Some of these companies have been effectively forced to withdraw, with sanctions such as bank asset freezes and a block on Russian use of the SWIFT payment system making the operations of companies such as VISA and MasterCard untenable.
Other companies are seemingly taking a “morale stance” on the issue, with oil companies such as BP and Shell expected to take significant hits to their profits as a result of their decisions to halt business in Russia.
Many large companies have now issued statements that they will no longer be operating in Russia, with Coca-Cola, Starbucks and McDonalds suspending operations on Wednesday morning.
While the en masse withdrawals will undoubtedly injure the Russian economy, it will also undoubtedly hit the economies of the rest of the world as well. According to predictions made by the Centre for Economics and Business Research, the UK’s expected growth over the next year is half that of predictions prior to the conflict in Ukraine, with UK households expected to take a £2,500 hit to living standards.
Some have raised concerns the sanctions, along with the en masse withdrawal of so many companies, are going to do much to reduce the living standards of the average Russian, but have little effect on Russian oligarchs and politicians actually responsible for the conflict, leading some critics to label Western sanctions as “collective punishment”.
It is also possible that Russia will respond by cutting off European access to its oil and gas reserves – which would have a devastating impact on European economies. The EU gets around 40% of its gas from Russia. Germany, by most metrics the strongest European economy, is especially vulnerable. On Tuesday German Foreign Minister Annalena Baerbock said that her country would “not be able to move” without Russian oil imports.