Western sanctions mark end of an era in Russia amid corporate exits

When thousands of Russians lined up in bustling Pushkin Square in Moscowon January 31, 1990 to enter the first branch of the McDonalds in the country, the moment represented a seismic cultural change.

The Iron Curtain, which had divided the Europe East and West for decades, had just collapsed. Now the chain fast food loved by Americans and many others could serve Big Macs to Russian customers.

Thirty-two years later, McDonald’s has nearly 850 branches across the country. But on Tuesday (8), announced that they would close their doors.

Like many other major western brands, including IKEAH&M, Coca-Cola and StarbucksMcDonald’s has decided to suspend its operations in Russia in response to the invasion of Ukraine. Pepsi also said it will stop selling some of its products, including Pepsi Cola and 7-Up.

Of course, Russians can choose to eat elsewhere and buy other products – many local chains have sprung up across the vast country since the end of the Soviet Union.

But the decision by these international brands to suspend trade in Russia – after several rounds of sanctions punitive westerners and massive public pressure – it still represents the end of an era.

“Coca-Cola, Pepsi and McDonald’s were symbols of the westernization of Russia, of Russia opening up to the world. And the fact that these companies are leaving… signals and highlights the extent to which Russia is closing and turning inward,” said Gulnaz Sharafutdinova, a professor of Russian politics at King’s College London’s Russia Institute.

That first McDonald’s on Pushkin Square, known as Pushkinskaya Square by the Russians, had a capacity of 700 customers and was for years the company’s biggest point of sale worldwide.

Middle-class young Russians who grew up in the 1990s saw McDonald’s as a cool and seductively foreign place, a restaurant where you took friends to celebrate special birthdays.

As the 21st century progressed, the hammock seemed a less potent symbol of American culture, but it remained a favorite spot for Russian college students to meet for affordable lunches or get-togethers, and it offered a quick and inexpensive dinner option for Russian students. others. Its branches have also provided work opportunities for tens of thousands of Russians.

All of that is gone, at least for the foreseeable future. “Our values ​​mean that we cannot ignore the unnecessary human suffering unfolding in Ukraine,” McDonald’s Chief Executive Chris Kempczinski said in a message to employees on Tuesday announcing the company’s suspension of operations in the country.

He added that it was “impossible to predict” when his restaurants might reopen. THE CNN has contacted McDonald’s to confirm the final closing date for its restaurants, but has yet to receive a response.

“Whether it is the end of an era or not is hard to say now, many observers fear it could be, and it will depend on how long it takes for Russia to get through the current difficult, dark and toxic authoritarian regime,” Sharafutdinova said by phone. “We also understand that getting out of this is going to take a lot of effort – social, political, economic and leadership.”

reputational wound

Many ordinary Russians are still reeling from the shock of the past two weeks. With news coverage of the war tightly controlled by the state, it’s difficult to gauge exactly how much your world has changed with the imposition of Western sanctions.

But the economic pain is already being felt as the ruble value falls and bank controls tighten. While some wealthy Russians struggle to sell assets abroad and even leave the country while they still could, the poorest have fewer options.

The most immediate impact will obviously be on those working for Western companies that have suspended operations, although there have been promises of continued support from their employers.

In his statement, Kempczinski said the 62,000 employees in Russia “who have put their heart and soul into the McDonald’s brand to serve their communities” would continue to be paid.

He also noted the impact on “hundreds of local and Russian suppliers and partners who produce the foods for our menu and support our brand.”

the giant swedish furniture manufacturer IKEA, which opened its doors on Russian soil in 2000 and now has 17 stores across the country, said its decision to stop all exports and imports from Russia and Belarus and stop all IKEA operations in Russia, has a direct impact on 15,000 workers.

“The ambitions of the business groups are long-term and we guarantee stability of employment and income for the immediate future and we will provide support to them and their families in the region,” IKEA said in a statement.

For other Russians, the impact, while less direct, is likely to be demoralizing on two levels, said Tomas Chamorro-Premuzic, professor of business psychology at University College London.

First, they will lose access to products and services they enjoy — but they will also, and perhaps more painfully, feel the reputational wound of being “ostracized by the world and maligned,” he said in an email.

Of course, the response in different sectors of Russian society will vary, points out Sharafutdinova. Some of the companies suspending their operations in Russia are luxury brands whose products would be beyond the reach of the vast majority of Russians.

But others, like IKEA, Starbucks or even McDonald’s “were places that were visited, used and consumed by the Russian middle class” in urban areas on a regular basis, she said, and their loss will affect large numbers of people.

“There will be replacements, but it’s more of a middle-class symbol for Russians and they will lose that access,” he said.

Outside these urban areas, where views are more cosmopolitan, the reaction is more likely to be one of defiance in the face of sanctions, added Sharafutdinova, with the Western seen as turning against Russia.

These Russians “would consider themselves a kind of Russian patriots who care about Russia’s national interests, because that’s how the government presents it… let’s build our economy,'” she said.

The Russian President, Vladimir Putininsisted on Friday that Western sanctions represent an opportunity for Russia’s $1.5 trillion economy, the 11th largest in the world.

“The last few years have shown that where Westerners have imposed restrictions against us, we have acquired new skills and restored old ones to a new technological level,” Putin said, speaking alongside the Belarusian leader. Alexandr Lukashenko in Moscow.

“This is a time of opportunity to move forward in strengthening technological and economic sovereignty,” Putin added.

Unemployment

Some in Russia are responding to the withdrawal of Western brands with dark humor. New memes are circulating in the social networkssuch as one suggesting that IKEA’s giant plush sharks, which there was once a craze for in Russia, should have been stockpiled, or indicating that McDonald’s food is being sold on Avito, an equivalent of eBay or Craig’s List.

A user of twitter posted a picture of people queuing outside Pushkin Square McDonald’s in 1990 with the ironic caption (in Russian): “Moscow, the opening of a McDonald’s restaurant, March 2025”.

However, the symbolism of Russia’s withdrawal from the world will have an emotional and psychological impact, said Chamorro-Premuzic.

“It’s not really about the functional loss of paying more for furniture or not having your favorite hamburger or coffee, but the fact that you become public enemy number one. With any bad leader or despotic ruler, it’s the country’s citizens who suffer”.

THE loss of jobs it could also occur if companies decide to permanently shut down operations, rather than just suspending them, Chamorro-Premuzic added.

“These are big employers, and just as they created a lot of jobs when they arrived, the jobs will disappear if they leave,” he said.

But that doesn’t mean these companies will say goodbye to Russia forever. They can “come back very easily if there are significant political changes, changes in government, changes in reputation,” Chamorro-Premuzic said.

“Of course it’s a big market for companies, so they’ll have the same incentive to go back as they had to go there the first time. So if there’s no moral or reputation impediment to the brand, they’ll come back.”

However, according to Putin, Russia and Belarus will overcome the difficulties presented by the sanctions and will “acquire more skills, more opportunities to feel independent, self-sufficient and, ultimately, to benefit from [das sanções]as was the case in previous years”.