Large European companies suffered losses in the Russian market of at least 100 billion euros after the start of a special operation in Ukraine.

 

How will large losses affect EU countries? How will the losses be recovered after the war ends? How long will the support of the west to Ukraine last? 

 

Ednews discusses those questions with Sebastian Schäffer, Director, Institute for the Danube Region and Central Europe (IDM).

 

 

 “We have to put this into perspective: around 40% of those estimated losses come from oil and gas companies, which have made excess profits dues to the high prices of around 95 billion Euro, so there might have been losses in the Business in the Russian Federation, but at the same time those groups actually made money at the end of the day. Financial institutions like banks but also insurance companies accounted for 17,5 billion Euro of these losses, which are write-offs. Sure there have been a few companies who took a huge hit, however, I do not see a huge effect on the EU countries, as the Russian market is merely 3,5% of the global investment from Europeans.” - Sebastian Schäffer said.

 

According to him, the big question here will be not only when the war in Ukraine ends, but even more importantly how.

 

“Some of those losses have either already been compensated through the excess profits mentioned before, others have been bailed out by states. In the long run the big question here will be not only when the war ends, but even more importantly how. More than half of the European-owned entities in the Russian Federation are still operating in the country and it will only get more difficult to cut losses the longer the war lasts. However, the crucial aspect is the terms of the end. There is a very real scenario that the end of the war will lead to a destabilization or even dissolution of the Russian Federation. Even a negotiated peace with some sort of frozen conflict will mean further insecurity in the direct neighborhood and also in Russia, as an escalation after some time is likely, which other so-called frozen conflicts in the region show. Those companies who have cut their losses and left might pay close attention if returning to the Russian Federation under such conditions is worthwhile. Certainly there will be opportunities as well as opportunists, however, there is already a shift ongoing, which is looking for other possibilities same as in the Russian Federation.”

 

The expert responded to the question: How long will the support of the west to Ukraine last? Will the support decrease?

 

“This is a difficult question to answer. We see a decrease in some countries, although we could also ask the question if it had been higher in the beginning anyways. Nevertheless, I do think that there is an understanding that Ukraine is not only fighting for its own survival, but also defending values like freedom and democracy. While there are certainly also certain politicians as well as parts of society in the EU and Europe in general, that do not have a problem if these values are undermined and are actively contributing to the erosion, I still believe that the majority realizes the wider consequences of ending the support to Ukraine.”

 

«Almost every day we are under pressure from various sides - Italian, Western politicians, our media, our colleagues, finally, from France, Germany, the USA, and other countries who call endlessly and they are interested: how did you not leave Russia yet, what did you forget there?» - said Vittorio Torrembini, President of the Association of Italian Entrepreneurs in Russia. 

 

But what is the attitude of the West to such organizations and companies that have not left Russia?

 

“It’s hard to generalize here, as the West is not a unified entity, but consists of independent states, companies and individuals with varying views also regarding this topic. As I have stated before, I believe that the majority understands the broader implications and I personally do look more closely if a company is still doing business with the current regime in Moscow. Having personally witnessed the atrocities happening in Ukraine as well as the constant attacks on civilian infrastructure from the Kremlin, I would think twice to complain about pressure and financial losses.”

 

Nurlana Hajiyeva