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Western business works out solutions in Russia

European and American companies continually explore new ways to persist or resume their operations in Russia, despite ongoing political freeze and shaming campaigns

From Istanbul Airport – one of the world's largest airports – one can fly to a range of destinations in Russia, including Moscow, St. Petersburg, Samara, Kazan, and Yekaterinburg. The number of Westerners on these flights is modest. Russia has become a taboo in public discourse, Western foreign ministries advise against all entry, and the travel route is lengthy due to the suspension of air traffic from the EU. One of the easiest routes to Moscow from Denmark is Copenhagen-Istanbul, followed by Istanbul-Moscow. Including waiting time in Turkey, the journey takes around 12 hours.

Numerous Danish companies have scaled back their Russian activities due to sanctions, reputational risks, and pressure from the media, politicians, and shareholders. The same applies to companies in Sweden, Norway, Finland, and the Netherlands. However, some major players have chosen to remain in Russia, where local employees often manage operations independently.

In the United States and among European heavyweights, the business community has adopted a more pragmatic approach than in the Nordic countries. Tens of thousands of Russians continue to work for companies owned by Americans, Germans, French, and Italians. Large foreign companies that temporarily suspended business in Russia due to the Russian invasion of Ukraine are making a comeback. Many foreign brands are now sold under Russian names. Other products, such as Danish Lego bricks, continue to be sold in elegant stores that are now locally owned.

New players – particularly Russian and Chinese ones – have seized the opportunity to gain market share from Western companies that have completely exited the country. A whole new class of Russian businesspeople has emerged. Trade with countries outside of Europe has skyrocketed. A recent international business conference in Moscow, which Russian President Vladimir Putin also attended, primarily saw participation from business people from China, India, Iran, the Arab Emirates, Central Asia, and a number of African countries.

Both the CEO of the Russian major bank VTB, Andrey Kostin, and Putin emphasized at the conference that the world is in the midst of a transition from a unipolar world to a multipolar one. Putin also stated that he welcomes foreign companies working in Russia, whether they are from unfriendly countries (as he calls the Western countries) or friendly ones.

"Many foreign firms and companies said they wanted to continue working in our country despite the pressure from their governments and officials. We only welcome this."

Putin highlighted that Western sanctions have particularly affected the country's automotive and timber industries. Nevertheless, the Russian economy grew by 3.2% in the first 10 months of the year, and a growth rate of 3.5% is expected for the entire year.

Western companies in Russia continue to find new solutions when the EU and the United States introduce new sanctions or regulations that make daily life more difficult, and when Russians, in response, implement counter-sanctions. Foreign companies that wish to leave face challenging times. The Russian government and authorities make it as difficult and expensive as possible to exit the country, a sort of counter measure to the many - more or less reasonable - sanctions and restrictions against Russian citizens and companies abroad.

Not only companies from large Western countries would like the ice wall between East and West to thaw. In both the Faroe Islands and Russia, fishermen and fishing companies have worked to avoid an iron curtain. It is about fish, food, and livelihood. The industry organization for Russian fishing companies recently requested that the Russian government not boycott trade with the Faroe Islands. This move was taken by the Russian Fisheries Agency to position itself slightly better if the Faroe Islands were to choose to end the 46 years old fishing cooperation with Russia following critical voices from several local politicians, as well as the UK and Denmark. It is the first time that a business organisation has publicly advocated for the preservation of business relationships between East and West amidst the tragic war in Ukraine. Just a few days ago, a new fishing agreement was reached.

The American Chamber of Commerce in Russia, AmCham Russia, has continued its operations in Russia since the beginning of the war. AmCham Russia regularly organizes conferences and meetings in Russia, actively advocating for the best possible conditions for foreign companies through dialogues with both Russian and U.S. authorities. At an AmCham conference held at the Carlton Hotel in Moscow last week, the Netherlands-based tea and coffee company Jacobs Douwe Egberts Russia was awarded "Company of the year".

Jacobs Douwe Egberts, known for brands like Gevalia, has decided to cease selling its international coffee and tea brands in Russia, now exclusively offering tea and coffee under Russian names. The company has faced significant pressure from various political parties in the Netherlands to withdraw from Russia, but its leadership has maintained its decision to stay. Like other major companies with well-known brands, the company is a target for activist groups demanding its exit from Russia.

In Moscow, a sense of peace prevails. The Christmas season has taken over the capital with tall Christmas trees adorned with large ornaments and lights, covered in thick snow. Small wooden huts with rabbits, owls, skates, and lights are scattered along Tverskoy Boulevard. Light strings on trees, pillars, arches, and monuments. There are some, but not many, advertisements encouraging Russians to help defend the motherland.

Putin's election campaign has just begun. The TV screen is filled with advertisements and news urging Russians to ask Putin questions via phone, SMS, or online. Everything indicates that Putin will be re-elected. The popularity of the Russian president has increased since the beginning of the war in Ukraine. The hope that Western sanctions would weaken Russia and turn the population against Putin has failed. Instead of dividing the Russian people internally, Western behavior has contributed to uniting them. Wether they support the war or not.

Not only in Russia but also in Ukraine and the West, the number of voices calling for peace and an end to the war is growing. Over the past 19 months, Russia has annexed four new regions in eastern Ukraine. They are included in the Russian weather forecast, and the population in these areas will have access to the ballot boxes during the Russian presidential election. Ukraine's counteroffensive has not yielded the desired results.

The international business community is moving forward. The conclusion is clear. It desires no new Iron Curtain, no world divided into us and them. Now the question is when politicians from all sides will follow suit.


Birgitte Dyrekilde
Umbra Communications and Intelligence

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