Wednesday, July 6th, 2022

Businesses are cutting ties with Russia

Businesses are cutting ties with Russia

Many of the announcements sprang from Western companies attempting to comply with U.S. and European sanctions on Russia, which have banned a range of trade in recent days. Other companies attributed their moves to disgust over the Kremlin’s attack on a sovereign neighbor.

Some of the relationships have survived big ups and downs over the past 30 years or more, but they “just broke in the last week,” said Nick Tsafos, an expert on energy and geopolitics at the Center for Strategic and International Studies think tank. “Companies are basically saying, we don’t want to be part of this.”

The corporate announcements were part of a broad economic splintering as banks raced to cut financial transactions with Russian counterparts to comply with Western sanctions and as a growing number of governments announced new steps to isolate Russia.

Britain added to a long list of economic punishments it has already adopted by banning Russian-owned ships from docking in U.K. ports. “Given Putin’s action in #Ukraine I’ve made clear these vessels are NOT welcome here,” Grant Shapps, Britain’s transport minister, tweeted.

Even Switzerland suspended its centuries-old policy of neutrality and isolation to say it would join the European Union in closing its airspace to Russian flights and impose sanctions on Russian President Vladimir Putin and other officials.

“We are in an extraordinary situation where extraordinary measures could be decided,” President and Foreign Minister Ignazio Cassis told reporters Monday.

JPMorgan Chase Chairman and CEO Jamie Dimon said banks were talking to the U.S. government to understand the new sanctions, which he said could have “unintended consequences.”

“War doesn’t always follow the path you want. Financial sanctions don’t always follow the path you want,” Dimon told Bloomberg TV on Monday. “People should be very thoughtful how they go about these things.”

“I’m an American patriot and we’re going to do what the American government tells us to do,” he added.

The exodus has been starkest in the energy sector, with Shell on Monday becoming the third major oil and gas company to announce plans to leave Russia.

The London-headquartered company said it intends to “exit” stakes in joint ventures it shares with Russian gas giant Gazprom, estimating the value of these stakes at $3 billion.

These include Shell’s 27.5 percent interest in Sakhalin-2, a large oil and gas project located on Sakhalin Island off Russia’s Pacific coast. Shell and other oil majors have been pursuing large projects on the island since the 1990s.

Shell also plans to dump its stakes in Siberian energy projects, and to end its role providing financing for Nord Stream 2, a constructed but still inactive natural gas pipeline from Russia to Europe, whose activation Germany froze last week to punish Russia.

“We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security,” Shell’s chief executive officer, Ben van Beurden, said in an emailed statement. “We cannot — and we will not — stand by.”

“In discussion with governments around the world, we will also work through the detailed business implications, including the importance of secure energy supplies to Europe and other markets,” he added.

BP and Norway’s state-controlled oil company announced similar departures on Sunday. It isn’t clear whether any of the companies will find buyers for their holdings or simply walk away from them.

General Motors, meanwhile, said it will suspend vehicle exports to Russia until further notice. The company sells about 3,000 vehicles in Russia a year, mostly via exports from the United States.

“Our thoughts are with the people of Ukraine at this time,” GM said in a statement. “The loss of life is a tragedy and our overriding concern is for the safety of people in the region.”

A GM spokesman said the decision was “due to a number of external factors, including supply chain issues and other matters beyond the company’s control.”

“For cargo already on the water, we will do our utmost to deliver it to its intended destination,” the company said, adding it would strive to protect perishable cargoes such as groceries and pharmaceuticals.

The German manufacturer Daimler Truck said it was immediately suspending all business activities in Russia until further notice, including its supply of civilian truck components to the Russian manufacturer Kamaz.

Daimler and Kamaz also have a joint venture making nonmilitary Mercedes-Benz trucks and cabins.

“We are deeply shocked by the military violence in Ukraine and very concerned about the threats to peace and stability in Europe. We clearly stand for peaceful global cooperation and categorically reject any form of military force,” Martin Daum, chairman of Daimler Truck, wrote in a message to employees Monday.

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