Stay Or Go? The Dilemma Of Swiss Companies In Russia

(MENAFN- Swissinfo) Foreign Minister Ignazio Cassis inaugurating the new Swiss embassy in Moscow, on June 18, 2019. Many representatives of Swiss firms active in Russia attended the event. Keystone / Yuri Kochetkov

After Russia's invasion of Ukraine, several Swiss companies suspended their activities in Russia. Others pulled out for good, while for others it was business as usual. Given that there's“no ethical justification” for staying in Russia, as one management professor told us, we asked some 20 companies to explain their strategy.

• Deutsch (de) Das grosse Dilemma der Schweizer Unternehmen in Russland
• Italiano (it) Partire o restare? Il grande dilemma delle imprese svizzere in Russia
• Français (fr) Partir ou rester? Le dilemme cornélien des entreprises suisses en Russie (original)
• Pусский (ru) Уйти или остаться? Дилемма, с которой сталкивается швейцарский бизнес в России

In June 2019 Swiss Foreign Minister Ignazio Cassis and his Russian counterpart Sergei Lavrov inaugurated the new Swiss embassy in Moscow with a toast. The party cost an estimated CHF700,000 ($720,000), a large chunk of which was provided by private sponsors. These included Swiss-based companies controlled by Russian oligarchs such as Eurochem, Andrey Melnichenko's fertiliser giant from Zug, Gennady Timchenko's Volga Group, as well as Sulzer and OC Oerlikon, the two historical brands of Swiss industry in which Viktor Vekselberg is a shareholder. Supporters also included Nord Stream 2, the Baar-based company in canton Zug that operates the gas pipeline linking Russia to Germany and of which Gazprom, the Kremlin-owned gas giant, is the main promoter. Several large Swiss groups were also on the list, which SWI swissinfo.ch has seen: Glencore, Sika, UBS, ABB, Philip Morris, Schindler, Nestlé, Lafarge Holcim, Omya, MSC and others.

At the time, Swiss companies had a strong presence in Russia, where they were investing in opening new factories, acquiring local companies or jumping headlong into the race for raw materials.

Less than three years later, the war unleashed by Russia on Ukraine means not much remains of that friendly environment. Europe and the United States, followed by Switzerland, imposed a series of sanctions on Russian companies and the assets of oligarchs and their families. These have pressured the oligarchs in Switzerland. Meanwhile Nord Stream 2 declared itself bankrupt.

Swiss companies are also under pressure to comply with sanctions. While Russia remains a relatively minor partner for Switzerland in terms of imports and exports of goods, in certain areas trade is more significant, especially in raw materials. These are traded by companies based in Geneva, Zug or Lugano. Swiss investments in Russia are also considerable. They are estimated by the newspaper 24 heuresExternal link at CHF28 billion (about 2% of the total amount held abroad by Swiss companies). According to the Swiss State Secretariat for Economic Affairs (SECO), around 200 companies in Switzerland employ around 40,000 people in the Russian food, pharmaceuticals, logistics, construction and raw materials sectors.

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While there is this deep-rooted tradition of respect of the environment in Switzerland it does not necessarily extend beyond the country's borders.

All these companies have condemned the war. In the weeks following the outbreak of the conflict, many multinationals announced their desire to leave Russia – an exodus that included many Swiss companies. But leaving a country where so much money has been invested and where companies could have hundreds of employees is not so easy. Not least because the Russian authorities are not standing idly by and intend to introduce a law aimed at confiscating abandoned assets.

SWI swissinfo.ch contacted about 20 companies to understand their position. In general, the answers we received were the same: we are against the war, we have stopped investments and we are monitoring the situation, taking into account both sanctions and contractual obligations.

Since the beginning of the war Jeffrey Sonnenfeld, a professor at Yale School of Management, has become a bogeyman – not so much for his students as for the managers of dozens of multinationals around the world. Together with his team, he publishes on the university website a list of companiesExternal link that have withdrawn from or remained in Russia during the conflict. The list is continuously updated and comprises more than 1,000 companies categorised into five groups: from those that have abandoned the country completely to those that have taken no action at all.

“I thought the university could offer its experience and objectivity to separate in a meaningful way the companies that are actually leaving Russia from those who are simply engaging in a cosmetic operation, a bit like greenwashing in the context of climate change,” Sonnenfeld told SWI swissinfo.ch.

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