Eurasian firms see Russia sanctions as big biz chance


Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin. Turkey has stayed engaged in Russia’s economy despite Western sanctions. Photo: AFP / Sergey Guneev / Sputnik

As sanctions have their intended effect – getting companies from the US and allied countries to leave Russia – there’s also an unintended effect as competitors from countries led by India, Turkey and China pick up the slack.

Despite the bad news, Russians can justify harboring hope based on the actions of some countries that do not support the sanctions and are increasing their involvement in Russia’s economy.

Anecdotal evidence for this includes such hints of ambiguity as a rhetorical question from US national public radio network NPR (April 13, 2022): The West is hammering Russia with sanctions. But, do they work?

Nearly 300 American, European, East Asian and other foreign companies have completely stopped doing business in Russia since the invasion of Ukraine, according to a survey conducted by the Yale School of Management.

More than 470 have suspended or scaled back their operations and more than 110 others have postponed new investments.

Prominent firms that have either abandoned or suspended their businesses in Russia include oil companies BP, Exxon and Shell; aircraft manufacturers Airbus and Boeing; telecom equipment vendors Ericsson and Nokia; and tech companies Alphabet (Google), AMD, Apple, Cisco, Global Foundries, Intel, Nvidia, Samsung, TSMC and Qualcomm.

Will this cripple the Russian economy? Some people think so. Investment Monitor published an article entitled: Taiwan’s semiconductor ban could spell catastrophe for Russia” (March 18, 2022).

More about this later. The Mayor of Moscow, Sergey Sobyanin, blogged that in his city, According to our estimates, about 200,000 people are at risk of losing their jobs.

On April 24, Jeffrey Sonnenfeld and his research team at the Yale School of Management published an updated list of companies that have halted or curtailed their operations in Russia. Sonnenfeld is senior associate dean for leadership programs at the school and president & CEO of the Yale Chief Executive Leadership Institute (CELI). 

Sonnenfeld and CELI Director of Research Steven Tian are 

 Every corporation with a presence in Russia must publicly commit to a total cessation of business there.”

Apartheid comparison

They compare their effort to the boycott of apartheid South Africa: The corporate exodus contributed to the end of apartheid, and was a remarkable display of the power that companies have. When they’re courageous enough to use that power for good, it can help topple repressive governments.

Their survey ranks companies as follows:

  • Grade A: Withdrawal – Clean break. Companies totally halting Russian engagements or completely exiting Russia (299 companies)
  • Grade B: Suspension – Temporarily curtailing most operations while keeping options open for return (364 companies)
  • Grade C: Scaling Back – Reducing some significant operations but continuing others (112 companies)
  • Grade D: Buying Time – Postponing new investments while continuing substantive business. (143 companies)
  • Grade F: Digging In – Defying demands for exit or reduction of activities. Companies that are continuing business-as-usual in Russia (181 companies)

This points to tough times ahead for Russia. But before seeing it as an unmitigated negative, we need to add another category:

  • Grade E: Eurasia – Indian, Turkish and Chinese companies seeking to take advantage of the mass withdrawal of Western and East Asian competitors from the Russian market.

Where Yale and many other Westerners see moral certitude, the non-Western world tends to see hypocrisy and opportunity. Why?

Conflicting viewpoint

The  research project conducted by the Watson Institute for International and Public Affairs at Brown University concludes that:

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