Forced by sanctions, pressured by logistical challenges, committed to denouncing the conflict or concerned about their image, multinationals are increasing announcements of exit or suspension of activities in Russia, from the oil group BP to the Swedish furniture giant Ikea.
“Doing business with Russia will be less and less politically correct and reasonable. On the contrary, the reputational risk increases beyond the geopolitical risk related to the conflict and the economic risk generated by the sanctions,” said Sylvie Matelly, deputy director of IRIS (Institute for International and Strategic Relations).
logistical problems
Many companies are confronted with world trade logistics disruptions related to the Russo-Ukrainian conflict and anti-Russian sanctions.
“Given the current context inherent to international sanctions, companies are exposed to significant risk in their supply chains,” said Philippe Métais and Elodie Valette, lawyers associated with the Bryan Cave Leighton Paisner cabinet.
Ikea, by suspending, on Thursday, its activities in Russia – where it is one of the main Western employers – and in Belarus, made a decision that affects 15,000 employees, 17 warehouses and three production sites. “War has a huge human impact,” the group stressed.
The conflict “causes serious disturbances in the production and trade chain,” said Ikea, heavily criticized in Sweden when it initially announced that its stores would remain open.
The automobile sector is severely affected by logistical problems and two of the world’s largest groups, Toyota and Volkswagen, suspended their production in Russia “until further notice”.
According to the sanctions in force
Any violation of the sanctions can cause very heavy penalties for companies.
In the aviation sector, when the European Union (EU) and Canada banned the export of aircraft, spare parts and equipment from the aeronautical industry to Russia, Airbus suspended its support services to Russian airlines and the supply of spare parts, as well as Boeing .
Payment card issuers such as US Visa, Mastercard and American Express have taken steps to prevent Russian banks from using their networks.
The sanctions against Russia are “so broad and so intense that they amount to a total embargo,” Volker Treier, head of foreign trade at the German Chamber of Industry (DIHK), considered on Thursday. Therefore, “now it is fundamentally a question of liquidating businesses” or abandoning them, according to him.
Some companies anticipate for reasons of social responsibility, denunciations of the war or prestige.
“The concern for the social responsibility of companies weighs more and more in their strategic decisions”, stated Sylvie Matelly.
The Ukrainian government, using social networks, did not hesitate to directly question large Western companies, asking them to burn bridges with Moscow.
It was what happened with Apple and its boss, Tim Cook. On Tuesday, Apple announced it had suspended sales of all its products in Russia after halting exports to the country since last week, and limited some services such as its Apple Pay payment technology.
Among the most recent announcements, the Hermès group, “very concerned about the current situation in Europe”, decided on Friday to “temporarily close” its stores in Russia. “All these large groups are first and foremost aware of social responsibility,” said Philippe Métais.
In the United States, where the pressure of public opinion is strong, companies from all sectors announced that they were at least temporarily separating from activities.
On Friday, the Intel microprocessor group announced its exit and denounced the invasion in Ukraine and the Airbnb tourist rental platform announced its exit from Russia.
Power on the front line
The energy sector, very strategic for the States and in which it is very difficult for Westerners to apply sanctions, registered an avalanche of announcements. Europeans remain highly dependent on Russian gas.
On Sunday, the British oil company BP announced its departure from the Russian giant Rosneft in which it has a 19.75% stake.
“The decision to exit Rosneft will cost BP dearly, but the shocked board of directors realized there was no choice but to pay the heavy price and distance itself from its activities since the start of the Russian aggression,” he said. Susannah Streeter, Analyst at Hargreaves Lansdown.
Many in the energy sector left: the British Shell, the Norwegian Equinor (67% controlled by the State), ExxonMobil…
France’s TotalEnergies, which makes 3% to 5% of its total revenue in Russia, “will not invest any more capital in new projects in Russia,” but did not mention any withdrawal projects.
Source: Gestion
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