End of an era in Russia as sanctions dwindle and Western companies decline

The Iron Curtain, which had divided Eastern and Western Europe for decades, had just collapsed. Now the fast food chain loved by Americans and many others can serve Big Mac meals to Russian customers.

Of course, Russians can choose to eat elsewhere and buy other goods – many local chains have sprouted throughout the vast country since the collapse of the Soviet Union.

“Coca-Cola, Pepsi and McDonald’s were symbols of Russia’s Westernization and Russia’s openness to the world. The fact that these companies are leaving … indicates and highlights the extent to which Russia is closing in and turning inward,” he said. Gulnaz ShervutdinovaProfessor of Russian Politics at the Russia Institute at King’s College London.

McDonald’s first restaurant on Pushkin Square, known as Pushkinskaya Square to the Russians, seated 700 diners and was for years the company’s largest outlet anywhere in the world. Young middle-class Russians who grew up in the 90s saw McDonald’s as a cool, foreign-friendly restaurant where you could take friends to celebrate special birthdays.

As the 21st century progressed, the chain seemed a less effective symbol of American culture, but it remained a favorite place for Russian college students to meet for affordable lunches or dates, and offered a quick, cheap dining option for others. Its branches have also provided job opportunities to tens of thousands of Russians.

All of that is gone now, at least for the foreseeable future. “Our values ​​mean we cannot ignore the needless human suffering unfolding in Ukraine,” McDonald’s CEO Chris Kempinski said in a letter to employees on Tuesday announcing the company’s suspension of its operations in the country. He added that it was “impossible to predict” when his restaurants would reopen. CNN has reached out to McDonald’s to confirm the final closing date for its restaurants but has yet to receive a response.

“Whether or not it is the end of an era, it is difficult to determine now, many observers fear that this is the end of an era, and it will depend on how long it will take Russia to get past the difficult, dark and poisonous authoritarian regime- We are also quite clear that moving away About this will require a lot of effort – socially, politically, economically and leadership.”

A soldier gives two cans of Coca-Cola to a tank driver near the building of the Russian Federation in Moscow, August 21, 1991.

reputation hurt

Many Russian citizens are still traumatized by the events of the past two weeks. With the state tightly controlled news coverage of the war, it is difficult to assess exactly how much their world has changed with the imposition of Western sanctions.

But the economic pain is already beginning to be felt The value of the ruble collapses Tighter banking controls. While some wealthy Russians Scrambled to sell assets abroad And even to leave the country while they still can, the less affluent have fewer options.
Shoppers pass through the H&C's store.  The closed M at the Vegas shopping center on March 4, 2022 in the Russian capital.

Obviously, the immediate impact will be on those working for Western companies who have halted operations, despite promises of continued support from employers.

at statmentThe 62,000 employees in Russia who “have poured their hearts and souls into our McDonald’s brand to serve their communities,” Kempczynski said, will continue to be paid. He also noted the impact on “the hundreds of local and Russian suppliers and partners who produce food for our menu and support our brand.”

Swedish furniture giant IKEA, which first opened its doors on Russian soil in 2000 and now has 17 stores across the country, said its decision to halt all exports and imports to and from Russia and Belarus and halt all IKEA operations in Russia would have a direct impact. over 15,000 workers.

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“The ambitions of the company’s groups are long-term and we have worked to secure employment and income stability in the near future and provide support to them and their families in the region,” IKEA said in a statement.

Shoppers wait in line to pay for their purchases at an IKEA store on March 3, 2022 in Moscow.

For other Russians, the effect is likely to be depressing on two levels, though less direct, said Thomas Chamorro Primuzic, professor of business psychology at University College London. First, they will lose access to the products and services they enjoy — but also, and perhaps more painfully, they will feel reputational damage from being “dishonored and ostracized by the world,” he said via email.

Shervutdinova notes that the response will, of course, differ across different segments of Russian society. Some of the companies that have ceased operations in Russia are luxury brands whose products were out of reach for the vast majority of Russians.

But others, such as IKEA, Starbucks, or even McDonald’s, “were places visited, used and consumed by the middle classes of Russia” in urban areas regularly, she said, and their loss would affect large numbers of people. “There will be alternatives, but it is another symbol of the middle class for the Russians and they will lose that access,” she said.

Shervutdinova added that outside of those urban areas, where opinions are more global, the response is likely to be the challenge in the face of sanctions, as the West is seen as turning against Russia.

These Russians “will see themselves as some kind of Russian patriot who cares about Russia’s national interests, because that’s what the government is offering… they’ll be up for the challenge and they’re going to strengthen behind the leadership and say, ‘Well, it’s better that we’re going to build our economy.'”

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Russian President Vladimir Putin insisted on Friday that Western sanctions represented an opportunity for Russia’s $1.5 trillion economy, the world’s 11th largest.

Speaking alongside Belarusian leader Alexander Lukashenko in Moscow, Putin said: “Recent years have shown that wherever Westerners impose restrictions on us, we have acquired new competencies and brought new competencies back to a new technological level.”

“This is a time of opportunity to move towards strengthening technological and economic sovereignty,” Putin added.

People are seen at a McDonald's restaurant in Moscow on March 9, 2022.

Job loss

Some in Russia respond to the withdrawal of Western brands with black humor. New memes are making the rounds On social media, like suggest it Giant plush sharks from IKEAwhich previously had a craze in Russia, had to be stockpiled, or point out that McDonald’s food is now sold at Avito, the equivalent of eBay or Craig’s List in Russia.
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1 Twitter user to publish Photo of people standing in line outside Pushkin Square McDonald’s in 1990 with the sarcastic caption (in Russian): “Moscow, opening of McDonald’s, March 2025.”

However, Chamoru Primozic said that the symbolism of the world’s withdrawal from Russia will have an emotional and psychological impact.

“It’s not really about the job loss of paying more for furniture or not having your favorite burger or coffee, but the fact that you’ve become public enemy number one. With any bad leader or tyrannical ruler, it’s the citizens of the country who have the bone.”

Chamorro Primuzic added that job losses may also follow if companies decide to permanently close operations, rather than simply suspend them. “These are big employers and just as they created many jobs when they come in, the jobs will go if they leave,” he said.

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But this does not mean that those companies will say goodbye to Russia forever. Chamorro Primozic said companies can of course “return easily if there are significant policy changes, government changes, and reputational changes”.

“Of course it’s a big market for companies, so they’ll have the same incentive to go back than they had to go there the first time. So, if there’s no ethical or brand reputation barrier, they’ll come back.”

In the meantime, according to Putin, Russia and Belarus will get through the difficulties imposed by the sanctions and will even gain “more competencies, more opportunities to feel independent, self-sufficient, and ultimately benefit. [from them]As it was in previous years.”

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