops — revealed glaring gaps in preparedness. The government has since made concerted efforts to eliminate these vulnerabilities, including the repurposing of private assets like Glavprodukt.
A Flashpoint in U.S.-Russia Relations
The seizure of Glavprodukt could have outsized implications for U.S.-Russia relations, which are delicately poised as both sides engage in backchannel negotiations aimed at ending or de-escalating the war in Ukraine. U.S. Secretary of State Marco Rubio has indicated that the treatment of Glavprodukt will be a central issue in discussions surrounding a potential diplomatic reset.
From Washington’s perspective, the nationalization of an American business without due process undermines property rights and sets a dangerous precedent for international investment. Legal experts say the U.S. government could invoke investment treaties or even pursue retaliatory measures if the situation escalates.
Yet Moscow appears to be betting that strategic necessity will outweigh diplomatic consequences. By seizing Glavprodukt, the Kremlin gains immediate control over a domestic food production line with established logistics and supply chains — assets that are difficult to replicate or replace during wartime.
A Closer Look at the Beneficiaries
The internal letter obtained by Reuters also sheds light on entities that stand to benefit from Glavprodukt’s repurposing. It reveals that the new director general was appointed at the request of a company called Druzhba Narodov, a food producer with longstanding ties to Russia’s security services. According to public records from 2018, Druzhba Narodov served as the sole supplier to the Russian National Guard between 2019 and 2020.
While current ownership information about Druzhba Narodov is classified, Russian business newspaper Kommersant previously reported that the company had been acquired by entities affiliated with Agrocomplex named after N.I. Tkachev — an agricultural holding with deep connections to the Russian political elite. Agrocomplex has historically been linked to former agriculture minister Alexander Tkachev, a powerful figure in Russian agribusiness.
An investigation by the late opposition leader Alexei Navalny’s Anti-Corruption Fund had previously revealed that in 2017, then-President Dmitry Medvedev approved a decree that gave Druzhba Narodov exclusive supplier status to the National Guard — a move critics described as emblematic of crony capitalism within the Kremlin’s inner circle.
It is unclear whether these affiliations played a direct role in the state’s decision to seize Glavprodukt. However, the sequence of events suggests a convergence of state strategy and private interest — a hallmark of modern Russian economic governance.
A New Kind of Warfare: Economic and Legal Instruments
Russia’s wartime strategy increasingly relies on legal and economic tools to bolster its military capabilities. From leveraging state control over energy to seizing critical food production infrastructure, the Kremlin is constructing a wartime economy reminiscent of Soviet-era mobilization.
Glavprodukt’s transformation from a private, foreign-owned enterprise to a cog in Russia’s military supply machine exemplifies this shift. It represents a new kind of warfare — one where legal instruments, property rights, and economic assets are as much part of the battleground as tanks and missiles.
This approach is not without precedent. Throughout history, nations at war have nationalized industries deemed vital to their survival. The difference in Russia’s case is the highly selective and politically charged nature of its expropriations. Most affected businesses are Western-owned and often operate in strategically important sectors. The seizures also coincide with a concerted narrative in Russian state media portraying foreign capital as unreliable and potentially subversive.
The View from the Ground
Inside Russia, the Glavprodukt saga has elicited mixed reactions. Some see it as a necessary assertion of sovereignty and economic resilience in the face of Western sanctions and geopolitical pressure. Others — particularly those with memories of post-Soviet privatizations and ensuing chaos — worry that the expropriation wave could herald a return to centralized economic mismanagement and cronyism.
Former employees of Glavprodukt have expressed uncertainty about the company’s future. Speaking anonymously, one worker noted that production lines remain operational but morale is low amid fears of management purges and reduced foreign demand. Export prospects have also dimmed, as Western markets increasingly avoid products linked to Russian state enterprises.
For Smirnov, the American businessman at the center of the controversy, the legal battle continues. He maintains that he invested heavily in modernizing Glavprodukt and had no involvement in any illicit financial activity. His legal team is preparing to challenge the seizure in international courts, though legal experts warn that enforcing a favorable ruling inside Russia may prove difficult.
What Lies Ahead
As the April 18 court hearing approaches, all eyes will be on whether the Moscow Arbitration Court upholds the asset seizure or opens the door for a possible settlement. Whatever the outcome, the case is likely to set a precedent for how Russia deals with foreign-owned enterprises going forward.
If the seizure is validated and Glavprodukt is permanently integrated into Russia’s military supply chain, it could signal the beginning of a new phase in the economic dimensions of the Ukraine conflict. One in which the lines between civilian industry and military infrastructure become increasingly blurred — and where legal ownership can be overruled by national interest.
In this evolving landscape, companies operating in Russia — particularly those with Western ties — face mounting risks. And for governments trying to navigate a diplomatic off-ramp to a devastating war, the Glavprodukt case underscores just how high the stakes have become.
Frequently Asked Questions
What is Glavprodukt and why is it important?
Glavprodukt is a Russian canned food manufacturer that was previously owned by U.S.-based businessman Leonid Smirnov. It became especially important after being seized by the Russian government during the ongoing Ukraine conflict. Now, it’s reportedly being used to supply food to the Russian military, marking a rare case where an American-owned company has been brought under direct Kremlin control.
Why did the Russian government seize Glavprodukt?
Russian authorities allege that Smirnov and related businesses moved large sums of money out of the country unlawfully. They say the seizure was necessary to maintain stable food production, especially for critical national needs like military provisioning.
Who is currently managing Glavprodukt?
The company is now controlled by Rosimushchestvo, Russia’s federal property management agency. The new leadership was reportedly appointed at the request of Druzhba Narodov, a food supplier with historical ties to Russian security services.
What is Druzhba Narodov, and why is it relevant?
Druzhba Narodov is a food production company that once served as the sole supplier to Russia’s National Guard. It has connections to politically influential agribusiness entities and has benefited from previous government decrees. Its involvement suggests the Glavprodukt seizure may serve both strategic and insider economic interests.
How does this affect U.S.-Russia relations?
The seizure could seriously complicate efforts to stabilize U.S.-Russia relations, especially amid ongoing negotiations related to the Ukraine war. American officials have stated that the handling of this case will be a key issue in any potential diplomatic reset.
Is this part of a broader pattern?
Yes. Russia has seized several foreign-owned businesses in recent years, especially from countries that have imposed sanctions. These moves are part of a broader wartime strategy to gain full control over industries deemed vital to national defense and self-sufficiency.
What does Leonid Smirnov say about the case?
Smirnov denies all wrongdoing, calling the seizure a politically motivated “corporate raid.” He argues that the legal case is part of a broader campaign to nationalize profitable foreign-owned businesses under the guise of legal enforcement.
Can the U.S. government intervene?
While the U.S. government may raise the issue diplomatically and explore legal or economic countermeasures, its ability to directly reverse the seizure is limited due to Russia’s sovereign legal system.
Conclusion
The seizure of Glavprodukt is more than a business dispute — it’s a high-stakes episode that underscores the intersection of war, politics, and economics in modern-day Russia. As Moscow tightens its grip on strategic assets and retools its economy for prolonged conflict, foreign-owned enterprises are finding themselves in the crosshairs.
This case highlights the increasing risk for international investors operating in Russia, particularly those with assets in sectors tied to security and infrastructure. It also adds a new layer of tension to U.S.-Russia relations at a moment when diplomatic progress is both elusive and desperately needed.
