Business & the Russian Invasion of the Ukraine

A number of prominent corporations have added their weight to the international effort to impose sanctions on Russia. More and more companies are pulling out of Russia in response to Vladimir Putin’s war of aggression.

The list of companies is growing, and—crucially in the information age—includes tech giants such as Google, Apple, Microsoft, Dell, PayPal, and Netflix, among others. (See the growing Twitter thread being maintained by @NetopiaEU here.) Most recently, perhaps, both KPMG International and PricewaterhouseCoopers have suspended operations in Russia and Belarus (according to a tweet from the Kyiv Independent). Perhaps most significantly, Mastercard and Visa have suspended operations in Russia.

Is this a good thing? On balance, I think the answer is yes. But it’s always worth at least looking at the arguments on both sides.

The most obvious ethical question has to do with collateral damage. Most of the companies pulling out of Russia aren’t pulling their services away from Vladimir Putin, or from the Russian government or the Russian army, but from regular Russians—-some but not all of whom support Putin and his war. (There are some indications that Putin’s popularity is up since the invasion began, but the key polling was done by an organization owned by the Russian government, so perhaps take that with a grain of salt.) If sanctions (corporate or otherwise) make the lives of regular Russians hard, that’s generally a bad thing. It’s not as bad as the civilian deaths currently happening in the Ukraine, but a bad thing non the less. The question is whether, on balance, the good to be achieved by corporate sanctions is worth the cost. I think it clearly is, for reasons I’ll return to below.

Then there’s the question of corporate activism. The backdrop for this issue—the thing that even makes pulling out of Russia a question—is the general question of whether companies should, in brief, be political. Do the companies named above, and others like them, have the moral authority to impose sanctions, on Russia or on anyone else? And what do corporations know, after all, about international affairs? What special competency does Netflix or Microsoft have to assess Putin’s (admittedly nutty) claims about how the Ukraine is, in reality, part of Russia? In days past, the question of corporate moral authority has taken less acute forms: Should companies take sides in domestic political disputes? Should companies be ‘woke?’ Should companies have views on human sexuality? And so on. But then, Putin’s behaviour in this case is truly beyond the pale. It constitutes naked aggression against a sovereign people, and the companies that have taken action are doing so 100% in line with international consensus.

Of course, enthusiasm for corporate sanctions in the present case immediately leads to questions about which other countries, beyond Russia, should be the target of corporate sanctions. After all, as horrific as the suffering in the Ukraine is, it’s arguably no greater than the suffering being experienced by ethnic minorities in China (see for example the forced labour imposed upon the Uighurs), or the violence against Tigrayans in Ethiopia, which some have characterized as genocide. Those are just a couple of examples, picked more or less at random. The list of countries with which respectable companies arguably shouldn’t do business is a long one. But on the other hand, outside of crisis moments, there are good arguments to the effect that maintaining trade is a useful mechanism in building ties and in fostering liberal democratic values.

I think the only real question with regard to the corporate sanctions is how long such sanctions should last. Some think these corporate actions will, as a matter of fact, be relatively limited in duration. But how long should they last? One plausible view is that sanctions should last until aggression against the Ukraine stops. After all, if sanctions are the stick, then eliminating sanctions is the carrot. Likely no one thinks corporate sanctions will matter to Putin directly, but they might matter enough to regular Russians for them to put pressure on Putin, who will be incentivized to find a way out of what is, in the view of some, becoming a quagmire anyway. Another plausible view: they should last until Putin is out of power. After all, Putin isn’t a symptom; he’s the problem. And for most of the big companies involved, the Russian market probably isn’t big enough to matter much to the bottom line, so it’s not an unreasonable request. There is nothing in this story that suggests this is a one-time thing for Putin. He has expansionist impulses, and weird theories about geopolitical history. The world will be safer when—and only when—he is gone. And economic isolation is one piece of a larger strategy to achieving that goal.