The Washington Post - USA (2022-03-27)

A20 EZ RE THEWASHINGTONPOST.SUNDAY,MARCH 27 , 2022

warin ukraine

BYRUBYMELLEN,

MAITEFERNÁNDEZ

SIMON,JÚLIALEDUR

ANDYUTAOCHEN

On atypical sunnyday in

Moscow,StoleshnikovLane

teemswithwealthyshoppers.

Ladies in immaculate suits

step fromRolls-RoycesandBent-

leys,tinydogsin tow,oremerge

fromname-branddesigner

stores,ladenwithshoppingbags.

TheflashyrichparkFerrarisor

Lamborghinisnearby.

Butthese days,mostofthe

stores along Stoleshnikov are

closed.OnarecentMondayafter-

noon,aphotographer forThe

WashingtonPost sawjustafew

peopleamblingby,ontheir way

somewhereelse.

ThequietonStoleshnikov

echoesacrossparts ofMoscow.

ManyWesterncompanies,some

of whichcateredto Russia’sup-

percrust, have pulledoutof the

country, in thefaceof mounting

internationalireand araftof

sanctions,followingtheinvasion

of Ukraine. Themass exodus,

historianssay, is radical,bringing

to anendthreedecadesof eco-

nomicintegrationinacountry

thatbeganto embraceglobaliza-

tiondecadesago, evenbeforethe

fallof theSovietUnionin1991.

Russiais “a moderneconomy,

highly integrated in global

chains,”saidVolodymyr Kulikov,

ahistorianat Central European

University. “A ndnowwearewit-

nessingunprecedentedin history

speedyandmassivedeglobaliza-

tion and isolation of alarge

economy.”Inthepost-Sovietera,

Westernpolicymakershopedthe

rapidspreadof Westernbrands,

manyofthemiconsof capitalism,

wouldserve to sowpeacethrough

economicinterdependence.

Just afewdecadeslater,as

Russian tanks roll through

Ukraine,thatvisionappearsto be

crumbling.Morethan3 80 com-

panieshave announcedthatthey

wouldwithdraw,scalebackor

pauseoperationsinRussia,ac-

cordingtoadatabasefromthe

Yale Schoolof Management.The

movesaredifficult forresearch-

erstotrack,and thescope of

changes variesacrosscompanies.

But the effects are no doubt

drastic.

Kulikov said thatofthe 50

largestforeigncompaniesin Rus-

sia, whichcollectively earned

some$99billioninrevenuein

2020,morethan 20 companies,

includingApple,ShellandCoca-

Cola,hadsuspendedshipments

or someoperationsin thecountry

as of thisweek.

Twenty-fivehave notmadema-

jormovesto scalebackor with-

drawcurrentoperations.

“Mostbusinesseswhodecided

to remainin Russiajustifiedit by

thenecessitytoprovideessential

servicesto Russia’speople,”Ku-

likovsaid.“Still,eventhepartial

exodusof foreigncompanieswill

havedisastroussocialandeco-

nomicconsequences.”

Theeffects willripplefarbe-

yondafewstreets in Moscow.

“Westernbrandsarepartofthe

lifestyle of aparticularsegment

of Russiansociety.SosomeRus-

sianswillseethelossof foreign

tradeasabig disruption,while

otherswon’t care,”saidPaul Mus-

grave, anassistantprofessorof

politicalscienceat theUniversity

of MassachusettsAmherst. “But

evenpeoplewhoaren’t affected

by thesymbolismwillbe affected

by thebroadersanctions.”

NewArbatAvenue, another

keyshoppingdragin Moscow,

linedwithWesternstorefronts,

manyofthemlessexclusivethan

thosealongStoleshnikov,has be-

cameacommonhangoutduring

the summer for teenagers on

skateboards and families with

youngchildren.

Aplaceof gatheringin Soviet

timesandfornewgenerations,

streetlifeonNewArbatissub-

dued following the invasion.

Some cafes and bars remain

open,butmanyWesternchains

haveleft.Police patrol in the

wakeofantiwarprotests.

TheMcDonald’s,inabuilding

withanornate yellowfacade,is

shuttered, along with the 850

others, in Russia. Thegolden

arches remain visible.

Theopeningof McDonald’s in

thecity32yearsagowas an iconic

late-Sovietmoment.OnJan. 31,

1990, a500-yard line snaked

aroundthechain’s firstlocation

inPushkinSquare,nottoofar

fromNewArbat. PizzaHutwould

soon followsuit. Fewbrands

couldclaimto be moreantitheti-

cal to the Sovietethos—or

emblematicof theWesternalter-

native.

Asthesamefast-foodchains

shuttheirdoorsthismonth,Rus-

sianslineduptobuytheirlast

McDonald’s burger,inscenes

reminiscentof theits initialentry

to amarket achingforWestern

consumerbrands.

At thattime, “CEOs talked

aboutdeepeningcommercialties

withRussiain termsof bringing

peaceandcapitalism”Musgrave

said.“That’sjustnotwherewe

are.Thedeepdreamof the’90sis

overin Moscow.”

“TheWest comingto thefor-

merSovietUnionwastremen-

dous,”saidEkaterinaPravilova, a

historyprofessor at Princeton.

ShelivedinLeningrad—since

renamedSt.Petersburg—atthe

time McDonald’s firstopened

there.It wasexpensiveformost

Russiansbutattractedthemid-

dleclass,Pravilovasaid.“Itwas

viewedwithexcitement,withcu-

riosity,”she said.

More thanthreedecadeslater,

as Westerncountriesseekto iso-

late Russia,post-ColdWaraspira-

tionshavecometofeel likea

distantmemory.

ForRussians,“it’s afeelingof

deepgloom,kindof ahorrified

reaction as theysee all these

Westernand globalcompanies

abandoning”the country, said

DanielTreisman,aprofessorof

politicalscience at UCLA.“So

muchof cultureis boundupin

theproducts weuse,themovies

wesee,”hesaid.“A ll of thisleaves

theRussianswho’vegrownupin

thisnewinternationalizedenvi-

ronmentfeelingisolated,cutoff.”

Thedarkenedstorefrontsand

emptysidewalksalongStolesh-

nikovandNewArbatare among

thestarkestillustrationsof this

newisolation.

Butmanyoftheclosuresare

notmeantto beforgood.Sanc-

tions arenot “designed to be

permanent”andwouldrollback

if Russiaendstheinvasionin a

waythatis“irreversible,”Secre-

taryofState AntonyBlinkentold

NPRlastweek.

Apeacedealmightencourage

Westernbrandsto reopen,usher-

inginareturn tothe capital

Muscoviteshave cometo know.

The ‘deglobalization’ of Moscow

Awalk downamostly emptyStoleshnikovLane,normallyadraw for wealthyshoppers,showshow life has changedin Russia’scapital

Asof March24.Categoriesarebasedonroughassessmentsdrawnfrompublicstatementsbycompanies.

Sources:Yale Schoolof Management,Volodymyr Kulikov

WithdrewfromRussia

Hundredsof companieshave stoppedor suspendedoperations

in Russia,but somehave maintainedbusiness

Suspendedoperations

Scaledback

BoughttimeDug in

Airbnb

Stopped

allbookings

Swarovski

Apple

Suspended

allsales

YouTube

McDonald’s

Suspended

directoperations

andrestaurants

J.P. Morgan

Wounddown

business

butbought

Russiandebt

Coinbase

Michelin

Halted

productionat

someplants

Ikea

Levi’s

Suspended

allsales

Etsy

Deactivated

alllistingsfrom

Russiansellers

Netflix

Spotify

Closedoffices

andimposed

restrictions

Formula 1

AbbottLabs

Dunkin’Donuts

Suspendednew

development

Marriott

Closed

corporate

offices

Siemens

Frozenew

business

Decathlon

Asus

Emirates

Airlines

Visa

Lenovo

Amazon

3M

Completelyhalted

operationsor exitedRussia

Te mporarilycurtailedoperations

butkept optionsto reopen

Postponedfutureinvestments

butcontinuedsubstantialbusiness

Defieddemandsforexit and

didnotcurtailanybusiness

Reducedsomebusiness

operationsbutcontinuedothers

SUSPENDEDORREDUCEDOPERATIONS

MAINTAINEDCURRENTOPERATIONS

Amongthe 50largestforeigncompaniesin Russia,reactionshave been mixed

Scaledback

Bosch

$1.2B

Pepsi

$3B

WithdrewfromRussia

Daimler

$2.6B

British

American

Tobacco

$2.7B

Shell

$1.4B

Dugin

Auchan

$3.7B

Huawei

$1.7B

Kia

$3B

Leroy

Merlin

$4.8B

500M

1B

$5B

Revenue

in 2020

Boughttime

Philip

Morris

$4.9B

Japan

Tobacco

$4.3B

Nestlé

$2.5B

J&J

$892M

Suspendedoperations

Renault

$4.2B

Samsung

$3.4B

Volkswagen

$4.4B

Coca-Cola

$1B

Prada

Louis

Vuitton

Chanel

Hermès

Richard Dior

Mille

Piaget

Harry

Winston

Cartier

Dior

Fendi

Brunello

Cucinelli

OB STOLESHNIKOVLANE

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Closedstorefronts

NORT

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Stoleshnikov

Lane

Moscow

FORTHEWASHINGTONPOST

TOP:Aphoto illustration of Moscow’s Stoleshnikov Lane this month. Thesedays, mostofthe stores

along Stoleshnikovare closed, in aquietthatechoes acrossparts of Moscow. Many Western

companies,some of whichcateredtoRussia’s upper crust, havepulled outofthe country.