Corporate Flight From Russia Multiplies Putin’s Pain

As unprecedented Western economic sanctions send the Russian economy into free fall, a series of major Western companies announced this week that they plan to withdraw from the country, amplifying the strain on the Russian economy and deepening Moscow’s isolation.

On Tuesday, global shipping giants MSC Industrial Direct and Maersk announced they would suspend container shipping to and from Russia, kneecapping the country’s ability to access global markets. FedEx, UPS, and DHL have also halted shipments to Russia. Apple is suspending all online sales in Russia while Visa and Mastercard, credit card service companies, have severed ties with multiple Russian financial institutions that have been hit with Western sanctions. Both companies also said they would send $2 million each to support the war’s humanitarian crisis.

Although Western governments have provided sanctions carve outs for the energy industry to shield global supplies and prices, energy giants BP and Royal Dutch Shell both announced plans in recent days to cut ties with state-owned energy companies in Russia, the world’s third largest oil producer, while the Italian energy group Eni announced plans to sell its share in the Blue Stream pipeline between Russia and Turkey. France’s TotalEnergies said it will not make new investments in Russia but is staying put for now.

BP’s decision to abandon its almost 20 percent share in Russian state energy company Rosneft is expected to cost the company up to $25 billion. “Russia’s attack on Ukraine is an act of aggression, which is having tragic consequences across the region,” said BP chairperson Helge Lund in a statement. “BP has operated in Russia for over 30 years, working with brilliant Russian colleagues. However, this military action represents a fundamental change.”

On Tuesday, commodities behemoth Glencore announced it was “reviewing” its business activities in the country, including its investments in En+ and Rosneft. 

Russia’s invasion of Ukraine in the early hours of Thursday morning has prompted companies to rethink their presence in the country and others to cut ties with Russia as an act of protest at the war. Both the Walt Disney Co. and WarnerMedia have announced they will temporarily suspend screenings of their movies in Russia, and Netflix canceled a spate of shows filming in the country. At least 11 U.S. states have imposed bans on the sale of Russian-made alcohol as a mark of protest, though only a fraction—1.3 percent—of total vodka imports come from Russia, the Wall Street Journal reported. 

The sporting world is also giving Russia the cold shoulder—with soccer associations FIFA and the Union of European Football Associations suspending the Russian national teams and clubs from international competitions. On Sunday, the International Judo Federation said it was revoking Russian President Vladimir Putin’s status as honorary president, and World Taekwondo said it was stripping the Russian leader of his black belt. The International Skating Union announced it was banning Russian athletes from its upcoming world championships. 

In a bid to stanch the bleeding, Russian Prime Minister Mikhail Mishustin announced that a presidential decree was being drafted, which would impose capital controls temporarily impeding the ability of foreign investors to sell Russian assets. Announcing the move, Mishustin accused Western companies of bowing to “political pressure” to withdraw from Russia.