Burger King still likes Moscow

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WASHINGTON, March 12, (AP): A shrinking number of well-known companies are still doing business in Russia, even as hundreds have announced plans to curtail ties. Burger King restaurants are open, Eli Lilly is supplying drugs, and PepsiCo is selling milk and baby food, but no more soda. The pace of businesses exiting Russia accelerated over the past week as the deadly violence and humanitarian crisis in Ukraine worsened, and as Western governments ratcheted up economic sanctions to punish Russia for its two-week-old invasion.

Major oil companies BP and Shell walked away from multibillion-dollar investments. McDonald’s and Starbucks stopped serving customers. The companies that still have a presence in Russia say they have franchise owners or employees to consider; they don’t want to punish Russians by taking away food or medicine; or they provide software or financial services for Western businesses that aren’t easy to replace. “It’s a business calculation. On the stay side: How much revenue do they earn in Russia? Do they provide an essential service?” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics in Washington.

“Each day that passes, though, calculations change. Sanctions against Russia are likely to last a long time, along with rising revulsion.” Some companies in lower-profile industries like agriculture have been able to fly under the radar and avoid the type of social media pressure that had been directed at brands such as McDonald’s, Uniqlo and Starbucks, before they decided to cut ties this week, if only temporarily. But in this era of hyper-awareness that some customers and even employees have about the positions companies take on social and moral issues, those still doing business with – or in – Russia are putting their reputations on the line. Take Japanese clothing chain Uniqlo, which drew negative attention after the CEO of its parent company told the Nikkei newspaper in a story published Tuesday that the reason to keep nearly 50 Russian stores open was that: “clothing is a necessity of life.”

By Thursday, Uniqlo said it would close the stores. “There’s potentially a big downside of companies to be on the wrong side of this,” Lovely said. Many large multinationals didn’t flee Russia at the start of the war. But that changed as the invasion led to increasing violence – and more than 2 million refugees fleeing Ukraine. There are now more than 300 companies that have curtailed operations in Russia, according to a list maintained by a team at Yale. Apple stopped shipments. Google paused ad sales. Automakers halted production. Hollywood studios ceased releasing films, and Netflix stopped streaming. Some of these decisions were driven by the need to comply with the sanctions Western governments leveled at Russia; others came because of supply chain issues or the fear of a hit to their reputations. Sanctions have already taken a toll on Russia’s economy and global trade.

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