The Washington Post - USA (2022-05-17)

TUESDAY, MAY 17 , 2022. THE WASHINGTON POST EZ SU A

war in ukraine

BY MISSY RYAN

Russia may have a muted re-
sponse to Finland and Sweden’s
decision to seek NATO member-
ship despite earlier threats of
retaliation, President Vladimir
Putin suggested on Monday, as
the Kremlin reckons with the
transformation of Europe’s secu-
rity order triggered by its inva-
sion of Ukraine.
Putin said Finland and Swe-
den’s entry into NATO did not
represent an imminent danger to
Russia, even though their acces-
sion, if finalized, would add hun-
dreds of miles to Russia and
NATO’s shared border. But, the
Russian leader cautioned, the
same would not be true if NATO
staged a military buildup in the
two countries.
“Russia has no problems with
Finland and Sweden, and in this
sense, expansion at the expense
of these countries does not create
an immediate threat for us,”
Putin said in televised remarks.
“But the expansion of military
infrastructure into this territory
will certainly provoke our re-
sponse.”
“What it will be, we will look at
based on the threats that will be
created for us. That is, problems
are created out of thin air,” he
said, blaming the United States
for the Nordic nations’ historic
shift. “We will respond accord-
ingly.”
Putin spoke as Sweden’s gov-
ernment on Monday announced
it would join neighboring Fin-
land in launching a NATO bid, a
process that alliance officials
hope will be concluded in com-
ing months. Prime Minister
Magdalena Andersson said a
large majority in Sweden’s par-
liament supported joining
NATO, ending a decades-long
position outside the 30-member
bloc. “We are leaving one era
behind us and entering a new
one,” Andersson said.
The prospect of membership
for Finland and Sweden, which
experts say punch above their
weight in military might, defies
years of warnings from Moscow,
where some senior officials in-
cluding former president Dmitry
Medvedev have suggested that
Russia could respond by posi-

tioning nuclear and hypersonic

weapons along the Baltic Sea.

Putin’s more measured re-

sponse may reflect the reality of

how the conflict in Ukraine has

depleted Russia’s military at the

same time it is facing the pros-

pect of lasting economic damage

from global sanctions.

The Russian leader’s offensive

appeared to secure a victory on

Monday when Ukraine’s military

command said it would end com-

bat operations in the coastal city

of Mariupol, where forces loyal

to Kyiv have attempted to hold

back a prolonged Russian as-

sault, and focus instead on evac-

uating the hundreds of fighters

that had been sheltering in a

ruined steel plant.

Ukraine’s deputy defense min-

ister, Anna Malyar, said more

than 260 soldiers have been

transported to Russian-con-

trolled territory, including 53

who were “seriously wounded”

and taken to a hospital. Moscow

and Kyiv will broker a prisoner

swap to secure their release, she

said, and efforts are underway to

rescue troops trapped in the

plant.

Finland’s decision to join

NATO, meanwhile, marks the

culmination of a gradual deepen-

ing of Finnish-NATO ties, said

Mikko Hautala, Finland’s ambas-

sador to the United States, point-

ing to Finland’s status as an

official NATO partner as part of

“Partnership for Peace” in the

1990s. Finland, like Sweden, has

long conducted joint exercises

with NATO and sent troops to

NATO-led missions in Afghani-

stan and other areas.

“Rather than seeing this as a

kind of a leap of a neutral

country suddenly into NATO,

rather it’s a last step on a long

road,” he said in an interview.

Western officials expect that

the Nordic nations will provide

an important security boost, par-

ticularly in northern Europe,

where the small and modestly

defended Baltic nations have

long worried that they might

become Moscow’s next target.

Finland’s defense expenditure

as a share of GDP is the largest in

Europe, at 2.3 percent. Finland

has a formidable artillery force

and is buying 64 F-35 stealth

fighters.

Hautala said growing support

in Finland for NATO member-

ship was not driven by fear but

by a feeling the country needed

to acknowledge the changing

realities in Europe given Russia’s

willingness to use force against a

neighboring state.

“ We don’t see any direct mili-

tary threat from Russia right

now. But there’s a need to be

prudent here,” he said. “Our goal

is to prevent any speculation

about our position, our security.”

Finnish President Sauli Ni-

inisto’s call with Putin on Satur-

day to inform him of Finland’s

decision occurred “without ag-

gravations,” the Finnish govern-

ment said.

As Sweden announced its own

accession bid, Deputy Russian

Foreign Minister Sergei Ryabkov

lashed out at both countries,

going further than Putin in call-

ing their moves “another serious

mistake with far-reaching conse-

quences.”

“The general level of military

tension will increase, and there

will be less predictability in this

area,” Ryabkov said at a news

conference.

The Swedish government said

it would not bow to Russian

coercion.

“As we see it, it’s not their

decision to take if we are joining

or not. It’s a sovereign Swedish

decision,” Karin Olofsdotter,

Sweden’s ambassador to the

United States, said in an inter-

view.

“They may try to influence us

or intimidate us, which they have

to a certain degree, but we are

not deterred,” she said. “So we

are prepared. We are strong. We

have reinforced our security also

in the short term. ... We’ve seen

this coming.”

At the same time, Olofsdotter

said there were no plans to

deploy NATO forces in either

Nordic country.

“We are joining NATO. We are

going all in,” she said in an

interview. “But there’s no discus-

sion of posting troops in Sweden

or Finland. We are really taking

care of our own security as much

as we can .”

Hautala, a fluent Russian

speaker who served as the No. 2

official at the Finnish Embassy in

Moscow from 2011-2012 and then

as ambassador from 2016-2020,

said he did not expect Russia to

back down from its maximalist

goals in Ukraine despite the

military struggles there, mean-

ing a long and likely punishing

conflict in the heart of Europe.

“I don’t think there’s any

chance that [Putin] would will-

ingly accept any kind of solution

like before the war. I don’t think

Russians have given up on their

fundamental goals, which is to

control all of Ukraine,” Hautala

said. “They may adjust their

plans given the situation of the

resources and other risks. But

still, I think this war has deeper

roots.”

Hautala’s observations stem

not only from his diplomatic

duties — he also served as Niinis-

ito’s foreign policy adviser and

has met with Putin — but from

more quotidian moments.

While serving in Moscow,

Hautala’s son came home from

his Moscow preschool saluting

and marching in the Russian

military style. The diplomat

thought it was a little curious.

When he learned the children

would celebrate Russia’s May 9

Victory Day by dressing in Red

Army or contemporary military

uniforms, he was more con-

cerned. He and his wife kept

their son home. That none of the

other parents raised concerns

about their 3-year-olds taking

part in that kind of display, he

concluded, said something about

Russian society.

After years of eroding trust in

institutions, Hautala said, “most

Russians want to believe in state

propaganda and they want to

feel proud of their military

might.”

If Russians are looking for

redemption in the restoration of

Moscow’s historic might, that

may give Putin more leeway to

pursue his goals in the war.

“Moscow has a long cherished

idea of Western decline and rise

of a multipolar order in which

Russia is one of the key players,”

he said. “Taking control of

Ukraine is [an] essential part of

the story.”

Mary Ilyushina in Riga, Latvia, and

Annabelle Timsit in London

contributed to this report.

Nordic moves draw more muted response from Putin

RONI REKOMAA/BLOOMBERG NEWS

Finnish troops conduct training exercises in Niinisalo. Finland’s defense expenditure as a share of GDP is Europe’s largest, at 2.3 percent.

As Finland and Sweden

embrace NATO, Russia

assesses security arena

BY AARON GREGG,

ANNABELLE TIMSIT

AND JONATHAN EDWARDS

McDonald’s is done with Rus-
sia after more than three decades
of investment, concluding that
doing business there is “no lon-
ger tenable” as the war in
Ukraine stretches into a third
month.
The fast food giant’s decision
to seek a local buyer for hundreds
of Russian stores marks the first
time it has given up on a major
international market, chief exec-
utive Chris Kempczinski noted
Monday in a letter addressed to
the “Global McFamily.” But it’s
“impossible to ignore the human-
itarian crisis caused by the war in
Ukraine,” he said.
The moves underscore the
o ther-shoe question for the hun-
dreds of multinationals that have
suspended or curtailed opera-
tions in response to Moscow’s
Feb. 24 invasion of its neighbor —
whether to sever ties altogether.
Meanwhile, many of the compa-
nies that have maintained opera-
tions — including several that
have cited humanitarian reasons
such as providing food — have
been swept up in a global back-
lash as consumers and investors
register their shock at the war-
time devastation and reports of
atrocities.
Renault, which has been called
out by name by Ukrainian Presi-
dent Volodymyr Zelensky, said
Monday that it sold its 68 percent
stake in Russia’s biggest auto-
maker, AvtoVAZ, to the govern-
ment. The sale price was 1 ruble,
according to Reuters, albeit with
a six-year option to buy back the
shares; last year, the French car-
maker valued its Russian assets
at nearly $2.3 billion.
At the same time, a blistering

regimen of international sanc-

tions has made the country a

costly and troublesome place to

do business. McDonald’s leader-

ship concluded that continuing

to operate in Russia no longer

made good business sense and

would damage its brand. The

Golden Arches, one of the most

recognizable logos in the world,

is a $180.8 billion marvel of

globalization: It had more than

40,000 stores worldwide at the

end of 2021 and records more

than $23.2 billion a year in sales.

It joins more than 900 compa-

nies — including Ikea, Intel,

Uber, Adidas and BP — that made

“principled exits” from the coun-

try, as described in a widely

followed list from Yale University.

The ranks of those “buying

time” or “digging in” has dropped

to 371, illustrating how financial

and reputational liabilities are

stacking up as the conflict grinds

on, according to Jeff Sonnenfeld,

the Yale professor behind the list.

He called McDonald’s a “late-

mover” in the rush to exit the

country. He also said the compa-

ny’s departure flies in the face of

the longtime “Golden Rule of

Diplomacy,” which holds that no

two countries with a McDonalds

would ever fight each other.

Russia and Ukraine had a wide

array of overlapping business re-

lationships when the war started.

Now there’s pressure to make a

choice or risk being seen as

financing a rogue state. McDon-

alds “could not serve Russian

customers and buy from Russian

suppliers, but they were still

sending cash into Putin’s war

machine by paying salaries,” Son-

nenfeld said in an email to The

Washington Post.

The decision to sell its Russia

stores winds down a significant

chapter for the Chicago-based

company, which opened its first

store in Moscow in January 1990

— two months after the fall of the

Berlin Wall and less than two

years before the collapse of the

Soviet Union. Tens of thousands

of Russians lined up for the

opening, which many remem-

bered as a seminal moment in

their lives in interviews decades

later with The Post.

By the time the Ukrainian war

began, McDonald’s had roughly

62,000 employees in 850 commu-

nities, according to a March 8

statement from the company. Un-

like Burger King, which franchis-

es its restaurants to local opera-

tors, McDonald’s operates about

84 percent of its stores there,

according to a company disclo-

sure. Russia and Ukraine collec-

tively accounted for 9 percent of

its revenue last year.

It’s not yet clear who will

acquire the Russian restaurants

— though government officials

have suggested that domestic

competitors should take McDon-

ald’s place.

The sold-off restaurants could

form the backbone of something

new or effectively function as a

Russian knockoff version —

though K empczinski was ada-

mant that the future owner was

not to use the McDonald’s name

or serve its menu. Moscow re-

gional governor Andrey Voroby-

ov, in a statement on Telegram

posted from the state-owned Tass

news agency, said the authorities

“will support the McDonald’s res-

taurant chain when it passes

under the control of Russian

partners.”

After the company temporarily

closed its Russian stores in

March, a local alternative, Uncle

Vanya, applied to trademark a

logo that looked strikingly simi-

lar to McDonald’s emblematic

Golden Arches — appearing to

lay the groundwork for a take-

over of existing shuttered Mc-

Donald’s restaurants.

Vyacheslav Volodin, speaker of

Russia’s lower house in parlia-

ment, said at the time that Rus-

sian brands should take over

McDonald’s locations. “They an-

nounced they are closing. Well,

okay, close. But tomorrow in

those locations we should have

not McDonald’s, but Uncle Van-

ya’s,” he said. “Jobs must be

preserved and prices reduced.”

Josh Gerben, a D.C.-based pat-

ent and trademark lawyer, says it

remains to be seen whether Mc-

Donalds’ departure is going to be

a voluntarily sale as opposed to a

forced nationalization. The Uncle

Vanya trademark was later with-

drawn, he says, but it really

doesn’t matter because Russian

authorities in general are not

recognizing U.S. trademark laws

or government sanctions.

“Is Russia going to allow an

orderly transition to take place,

and not just seize the business,

seize the trademarks?” Gerben

said. “Up until now we’ve seen a

lot of propaganda, and a lot of

posturing from the Russian gov-

ernment. Now we’re going to see

if the bark has any bite.”

Renault is further along in its

plans to depart the country, hav-

ing already agreed to sell its

assets to the government.

Russia is the company’s sec-

ond-largest market, according to

Bloomberg News. In March, Luca

de Meo, chief executive of Re-

nault, warned that leaving the

country would create a “very

complex situation” by eating into

the company’s profits and sales,

Reuters reported.

Now the automaker will sell all

of its shares in Renault Russia to

the Moscow city government —

and its nearly 68 percent stake in

Russian automaker AvtoVAZ,

which produces the Lada car, to a

Russian federal agency, accord-

ing to a news release.

“We have taken a difficult but

necessary decision; and we are

making a responsible choice to-

wards our 45,000 employees in

Russia, while preserving the

Group’s performance and our

ability to return to the country in

the future, in a different context,”

de Meo said in a news release.

Russia’s Ministry of Industry

and Trade also announced that

the “Russian assets of the Re-

nault Group” would “become

state property.”

Z elensky had criticized the

company by name in a speech

before the French Parliament in

March, The Post reported.

“Renault, Auchan, Leroy Mer-

lin and others. They must cease

to be sponsors of Russia’s mili-

tary machine, sponsors of the

killing of children and women,

sponsors of rape, robbery and

looting by the Russian army,”

Zelensky said.

There is a possibility that ei-

ther company could reenter Rus-

sia at a later date.

K empczinski ended his letter

Monday by noting it was “impos-

sible to predict” what the future

might hold.

Colby Itkowitz, Andrew Jeong and

Isabelle Khurshudyan contributed to

this report.

McDonald’s s eeks to sell stores in Russia after more than 30 years there

AGENCE FRANCE-PRESSE/GETTY IMAGES

I n a letter addressed to the “Global McFamily,” McDonald’s chief executive Chris Kempczinski s aid it’s

“impossible to ignore the humanitarian crisis caused by the war in Ukraine.”

Chain joins more than

900 companies that have

made ‘principled exits’