According to a Swiss academic study, less than 9% of European companies and G7 countries have left Russia since the start of the war in Ukraine in February last year. According to teachers...

Interview

Foreign companies in Russia: “Disinvesting is what takes the longest”

The Renault factory in Moscow, in April 2022. The group confirmed shortly after, on May 16, that it was leaving Russia due to Western sanctions.

Text by: Ariane Gaffuri Follow

5 mins

According to a Swiss academic study, less than 9% of European companies and G7 countries have left Russia since the start of the war in Ukraine in February last year.

According to professors Simon Evenett, of the University of Saint-Gall, and Niccolò Pisani, of the IMD Lausanne, before the beginning of the conflict, approximately 2,400 subsidiaries, belonging to 1,400 large companies, were active in Russia.

9% of them are therefore still in place, according to the study.

Companies mainly German (19.5%), American (12.4%) or even Japanese (7%).

The exodus that we talk about so much would not have taken place?

Decryption by Ivan Samson, social science researcher at the University of Versailles (UVSQ Versailles-Saclay), specialist in Russia and Eastern European countries.

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RFI: According to a Swiss university study, less than 9% of European companies and G7 countries have left Russia since the start of the war in Ukraine.

How to interpret this percentage

Ivan Samson:

Indeed, seen from this angle, 9% seems very low.

And one wonders how it is done, with all the noise around the sanctions against Russia.

Why is there so little impact?

But we must not lose sight of the fact that this is an evolution that has occurred on the scale of less than a year.

The time of the economy is not the time of politics.

For example, when you invest or divest somewhere, there is a whole legal system to put in place, which is quite complicated in Russia, which is very bureaucratic, both to enter and to exit.

Western personnel must be brought in to train local people.

We have to help them find accommodation, etc.

So you understand that here, we are on a horizon of eleven months,

Then, if we consider other forms of presence, because investment is very heavy, these are purchases and sales, foreign trade.

On this, the variations are much faster.

You may need a few subsidiaries, but there is no need to immobilize a lot to have economic exchanges.

However, if we look at Russia's foreign trade, exports and imports both fell by 20%.

It's huge, it causes the gross national product itself to fall by 4% in 2022, and it is expected to be worse in 2023. It is also accompanied by a peak in inflation, which has risen to 14% and is now back down to 6% – but it is not expected to go any lower.

Finally, the Stock Exchange, the last indicator of insertion in the

world economy, has fallen by a third since the beginning of the war.

So this study, which deals with investments, is very interesting, but it gives part of the reality.

You were interested in other figures that complete this vision, you say, a little "binary" of the study of Swiss academics...

Yes, they come from the site “Leave Russia”, in French “Quittez la Russie”.

It's a site aimed at NGOs hostile to Russian intervention in Ukraine, of course.

He gives slightly different figures.

He says there are 3,000 foreign companies that are active in Russia, or were before the outbreak of the war.

This is about international investment, so the sample is larger than the first Swiss figures, which deal only with companies from the European Union and the G7.

There, it's all inclusive.

We therefore have, of these 3,000 foreign companies, a breakdown that has been made: 1,000-1,200 are still in business, that is to say 40%.

This means that 60% are no longer active.

This loss of activity results either in a withdrawal from the market, that is to say that these companies no longer have any commercial activity, but that they still exist.

The legal framework, the personnel of the company, all this continues to function;

432 have been put on hold, 714 have suspended their activities altogether, 313 have reduced their production and 176 have stopped investments.

That is to say, they trade.

Basically, they sell what they have, but they don't have a very integrated activity in the Russian economy.

These two studies, there are certainly others, give the image of a commercial and production activity of foreign companies in Russia which has been very quickly and significantly reduced.

It's obvious that disinvesting is

What companies are they?

The first study concerns multinationals.

At the level of the G7 and European Union sanctions, they have ruled out attacking the food, agriculture, health and pharmaceutical sectors, so as not to directly affect the population.

It is obvious that the subsidiaries of large multinational companies are SMEs.

In the Western definition, these small and medium-sized enterprises can have up to 500 employees, depending on the country.

If you like, Russia is like an emirate.

It's a country that sells hydrocarbons, metals, and that represents roughly three-quarters of what they sell.

That means they buy almost everything.

And so, it can really affect a very large number of sectors.

We have also, of course, heard of the effects on the many companies that have stopped working because parts were missing, there were no means of repairing equipment, there was a lack of everything that makes the productive activity work. .

Like you, I was surprised at first reading of this report by Swiss academics, but looking a little more in detail, we realize that in a very short time, the effects have nevertheless been significant.

►Read also: The Russian economy is changing towards a model of war economy

Foreign companies in Russia: “Disinvesting is what takes the longest”

Foreign companies in Russia: “Disinvesting is what takes the longest”

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