In February 2024, Columbia University Press informed me that it had sold the rights to my book on sanctions to a Russian firm that would translate it and sell it in Russia. I replied that I did not want sales of my book to support the Kremlin’s war machine, and my publisher agreed to cancel the contract. Last month, just before Christmas, I was stunned to see that a translated version of my book was a popular read in Russia. Columbia University Press had forgotten to tell me that it had not managed to cancel the deal.
My publisher had the right to sell my book to its Russian partner. My book contract allowed it, and most business in Russia by Western companies does not breach sanctions. However, what is legal may not be morally or economically sound. Western firms that continue to do business in Russia help Moscow finance the war in Ukraine through their payments of Russian corporate taxes. This is not even a sound investment: Nearly three years into the war, Western firms cannot repatriate the profits they earn in Russia, and the assets they own on Russian soil are not really theirs anymore.
In February 2024, Columbia University Press informed me that it had sold the rights to my book on sanctions to a Russian firm that would translate it and sell it in Russia. I replied that I did not want sales of my book to support the Kremlin’s war machine, and my publisher agreed to cancel the contract. Last month, just before Christmas, I was stunned to see that a translated version of my book was a popular read in Russia. Columbia University Press had forgotten to tell me that it had not managed to cancel the deal.
My publisher had the right to sell my book to its Russian partner. My book contract allowed it, and most business in Russia by Western companies does not breach sanctions. However, what is legal may not be morally or economically sound. Western firms that continue to do business in Russia help Moscow finance the war in Ukraine through their payments of Russian corporate taxes. This is not even a sound investment: Nearly three years into the war, Western firms cannot repatriate the profits they earn in Russia, and the assets they own on Russian soil are not really theirs anymore.
Western firms’ continued business in Russia is not a marginal phenomenon. Data compiled by the Kyiv School of Economics and Ukrainian volunteers show that, as of 2023, around 800 multinational companies from Western and like-minded countries were still operating in Russia—either because they decided to stay or because they were still generating revenues there despite having pledged to leave. Combing through the data, two facts stand out. First, around 60 percent of those global firms that operated in Russia before the full-scale invasion began in February 2022 still continue to do so. Second, Germany, the United States, and France are—by far—the top three countries of origin for Western firms that retain a presence in Russia, accounting for around half of them.
Browsing through statements by Western firms explaining why they have decided to stay in Russia yields intriguing surprises: Many argue that their decision hinges on humanitarian reasons, either because they produce critical goods (like food) or because they feel responsible for the well-being of their staff and their families. Both arguments are easy to debunk. Russia is self-sufficient when it comes to food; in fact, it is a major exporter of many staples. What’s more, Western sanctions do not target Russia’s access to humanitarian goods like food, so an in-country presence isn’t required. The talking point about staff does not stand up to scrutiny, either. Russia has a massive labor shortage, with unemployment at record lows and alternative jobs more than plentiful.
What is undeniably true is that the hundreds of Western firms staying in Russia are helping Moscow finance the war in Ukraine. The data is eye-popping. In 2022 and 2023, firms from the G-7, European Union, and like-minded economies generated around $370 billion in revenues on Russian soil, which was more than Moscow’s military budget over the same period. In the first two years of the war, Western firms transferred more than $11 billion in corporate taxes to Russian state coffers, with Austrian bank Raiffeisen alone accounting for one-tenth of this amount. The data is not available yet for 2024, but a ballpark estimate suggests that Western firms probably paid another $4-6 billion in corporate taxes, bringing the total to roughly $16 billion funneled to the Kremlin since the invasion began.
Two data points help put this figure into context. First, $16 billion is enough for Moscow to pay for around 5,300 Iskander missiles, 1,100 Kinzhal ballistic missiles, or 320,000 Shahed drones. For comparison, Russia’s massive attack against Ukraine last Christmas used 78 missiles of various types in addition to 106 Shahed drones and decoys. Second, the amount Western firms have paid in Russian corporate taxes since the start of the war is roughly equivalent to Germany’s entire military, humanitarian, and financial support to Ukraine over the same period. But money is not the only measure. For Moscow, the presence of Western firms has substantial propaganda value, as it supports the Kremlin’s talking point that the Russian market is too important for Western firms to abandon.
It is clear that the moral argument convinced only a minority of Western firms to make a clean exit from Russia. At the start of the conflict, most Western firms prioritized the economic argument over the moral one, with revenues from Russia seen as too important or Moscow’s conditions for asset sales too unfavorable. Many Western businesses were also betting that if they could weather the war, then they would be in a better position than their competitors once sanctions are dropped and Russia reopens. This bet was a losing one for Western firms, as the Kremlin now controls their revenues and assets.
Take revenues first. Only a few weeks into the invasion in 2022, the Kremlin outlawed transferring dividends to headquarters in “unfriendly countries” a category that includes the United States, European Union, and the United Kingdom. The ban has been relaxed a bit since then, but conditions remain stringent; the transfers cannot exceed 50 percent of the profits of Western firms in Russia. Conditions are so harsh that even firms from “friendly countries” face headaches: Indian oil firm PSU, for instance, has no idea if it will ever be able to repatriate around $900 million in profits from its Russian operations. Things could soon get worse. With growing signs of strain in the economy, Moscow could well decide to impose full-blown capital controls.
With the Kremlin controlling access to their revenues in Russia, many Western firms initially assumed that a wait-and-see approach was the best option. In hindsight, this strategy was a losing one. In August 2022, Russian President Vladimir Putin signed a decree ensuring that Western companies could not sell their Russian assets without government approval; those operating in energy or finance would even need permission from Putin himself. One year later, the Kremlin nationalized the Russian assets of French food maker Danone and Danish brewer Carlsberg, with both firms losing all but a fraction of their assets’ value. With Moscow’s finances increasingly in the red, things took another turn for the worse in October 2024. A presidential decree mandated that Western firms exiting Russia could only recoup a quarter of their assets’ value at most: The Kremlin requires companies from “unfriendly countries” to discount the selling price of their assets by at least 60 percent, in addition to a 35 percent “voluntary contribution” to Russian state coffers.
In Russia, Western companies are running businesses that are not really theirs anymore. If the moral motivation was not compelling enough, the economic argument to leave Russia is now watertight. On my side, the Russian publisher of my book eventually agreed to stop selling it, although I have no way to check if it’s keeping its promise. Russian readers might be interested to learn that their purchase of my book serves a great cause, though. I have long given proceeds from worldwide sales to charities—initially the French Pièces Jaunes, which finances projects for hospitalized children. I have now switched to donating royalties to the Ukrainian government’s appeal to finance drones and robots for its military and generators for electricity-deprived schools.
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