As companies around the world suspend operations in Russia over its war on Ukraine, two major Maine companies doing business there would not say if they will do the same.
Wex, which works with Lukoil, the Russian oil company, and Idexx, which sells veterinary supplies and water analysis tests, would not go beyond statements saying they would comply with US sanctions for do business with the country.
Companies that have announced they will suspend operations in Russia include Ikea, H&M stores, Boeing, Airbus, Netflix, Apple, Dell Technologies and three major film distributors. Google and TikTok have also blocked Russian state media channels on their platforms.
Wex said that “as a matter of principle, we do not comment on or disclose information about individual customers or business partners.”
Wex is an IT and payment processing company headquartered in Portland. One of its products is a payment card for use at gas stations operating under the Lukoil brand – the Russian oil company which has about 200 gas stations in the United States, mainly in New York and New Jersey, although that many are franchises owned and operated by The Americans.
Westbrook-based Idexx’s ties to Russia include its veterinary supply and practice management tools as well as water safety testing kits. Last week, a spokeswoman said the company had not commented on its operations in Russia, but this week it released a statement saying it was committed and concerned about the health and safety of its employees. employees, customers and suppliers in the region. like these people’s pets.
They also said the company’s foundation would contribute to International Medical Corps, an organization that provides aid to individuals and families affected by the conflict, but did not comment further on its operations in Russia.
But the rapid imposition of sanctions by the United States and Europe shows that sanctions have come of age as a foreign policy tool, said Matthew Botsch, assistant professor of economics at Bowdoin College in Brunswick. He said the impact on Russia will be harsh.
Russia needs foreign currency to buy imported goods, Botsch said, but the unified position of the United States and Europe cuts off its access to foreign currency.
Oil and gas remain “essentially the only way for Russia to get its hands on foreign currency”, he said. If the United States and Europe stop buying Russian oil and gas, as some are urging, it will leave China as the only major buyer. Russian oil and gas are already selling at a very favorable price, mainly to China, due to reduced purchases by the United States and Europe, he said.
Russia itself has a relatively small economy, and its trade with the United States is only a fraction of the business the United States does with China, Botsch said. In 2021, the United States exported $6.4 billion in goods and services to Russia and imported $29.7 billion from Russia. Both numbers are tiny compared to US-China trade, but the US’s ability to convince Europe to accept the sanctions makes it a more effective tool, he said, because Russia’s trade with Europe is much stronger.
“They are heavily dependent on imports,” Botsch said of Russia, and “the sanctions have been much tougher and more effective than anyone anticipated.”
In the past, sanctions were a little less effective because countries kept real foreign currency close at hand. But since most financial transactions are done electronically, Botsch said, other countries were able to quickly freeze assets Russia held in those countries, many of which were held in electronic accounts. That means the sanctions had a more immediate and widespread impact, he said.
Botsch said some of the pain from the disruption of trade with Russia will be felt by Americans, who are already seeing an impact in sharp increases in oil and gas prices, but inflation in the United States will be much lower than what the Russians will face. He also said that Russia is expected to face a recession later this year that will be deeper due to sanctions, imposing a new sanction on the country for its invasion of Ukraine.
But the sanctions have upended the business plans of companies around the world. Companies rushed to confirm they would abide by the sanctions — in most cases they had no choice — and some pledged to further restrict their operations as a show of support for Ukraine.
Russia has countered the sanctions by temporarily preventing foreign investors from selling their assets in Russia, making it difficult for any corporate plans to withdraw operations from the country.
Oil and gas companies have nonetheless said they are ending partnerships with Russian state-owned companies, and Toyota has said it is halting production at a plant it owns in St. Petersburg. He said the production stoppage was caused by supply chain disruptions and also issued a statement saying he was “very concerned for the safety of the Ukrainian people”.
Mercedes-Benz suspended exports to Russia and halted manufacturing in the country, a move mirrored by the Volkswagen Group, while Volvo halted deliveries and Ford suspended operations.
Harley-Davidson has halted motorcycle shipments to Russia, but some other companies have taken more limited action and said the sanctions will have a big impact on their operations. For example, Renault said it was suspending production at its Moscow plant for just a few days, due to “logistical issues”. Russia is Renault’s second largest market.
And Carlsberg, the Danish brewer, said it was suspending production at its three breweries in Ukraine, but said operations in Russia would continue. The company said it felt obligated to “protect the livelihoods of all our employees” in Russia.
This report contains material from The Associated Press.
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