Unilever has said that it has divested its Russian business as it leaves the country more than two-and-a-half years into the Russia-Ukraine war. The company has already stayed in Russia much longer than several of its peers.
If the end result is a more self-sufficient russia and profits going to the war effort … would it have been the right move?
Autarky costs something, given an efficient market. Normally, due to comparative advantage, a country will trade with whoever can produce something with the most comparative advantage. That will normally make the country better-off. So a restriction on trade – like an entity refusing to do business with it – will make the country worse-off than in a free market. Could cut off access to supply chains or money or whatever.
So you would not normally expect Russia to have more resources to go to the war effort as a result of cutting business connections. Russia of 2024 will have fewer resources available to it than Russia of 2021.
I don’t disagree that this is less-disruptive to Russia than a company intentionally dismantling its infrastructure in Russia. I do not know whether that is a practical option, as the authorities might simply seize the assets. Russia does have jurisdiction over things that happen in Russia. They can make it illegal to dismantle factories; I have not been following, but I remember reading that several laws restricting things along these lines have been passed in the past, including limiting bankers from exiting Russia, some sort of controls on moving assets, and some sort of restrictions on divesting assets.
reads article
Actually, the article specifically references this, right at the end:
However, for some companies, staying longer in Russia has not always been a carefully calculated business choice because the government has put significant obstacles in place to prevent them leaving.
These included trying to take over the assets of Western companies wanting to go
Autarky costs something, given an efficient market. Normally, due to comparative advantage, a country will trade with whoever can produce something with the most comparative advantage. That will normally make the country better-off. So a restriction on trade – like an entity refusing to do business with it – will make the country worse-off than in a free market. Could cut off access to supply chains or money or whatever.
So you would not normally expect Russia to have more resources to go to the war effort as a result of cutting business connections. Russia of 2024 will have fewer resources available to it than Russia of 2021.
I don’t disagree that this is less-disruptive to Russia than a company intentionally dismantling its infrastructure in Russia. I do not know whether that is a practical option, as the authorities might simply seize the assets. Russia does have jurisdiction over things that happen in Russia. They can make it illegal to dismantle factories; I have not been following, but I remember reading that several laws restricting things along these lines have been passed in the past, including limiting bankers from exiting Russia, some sort of controls on moving assets, and some sort of restrictions on divesting assets.
reads article
Actually, the article specifically references this, right at the end: