Major US companies leave Russia amid Ukraine conflict

Hundreds of large American companies have suspended their operations in Russia, amid a corporate exodus from the country over its military operation in Ukraine.

Popular American brands such as McDonald’s, Coca-Cola and Disney are among more than 100 companies across nearly every industry that have severed their business relationships with Russia or scaled them back in significant ways since 24 February when Russian President Vladimir Putin ordered a military operation in Ukraine.

Putin said that Russia was left with no other choice but to act after weeks of shelling of the Donetsk and Lugansk People's Republics (DPR and LPR) by Ukrainian forces. He thus ordered Russian forces to demilitarize Ukraine.

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In response to the Russian move, the US and its allies have imposed strict sanctions and export controls on Moscow.

Now, companies are considering the challenge of safely transporting goods through the region and the financial complications stemming from those sanctions and restrictions.

“Right now there’s a huge cost to doing any business with Russia,” said Jim Angel, a professor at the Georgetown McDonough School of Business. “There are political costs, social costs and economic costs.”

“It’s extraordinarily hard to do business in rubles if you’re an American company, given the various sanctions involved,” Angel said. “You may not be able to get funding to your Russian operations or to take profits out. Being able to transfer money becomes so problematic that many businesses are saying, ‘We can’t do business this way. We’ll shut down.’”

As of Wednesday, over 300 companies have partially or fully withdrawn from Russia, according to a list compiled by Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management.

Among the US corporations halting their operations, McDonald’s has one of the largest footprints. The fast-food giant has on its payroll 62,000 Russian workers at nearly 850 stores.

On Tuesday, the Coca-Cola Co. also said it would halt all of its business operations in Russia. Shortly afterward, PepsiCo Inc. announced it would suspend its soft drink sales and capital investments in Russia.

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Meanwhile, Visa and Mastercard, two American multinational financial services corporations, also announced Saturday that they would be suspending operations in Russia.

Visa said in a statement that cards issued in Russia would not work abroad as well as foreign issued cards in Russia.

Mastercard also said cards issued by Russian banks will no longer be supported by its network. Also, any Mastercard issued outside the country would not work at Russian merchants or ATMs, the company added.

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