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Putin’s Next Sanctions Disaster: More Companies Keep Leaving Russia

Russia Sanctions
Russian military drilling with artillery. Image Credit: Creative Commons.

American sports brand Nike will not renew its franchise agreements in Russia amid the ongoing Russian invasion of Ukraine and a slew of U.S. sanctions against the country.

Vedomosti Daily reported that the head of the Inventive Retail Group (IRG), which operates Nike stores throughout Russia, confirmed that the company will no longer supply any merchandise to the country.

“As supplies of goods run out IRG will be forced to close all of its shops under this brand,” IRG President Tikhon Smykov said in a note to employees recently.

Smykov also told employees that the situation means the business can no longer exist, meaning that all 37 Nike stores in Russia are expected to be closed down

The Move Was Inevitable

With many American brands effectively forced to stop doing deals with Russia as part of the United States’ sanctions levied against the country, it was only a matter of time before Nike made the decision – either as a result of government pressure, or to keep in line with other brands doing the same.

In March, Nike announced that all operations would be temporarily suspended in Russia.

Earlier this month, Russian Premier League soccer club Spartak Moscow also revealed that Nike had ended its kit sponsorship deal with the team and that they will not be taking part in competitions in Europe next season. The deal has been in place since 2005.

Companies Face Increasing Pressure to Pull Out Of Russia

For brands not affected by sanctions, pressure from media outlets and customers may be enough to make them finally pull the plug.

CBS News reported this week on 27 U.S.-based companies that are still doing business with Russia, defying calls to curtail their activities in the country. The outlet published information from Yale University Professor Jeffrey Sonnenfeld which shows the status of American companies doing business with Russia.

The Yale School of Management running tally lists major American businesses and explains their current status in Russia.

“The list below is updated continuously by Jeffrey Sonnenfeld and his team of experts, research fellows, and students at the Yale Chief Executive Leadership Institute to reflect new announcements from companies in as close to real time as possible,” the site explains.

Operating statuses for the companies on the list include “still operating in Russia,” “still flying to Russia,” “distributors in Russia,” and more.

With pressure ramping up from all angles, only the businesses whose trading in Russia is essential for their survival are likely to defy sanctions or public pressure and continue doing business with the country.

For those businesses that continue to do business, however, making financial transactions with the country will prove exceptionally difficult.

Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.

Written By

Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.

5 Comments

5 Comments

  1. EkonomistSkeptik

    May 30, 2022 at 11:35 am

    So what? The Russian ruble has only gotten stronger since the war (40% growth), and useless foreign companies like McDonalds (who even needs that?) will simply be replaced by local businessmen. Russia has replaced its dependency on SWIFT with a Chinese banking system and the vast majority of the world has not sanctioned Russia at all. Russia will simply find new customers for exports. Hate me if you want, but I speak the truth. Russia will recover, and it will never trade with the West again.

    • Goran

      May 30, 2022 at 5:09 pm

      It is a civilizational shift away from free thought and open society, a loss for both Europe and Russia. And for what? More land with dilapidated infrastructure, as if Russia was short on that? Russian historians will judge Mr. Putin very harshly, once they are actually free to do so.

    • Mike Hunt

      May 31, 2022 at 12:15 am

      YOU ARE RIGHT SO WHAT IF RUSSIA IS NOT EVER HEARD FROM AGAIN SO WHAT. WHAT HAS RUSSIA EVER MADE THAT THE WORLD WOULD EVER WANT???? SO WHAT.

  2. speedster

    May 30, 2022 at 7:23 pm

    The West invented banking so an ostrich head in the sand by russia, does not change the fact that Russia is throwing away the golden western goose that lays the golden eggs. Everything China does is second hand copied from the golden goose western countries or alternatively stolen intellectual property from the west.

    Socialism does not produce prodigious intellectual property like the west because inherently there is no incentive within socialism to produce new ideas. Socialism in past performance does what China does, copy or steal from the west.

  3. speedster

    May 30, 2022 at 7:29 pm

    The explanation for the stronger ruble, is straightforward, in desperation to save the ruble, the authorities made Russian companies change 80% of foreign earnings into rubles. The problem then arises that if ever the current situation changes, then the authorities would required to remove the artificial compulsion on companies along with other artificial measures to stop the ruble, falling.

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