Western Companies Look to Leave Russia Amid Sanctions

Photo credit: Reuters

Western countries and firms worth billions of dollars are looking to quickly exit Russia as the West tightens its sanctions against Moscow over its war against Ukraine. 

Energy giant British Petroleum (BP), global banking giant HSBC, and the largest aircraft leasing firm in the world, AerCap, joined the growing list of businesses looking to leave Russia. 

BP is Russia’s biggest foreign investor, and its abrupt announcement that it is pulling out of Russia and abandoning its massive 20 percent stake in Russian-controlled Rosneft, leaving behind up to $25 billion, will massively be felt in Russia. It will also be felt by BP, cutting the oil and gas reserves in half, and reducing its production by a third. 

The decision by BP came following talks with the British government and shows a spotlight on other firms in the West that still are holding onto their stakes in Russian oil and gas projects. American firm ExxonMobil, France’s TotalEnergy, and Britain’s Shell all still have not exited Russia. 

Western-allied countries have sought to punish Russia for invading Ukraine with multiple measures, especially economic measures. It has also included the closure of airspace to Russian aircraft and shutting out some Russian banks from the SWIFT global financial network.

It has also sought to restrict Russia’s ability to deploy its foreign reserves, estimated to be worth approximately $630 billion. Huge parts of Russia’s economy are quickly becoming a no-go zone for banks in the West as well as financial firms, following the decision for banks to be cut off from SWIFT. 

The economic sanctions have made Russia’s economy reel. The rouble plunged to an all-time low, dropping as much as 30 percent. The central bank made a huge increase in its interest rates, doubling the interest rate to 20 percent. The stock markets in Russia and derivative markets have been kept closed, and brokers have been temporarily banned from selling securities that are held by foreigners. 

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