‘Economic war’


Which companies have pulled out of Russia — and which have not?

By David Leonhardt and Ian Prasad Philbrick


A line for A.T.M. of Alfa Bank in Moscow last month.Victor Berzkin/Associated Press
‘Economic war’
It’s hard to think of a precedent: The British government yesterday ordered Chelsea — one of the world’s most glamorous soccer clubs and Europe’s defending champion — to stop conducting almost all its business operations.
Chelsea can no longer sell tickets or sign players. A team-owned hotel near Chelsea’s West London stadium stopped taking reservations, while the official souvenir store abruptly closed. “Shoppers, who had been filling baskets with club merchandise, were told to put everything back and leave,” our colleague Tariq Panja wrote.
These moves were the latest part of an international campaign to damage Russia’s economy and isolate Russian elites. Chelsea’s owner, Roman Abramovich, is close to Vladimir Putin and is one of seven oligarchs whose assets Britain froze yesterday.
Combined, the sanctions — by Britain, the U.S., the E.U. and others — have been more aggressive than many analysts expected. “We’re in totally new territory,” Nicholas Mulder, a historian of sanctions, told The Atlantic. “The speed, the sweep and the size of the sanctions, or the size of the targets of the sanctions — those three factors make them extraordinary.”
The sanctions are unlikely to alter Putin’s military strategy, at least in the short term: Russia seems committed to taking over Ukraine, almost regardless of the human cost. The Russian military has stepped up aerial bombardments across Ukraine, and has continued to attack civilians in an attempt to demoralize the population.
But the sanctions do have the potential to create longer-term problems for Putin’s regime. A Kremlin spokesman has described them as “economic war.” Among their effects:
They have cut off Russian banks from large parts of the international financial markets, which in turn will make it harder for Russian families and businesses to take out loans, use credit cards and make purchases.The list of Western companies that are pulling out of Russia — like McDonald’s and Starbucks — yesterday grew to include Goldman Sachs, JPMorgan Chase and Uniqlo. These shutdowns will reduce economic growth in Russia and may cause public frustration.Some companies have stopped exporting goods to Russia, which will complicate the manufacturing and sale of cellphones, cars and other technology-heavy items.Russian officials are sufficiently fearful of the effect on stock prices that they halted trading on Moscow’s stock market 11 days ago and have not yet resumed it.The economic damage has caused the value of Russia’s currency, the ruble, to decline about 40 percent since the war began, effectively increasing the price of any item that comes from outside Russia. “That immediately raises the cost of essentials for everyone, and will be felt most sharply by the poorest,” Patricia Cohen, The Times’s global economics correspondent, told me yesterday.

A closed Louis Vuitton shop in Moscow.Maxim Shipenkov/EPA, via Shutterstock
Signs of discontent
The history of sanctions suggests that the world probably needs to impose measures that hurt ordinary Russians if it wants to put political pressure on Putin. “Smart” sanctions, targeted at elites, are an important part of the strategy but by themselves would likely be too narrow to matter to change Putin’s domestic standing.
Even the current set of sanctions may fail to help Ukraine or may even lead Putin to lash out in new ways. (Yesterday, he suggested that he might nationalize the assets of Western companies that pull out of Russia.) Historically, sanctions have been at least partly successful about one-third of the time they have been tried, Mulder told The Atlantic’s Annie Lowrey.
But because Ukraine’s allies seem unwilling to send troops, sanctions seem their best hope for confronting Putin. And the sanctions do seem to be having some effect already. Oleg Deripaska, a prominent billionaire (and among those whom Britain sanctioned yesterday), recently said that he expected the country to experience an economic crisis lasting at least three years. Already, there are signs that the turmoil may be aggravating Russian public discontent that already existed about the war.
“Russian public opinion is becoming such a problem that Putin is effectively fighting two wars: one in Ukraine, and one at home,” Sam Greene, a Russia scholar at King’s College London, wrote this week. Erica Frantz, an expert on dictators at Michigan State University, told our colleague Max Fisher, “The indicators of elite discontent that we have seen thus far are unusual in Putin’s Russia and should therefore be taken seriously.”
Still in Russia
It’s worth mentioning that there are at least two major categories of sanctions that the world has not imposed on Russia.
One, Europe continues to buy large amounts of oil and natural gas from Russia, and energy is easily Russia’s biggest source of revenue. Europe is so reliant on Russian energy that a full embargo could cause large price increases, notes Mark Landler, The Times’s London bureau chief.
Two, some large companies are continuing to operate in Russia, as the Popular Information newsletter has reported. Hyatt and Marriott have continued running hotels there. Citi, Bridgestone Tire and Philip Morris have also continued their operations. And Halliburton has continued to operate oil fields in Russia despite a specific appeal from a top Ukrainian official.
“Always unfortunate in so many ways for so many people,” Jeff Miller, Halliburton’s chief executive, said in January, about the prospect of a war. “But from a business perspective, we’ve managed these sorts of things up and down for, I hate to say, nearly 100 years.”
We asked Hyatt, Marriott, Halliburton and other companies to explain their decisions to continue operating in Russia, and they did not do so. Several have expressed shock or horror about the war.

Yelena Lavinska mourns her fiancé, Mikhailo Pristupa, a Ukrainian soldier, in Kyiv, Ukraine.Lynsey Addario for The New York Times
The State of the War
Russian missiles struck at least three cities in western and central Ukraine, and there were reports of fierce fighting on the outskirts of Kyiv.Russia continued its attack on Mariupol, where bodies are being buried in trenches. Satellite images show widespread damage.Russia didn’t capture major cities in the past week, but its forces have fought their way into smaller cities. Yesterday they encircled Chernihiv, which is cut off from the national power grid and running out of burial space.President Biden will call for suspending normal trade relations with Russia, which would raise tariffs for many Russian products.

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