In January 1990, McDonald’s opened its first restaurant in Moscow’s Pushkin Square after spending years overcoming the Soviet bureaucracy and inefficiencies in the country’s commercial, agricultural and marketing businesses. McDonald’s presence in Russia eventually grew to a chain of 847 outlets and a workforce of 62,000 before the brutal invasion of Ukraine this year changed everything.
After the invasion, McDonald’s announced that it would close all of its locations in Russia and offer the company for sale. company bomb Advertising He explained that “the humanitarian crisis caused by the war in Ukraine, and the accelerated and unpredictable operating environment, have led McDonald’s to conclude that continued business ownership in Russia is no longer viable, and is incompatible with McDonald’s values.”
The decision by McDonald’s was a rare example of an initial and expensive stance for a highly profitable global brand. Soon another 1,000 multinationals voluntarily announced that they would follow suit and leave Russia. Many received praise for their stance. But the unfortunate fact is that, regardless of McDonald’s, three quarters of the most profitable foreign multinationals are still in Russia according to Research Conducted by activist group B4Ukraine, a coalition of Ukrainian and international civil society organizations.
“Even today, 106 companies only They completely exited the Russian market, while more than 1,149 foreigners remained. WeAreUkraine.info The Natalia Popovich Foundation via email. “The public has the impression that most of the major world brands have already left Russia. Indeed, most of the companies that downsize and suspend operations do so loudly, while eight out of ten companies doing business of a certain scale in Russia have been silent about this ” .
Andrey Onobrenko, deputy director of development for policy research at the Kyiv School of Economics, argued that the continued presence of multinational corporations in Russia enables Moscow to continue the war in Ukraine. Russia needs nearly $1 billion per day to supply the invasion forces with soldiers, equipment, and weapons. By continuing operations in Russia, international companies are enabling the Russian war effort.” He said. Companies that still pay corporate taxes and salaries to the Russian government as well as the salaries of nearly 690,000 employees in Russia. They are not neutral players in Russia’s aggressive war against Ukraine.”
In addition to inviting multinational companies to leave Russia, Ukrainian organizations are also requiring companies doing business in Russia to conduct human rights due diligence. Value chain analysis reveals that large investments, joint venture operations, and support services for multinational corporations are continuing apace, particularly in high-risk industries such as oil and gas, consumer goods and banking. Most of these companies are the same companies that claim adherence to the United Nations Guiding Principles on Business and Human Rights (UNGPs) and their call for human rights due diligence. Unfortunately, what we lack is diligence,” explained Richard Staszynski, Executive Director of the Heartland Initiative.
The process of leaving Russia is not easy and can lead to significant costs for some, even the possibility of proactive nationalization of assets by the Russian state. One example includes a multi-billion dollar gas project on Sakhalin Island in the Pacific Ocean. “Russia has taken control of the international consortium behind the giant Sakhalin-2 oil and natural gas project, handing it over to a new Russian entity that would effectively give the Kremlin word on which foreign investors will be allowed to keep their stakes,” mentioned The Wall Street Journal. Two major Japanese energy investors said that the value of their stakes in the Russian natural gas project had fallen by more than half [roughly $1 billion] After Putin’s decree threatened to strip them of their rights.”
Such actions by the Russian authorities constitute a form of “extortion blackmail”, Wrote Ethical Rating Agency founder Mark Dixon in a July report. “We anticipate a tsunami of expropriations or extortionate concessions over the next two months.”
In a globalized world, the Russian invasion of Ukraine has left international companies in a very precarious position. They are understandably criticized for not exiting the Russian market and face the prospect of punishing Russia if they try to leave. This may explain why so many are announced about their exit and then delayed or postponed.
Despite these challenges, those who remain in Russia cannot expect little sympathy and will continue to face pressure to leave. By exiting the Russian market, multinationals could make an important contribution to defunding Putin’s war machine. This is seen as a vital component in the fight to end Moscow’s unjustified invasion of Ukraine. Companies that choose to stay in Russia should consider whether the costs of leaving are higher than the reputational damage to help fund the genocidal war.
Reprinted with permission of the author of over here.
The opinions expressed in this article are those of the author and are not necessarily opinions Kyiv Post.