Shell, Harley-Davidson, Disney, Volvo, Nokia, ExxonMobil – the war in Ukraine sparked a mass economic exodus from Russia. More Western companies are turning their backs on Russia as Putin’s military invasion has turned the country into a financial pariah.
Chevrolet maker General Motors has stopped its car exports to the Lada state, Danish container giant Maersk no longer delivers freight and oil, but BP would rather pump $25 billion into the burner than continue to associate itself with state-owned Rosneft. And the new movie Batman Film company Warner Bros. announced, Tuesday, that it will not be shown in Russian cinemas for the time being, although it is doubtful whether the Russians will talk these days about the adventures of a masked superhero.
“We cannot and will not stand idly by,” Ben van Beurden, Shell CEO, said Monday evening, regarding Russia’s departure and Shell’s $3 billion in Russian assets, including a 27.5 percent stake in the Sakhalin-2 oil and gas project. “We are shocked by the lives lost in Ukraine, which resulted from an unreasonable act of military aggression that threatens European security.”
The Kremlin tried to curb mass immigration on Tuesday by preventing foreign companies and other investors from selling their Russian assets. Russian Prime Minister Mikhail Mishustin said this was in order for investors to make an “informed decision not motivated by political pressure”. It is also an attempt by the Putin regime to stop the fall of the ruble. Freezing Russia’s international reserves and other Western sanctions sent the currency to an all-time low of 116 rubles to the dollar on Tuesday afternoon.
The tour shows that at the moment, not all Dutch companies with subsidiaries in Russia are joining the exodus. Philips Healthcare Technology, for example, which moved into an office on Nevsky Prospekt in Saint Petersburg three years before the October Revolution of 1917, has 600 employees in Russia. They work on medical devices for Russian hospitals, such as CT scanners and ultrasound machines.
“It is primarily focused on helping modernize and improve healthcare in the country, which is why we continue to support hospitals and their patients,” said a spokesperson for Russia’s Philips, which accounts for 2 percent of total sales. We are very concerned about the situation in Ukraine and its dire consequences for the population. We work hard to provide our colleagues and local hospitals with the best possible support.
ING, Heineken, AkzoNobel and Unilever, among others, say they will continue their Russian activities for the time being. ING, which has 300 employees in Russia and 110 in Ukraine, mainly serves commercial customers in Russia. “We have decided not to provide new loans to Russian entities for the time being,” a spokesman said. Moreover, we will, of course, implement all the sanctions imposed. Our management is in close contact with our teams. Their safety and well-being is our top priority.
Companies face diabolical dilemmas, says Professor of Financial Ethics Baudouin de Bruyne (University of Groningen). It is commendable that Shell, for example, stops its Russian activities, but for many companies the decision is much more difficult. If you have anti-Putin Russian employees, and they get fired after that, you’re hurting ordinary Russians too. You have to weigh it very carefully.
De Bruin is a staunch supporter of severe financial sanctions against Russia – although in his view European governments have been delaying them for too long – but believes that the West should be wary of an overly vindictive and triumphant tone towards ordinary Russians. It also came in the words of French Finance Minister Bruno Le Maire, who said on Tuesday that Europe was waging “an all-out economic and financial war against Russia.” These are mistakes we made at Versailles after the First World War. We should not alienate the Russians who have risked their lives in recent days by demonstrating against Putin. This is Putin’s war, not all Russians.
Whatever dilemmas are diabolical, economist Marc de Vos of the Belgian think tank Itinera believes that by staying in Russia, Western companies are making themselves complicit in Putin’s regime. Companies make a lot of bidding about their “social responsibility”, but if they really took responsibility, they would now vote with their feet. You can change them as often as you like, but by being active now in Russia or China, in countries with values that are completely at odds with ours, you are helping to keep their systems in place. You contribute to the country’s prosperity, which is good for Russian families, but you also keep Putin in the saddle. Our large multinational corporations must make sure that they are on the right side of history, rather than positioned militarily, in collusion with the enemy.
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