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Economy

Let's Not Be Naive: A French Take On War Profiteering

French firms TotalEnergies and Renault announced they were, over time, suspending their activities and halting production in Russia after being widely criticized for their inaction since the invasion of Ukraine. But leaving Russia doesn’t have the same cost or the same consequences for all companies. And we should calculate in who will profit later.

Photo of a shadowy silhouette outside  a ​currency exchange office in Moscow on March 2.

At a currency exchange office in Moscow on March 2.

David Barroux

-OpEd-

PARIS — Companies that decide to cut ties with Russia are not all in the same boat. Some like Apple — which can no longer deliver iPhones to the country isolated from the rest of the planet — only take minimal risks. They forego limited and temporary revenues, hoping that the day will come when the war stops and Russia finds some semblance of normalcy, and their business can resume.

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It is not so simple for several of the largest French companies, which were among the very first foreign investors in post-Soviet Russia and control numerous assets in the country. These multinationals that have invested billions (from retail group Auchan to energy giant TotalEnergies, automaker Renault and Société Générale bank) have much more to lose by breaking with Vladimir Putin.


In the short term, they deprive themselves of a profitable market, and of growth potential in the medium term. If Russia ends up regaining a positive reputation, those who have made the decision to leave will never be able to completely come back. Sanctions are not permanent. Departures are.

Photo of people walking by an Auchan supermarket in Moscow\u200b

An Auchan supermarket in Moscow

A. Savin

Short-term actions, long-term uncertainty

In the current context, these decisions, even if they may seem hasty to some, are understandable. Public opinion can be a bit too ready to call any company still active in Russia an immoral “war profiteer” when these companies sometimes play a crucial role for us (like TotalEnergies), for millions of Russian citizens (like Auchan or Danone) or for thousands of employees (like Renault). But beyond this backlash, staying active in a country that will be completely isolated is not easy.

Who will the benefits go to then?

Supply chains have been disrupted, local revenues are threatened and the Russian adventure could cause cash losses likely to weaken groups globally. When facing uncertainty, it may be appropriate to take drastic actions on the spot, especially since even in the event of peace, Russia has become such an unpredictable partner that it will be difficult to continue to invest there.

Still, let's not be naive. There’s no doubt that the assets that our companies are forced to give up or sell will be seized by the Russian state — or sold off to the oligarchs! And tomorrow, when time has allowed wounds to heal, will Europe continue to impose sanctions on Moscow or will it open its doors wide again to Russian products? If that happens, will the benefits go to those who developed them, or someone else? The real war profiteers may not be who we think they are.

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Economy

Europe's Winter Energy Crisis Has Already Begun

in the face of Russia's stranglehold over supplies, the European Commission has proposed support packages and price caps. But across Europe, fears about the cost of living are spreading – and with it, doubts about support for Ukraine.

Protesters on Thursday in the German state of Thuringia carried Russian flags and signs: 'First our country! Life must be affordable.'

Martin Schutt/dpa via ZUMA
Stefanie Bolzen, Philipp Fritz, Virginia Kirst, Martina Meister, Mandoline Rutkowski, Stefan Schocher, Claus, Christian Malzahn and Nikolaus Doll

-Analysis-

In her State of the Union address on September 14, European Commission chief Ursula von der Leyen, issued an urgent appeal for solidarity between EU member states in tackling the energy crisis, and towards Ukraine. Von der Leyen need only look out her window to see that tensions are growing in capital cities across Europe due to the sharp rise in energy prices.

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In the Czech Republic, people are already taking to the streets, while opposition politicians elsewhere are looking to score points — and some countries' support for Ukraine may start to buckle.

With winter approaching, Europe is facing a true test of both its mettle, and imagination.

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