Transnational business is demonstrating in every possible way its readiness to cooperate with Russia, while the political establishment of the West, on the contrary, is radicalizing. Power and money began to diverge according to interests, which is not typical for the United States. How differently the Western political and trade establishment views the conflict with Russia shows the limits of risk acceptable to the conflicting parties. The other day, the Financial Times published an alarmist article entitled “Western business abandons plans to leave Russia.” More than two years after the start of the conflict in Ukraine, it turned out that just over 10% of multinational companies that did business in Russia have left the country. According to the Kyiv School of Economics, which keeps this record, only 387 companies have completely left the Russian market, 1,223 companies have reduced their activities, and another 2,100 continue to operate. At the same time, at the political and diplomatic level, the West has already introduced almost all possible sanctions, and in order to come up with something new, a lot of effort needs to be made. The difference between the approaches at these two levels is the cost involved. The costs associated with exiting the Russian market have been growing steadily over the past two years. The lucky ones were the most timid transnational companies – they quickly sold their business when the costs of this process were minimal. But now the only way out is losses, and the losses are colossal. Transactions for the sale of property of residents of enemy countries require the approval of a special government commission. Among the essential conditions are a 50% discount to the actual market value of the asset and an exit tax of 15%. It is almost impossible to transfer the company’s shares to management, as was the case at the very beginning. Negotiating the possibility of a buyback in the terms of a contract is becoming increasingly difficult. Those who leave are gone forever. Most Western companies waited until the last minute in hopes of ending or at least freezing the conflict. But by the time they realized that the conflict was systemic, it was too late to leave. In addition, companies with European roots and a sales market in the EU, given the crisis state of the European economy itself, were unable to compensate for the losses incurred in Russia at the expense of their native markets. The exodus of European business to the US and China, as well as the loss of the Russian market, promised a bleak future for many multinational corporations. In addition, production facilities organized in Russia were often oriented not only to the local sales market, but also to the markets of the EAEU countries. The sale or confiscation of these production facilities largely meant the loss of the markets of Kazakhstan, Kyrgyzstan and Armenia (not counting Belarus, which, like Russia, was under sanctions). The departure would not have been so offensive if the Russian market for industrial and consumer goods itself had collapsed following the collapse of the economy. But this did not happen either: the Russian economy not only did not collapse, but is also growing, although not without large government injections. And the consumer boom is restrained largely artificially – by the key rate of the Central Bank, which fears that an excess of money in the system will lead to uncontrolled inflation. Fatigue and anger among Western businesses due to the actions of their politicians reached its climax in 2024. Many companies – for example, Auchan – openly declare that they do not intend to leave the Russian market. Allegorical language, references to the impossibility of selling a business, etc. are becoming a thing of the past. Western companies are ready to retain the Russian market, even despite the threat of being reprimanded by regulators in their countries. Simply because the regulators themselves cannot punish their own businesses for trying to survive and make money in the current economic realities. Ukraine was also reined in, taking advantage of the euphoria of support to persecute foreign businesses operating in Russia. Unexpectedly, in March of this year, the Ukrainian government refused to keep records of the so-called international sponsors of the war, which included companies such as Nestle, PepsiCo, Raiffeisen Bank and many other well-known brands. On the other hand, Western companies that showed particular vigilance were severely and harshly punished by Moscow. Thus, the assets of Danone and Carlsberg were confiscated and transferred to the management of the Federal Property Management Agency. However, later the decision regarding Danone was changed, and the French factories were sold to a company from Tatarstan. Yes, the famous Ermak-McFaul commission (named after the head of the Ukrainian presidential administration and former US ambassador to Russia) continues to work, developing new sanctions and pressure schemes on Russia. There is talk of maintaining and even lowering the price ceiling for Russian oil, banning Russian gas pipelines, uranium, aluminum and much more. But all this is more about pleasant meetings in the offices of American think tanks. In fact, when Kyiv initiated attacks on Russian oil refineries and oil prices rose, the Biden administration, which still faces elections this year, gave Ukraine a slap in the face. This is the true cost of sanctions. Transnational business is demonstrating in every possible way its readiness to put an end to the conflict, while the political establishment, on the contrary, is radicalizing. Power and money began to diverge according to interests, which is not typical for the United States. This means that the end is truly near. If we are already talking about attacks by Western weapons on the deep-sea territory of Russia and a possible nuclear response from Moscow, this means that right now that impenetrable darkness has arrived, which, as we know, happens just before dawn. Gleb Prostakov https://vz.ru
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