It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Thursday, March 10, 2022
How This Superyacht Became an
Overnight Geopolitical Mystery
Jessica Cherner
The Russia sanctions are growing, seemingly by the hundreds, every day. And much of the world is watching with glee as oligarchs’ luxuries are being hunted down by international governments. If we’ve learned anything from movies like The Wolf of Wall Street, which is based on a true story, it’s that some of the world’s wealthiest enjoy flaunting their money. Not only do billionaires often spend their money on toys like European sports cars and diamond-encrusted watches, but they also want the world to know to whom these extremely rare possessions belong.
After all, Jeff Bezos has been accumulating quite a bit of press as he works on dismantling a historic bridge in Rotterdam to sail his $500 million yacht onto the open sea. But some billionaires play their cards a bit closer to the chest. Case in point: the owner of a 459-foot superyacht docked in a Tuscan port. No one, not even the Italian police, can identify who the enormous vessel belongs to, which leads the world to believe it may be someone tied to one of the world’s most currently despised leaders: Vladimir Putin.
Mega Yacht ''Scheherazade'' anchors in Turkey's Mugla
Scheherazade, which costs an estimated $700 million, boasts not one but two helicopter decks.
Photo: Anadolu Agency/Getty Images
Few believe that the floating mansion actually belongs to the Russian president—whose recent invasion of Ukraine is earning more sanctions than he, his country, and his billionaire friends thought imaginable—but many are more certain that it belongs to someone with ties to the top of the Russian government.
Since the devastating fate of Ukraine started to unfold, the United States, along with the UK and the European Union, have come together to track down the luxuries belonging to Putin’s friends, who are part of a massively growing list of billionaires facing punishing sanctions. That’s why this boat, one of the world’s largest and costliest, is such a point of interest.
International governments have been going after the luxurious belongings of Russian oligarchs since Putin and his government started getting slapped with sanctions two weeks ago, so assuming the yacht hiding out in Italy is one of Putin’s friend’s, things aren’t looking so good. However, no one can confirm just yet. The ship’s British captain, Guy Bennett-Pearce, promised that Putin had never been on the boat and that it didn’t belong to him, but he didn’t confirm whether or not the yacht belonged to a Russian national.
RUSSIA-TURKEY-DIPLOMACY
Russian president Vladimir Putin.
Photo: VLADIMIR SMIRNOV/Getty Images
Considering all of the amenities on the boat, dubbed Scheherazade, it’s not exactly an unfair guess to assume the owner is a Russian oligarch. Scheherazade, which costs an estimated $700 million, boasts not one but two helicopter decks, an indoor swimming pool with a retractable cover that transforms the pool into a dance floor, a fully equipped gym, and bathrooms complete with gold-plated fixtures. That’s a lot of sparkle even for the level of wealth associated with a purchase this big. However, the glamour isn’t the unusual part; the degree of intentional secrecy is.
The superyacht community does entertain a level of confidentiality—mostly for security purposes—but the Scheherazade is kept under so many wraps that it makes people believe something dubious must be going on when it comes to the owner’s identity. For instance, all of the contractors and crew members signed nondisclosure agreements, there’s a custom cover to hide the boat’s nameplate, and when Scheherazade arrived at the port, workers built a metal structure on the pier to keep passersby from seeing the yacht.
Roman Abramovich's yacht "Eclipse" anchors in Turkey
The 459-foot superyacht is currently docked in a Tuscan port.
Photo: Anadolu Agency/Getty Images
This yacht, however, isn’t the only one catching people’s attention as of late. The world’s second-biggest yacht, called Eclipse, is owned by Roman Abramovich, the Russian billionaire who bought (and has since sold his ownership stake) in the British soccer club, Chelsea. Interestingly, the UK government has yet to sanction any of Abramovich's assets in the country.
As for Scheherazade, that mystery is still being investigated, and until the feds can figure out who the not-so-proud owner is, the behemoth on water will remain where it is, shrouded in a cloak of well-orchestrated secrecy.
European authorities are trying to track down the owner of a superyacht nicknamed 'Putin's yacht' by locals
Rebecca Cohen Tue, March 8, 2022, 'Scheherazade', one of the largest superyachts in the world, anchors in
Bodrum district of Mugla, Turkey on August 16, 2020.
Osman Uras/Anadolu Agency via Getty Images
European authorities are trying to track down the owner of a superyacht docked in Italy.
The owner of the Scheherazade is unknown because of confidentiality and non-disclosure agreements.
Some think the yacht could belong to Putin himself and locals have nicknamed it "Putin's yacht."
European authorities are trying to track down the owner of a superyacht currently docked in Italy, whose ownership has been a mystery, according to the New York Times.
As assets of Russian oligarchs and those close to Russian President Vladimir Putin are seized, authorities are trying to identify the owner of the Scheherazade — a 459-foot-long superyacht sitting in a marina on the Tuscan coast of Italy.
Some think it could belong to one of the oligarchs, and locals told The Times that the boat has even been nicknamed "Putin's yacht."
"Everybody calls it Putin's yacht, but nobody knows whose it is," Ernesto Rossi, a retired clerk seen walking near the marina told The Times. "It's a rumor that's been going around for months."
The ship's captain, Guy Bennett-Pearce, told The Times Putin has never been on the yacht, and that the owner was not on any sanctions list, though he didn't rule out the possibility of the owner being Russian.
Bennett-Pearce told The Times that he had to sign non-disclosure agreement before working aboard the Scheherazade.
The Times reports that the Scheherazade has also taken extra steps to ensure privacy, including a cover to protect its nameplate and a barrier at the port to obstruct some of the boat from view.
Bennett-Pearce told The Times that he was forced to hand over the owner's information to "men in dark suits" Monday, but that he was promised the identity of the owner would remain confidential.
"They are looking hard," Bennett-Pearce told The Times. "They are looking at every aspect."
But Bennett-Pearce told The Times that the ship does not belong to a Russian oligarch or to Putin.
"I have no doubt in my mind whatsoever that this will clear the vessel of all negative rumors and speculations," he told the Times.
sanctions meant wages couldn't be paid, reports say
Grace Dean
The US Treasury says the yacht's estimated worth is between $600 million and $735 million.Mikhail Svetlov/Getty Images, Sabri Kesen/Anadolu Agency via Getty Images
The crew of the Russian oligarch Alisher Usmanov's superyacht was fired on Monday, reports said.
The company that staffed the boat said sanctions meant crew wages couldn't be paid, Forbes reported.
Usmanov's estimated worth is $18.4 billion, and his yacht is valued at $600 million to $735 million.
The crew of the Russian oligarch Alisher Usmanov's 512-foot superyacht was fired after Western sanctions prevented wages from being paid to the vessel's staff, multiple outlets reported.
Sarnia Yachts, a yacht-management company in the UK that provided the crew for the $600 million vessel, Dilbar, said in an email to staff on Monday that "normal operation of the yacht has ceased," and that its crew had to be dismissed "as a result of the sanctions imposed," Forbes reported.
The West has imposed heavy sanctions on Russia, with the aim of crippling its economy and cutting off its military's funding, in an attempt to pressure President Vladimir Putin to end the invasion of Ukraine. The West has imposed sanctions not only on Russian banks but also on Russian elites and oligarchs, and they include the seizure of assets such as private jets and superyachts.
The European Union,UK, US, and Switzerland have all sanctioned Usmanov, freezing his assets and, in some cases, barring him from entering their territory. The EU said Usmanov "actively supported" the Russian government's policies of the destabilization of Ukraine.
Usmanov is worth an estimated $18.4 billion, the UK government said. He is the founder of USM Holdings, which has interests in metals, mining, and telecoms. His largest holding is in the Russian steel giant Metalloinvest. The European Union said he had "particularly close ties" to the Kremlin, calling him one of "Putin's favorite oligarchs."
The US has declared Dilbar "blocked property," which prohibits US staff from working on the vessel and bans the payment for its docking fees in US dollars.
Sarnia said in Monday's email to staff that the sanctions meant that some of the companies supporting Dilbar's crew were "unable to continue their normal lines of business," Forbes reported. Sarnia added that it was unable to continue paying salaries to the ship's crew, and that their final wages would instead be paid by the boat's owner, Forbes said.
"We have tried all avenues to find a solution to keep the team in place, and protect our positions, but have reached the end of the road of possibilities," Tim Armstrong, the yacht's captain, wrote in a message to the crew, Bloomberg reported.
The US Treasury said Dilbar's estimated value was between $600 million and $735 million, and that it cost an estimated $60 million per year to run.
Its builder, Lürssen, says it's the "largest motor yacht in the world by gross tonnage." The vessel is equipped with two helicopter pads and has its own 82-foot swimming pool.
Forbes reported that the ship usually had 96 crew members on board, while Bloomberg put the figure at 80.
Sarnia said in the email to the crew that a small number of staff from Lürssen, which owns the Hamburg shipyard where Dilbar has been docked for a refitting since October, would instead look after the "safety and security" of the ship, Forbes reported.
Forbes also reported that Dilbar had been seized by German authorities on March 2, but it issued a correction the following day that said the ship hadn't been impounded. Hamburg's Ministry for Economy and Innovation told Bloomberg that Dilbar wouldn't be able to leave the port until it received an export waiver from Germany's federal customs agency.
Lürssen declined to comment. Sarnia Yachts and Hamburg's Ministry for Economy and Innovation did not immediately respond to Insider's request for comment.
A $600 million superyacht linked to the Russian billionaire Roman Abramovich
has left a Spanish shipyard after
undergoing repairs since 2021
Kate Duffy
Russian President Vladimir Putin, right, speaks as Roman Abramovich looks on during a meeting with top businessmen.Mikhail Svetlov/Getty Images
A superyacht linked to Roman Abramovich has left a Spanish shipyard, according to MarineTraffic.
The $600 million yacht had been docked there for repairs since late 2021, one person told Reuters.
Abramovich hasn't yet come under sanctions imposed by the US or European Union.
A superyacht with ties to the Russian oligarch Roman Abramovich departed from Barcelona in Spain on Tuesday after undergoing repairs since last year.
The yacht's departure was first reported by Reuters.
The vessel, named Solaris, left the shipyard of the Spanish yacht-maintenance firm MB92 in Barcelona on Tuesday afternoon, according to the ship-tracking site MarineTraffic.
Solaris, which spans 140 meters, or 460 feet, has a price tag of $600 million and can hold up to 36 guests, according to SuperYachtFan, which said that Abramovich owns the yacht.
The yacht was finished in 2021 after being built by the German company Lloyd Werft, according to SuperYacht Times.
A person in the industry told Reuters that the yacht had been docked at the Barcelona shipyard since late 2021, but it wasn't clear where it was headed next.
"We never comment on the movements of the yacht or any other vehicles or vessels," a spokesperson for Abramovich told Reuters.
MB92 declined to comment to Reuters and Insider.
The news comes as the wealthiest Russians sought to move their yachts and private jets to different locations after the invasion of Ukraine in an attempt to protect their assets.
Abramovich, who has a net worth of $13.6 billion, according to a Bloomberg estimate, hasn't yet come under US or EU sanctions, which have been imposed on other Russian oligarchs and billionaires with ties to President Vladimir Putin since his troops invaded Ukraine.
Last week, Abramovich announced he was selling the English Premier League team Chelsea FC, with an asking price of $2.5 billion, The New York Times reported.
After years of living in Moscow, I have bad news: No one should expect the Russian people to suddenly rise up against Putin now
In late 2011, tens of thousands of Russians took to the streets of Moscow to demand that election results rife with alleged fraud be overturned.
It was the biggest challenge to Vladimir Putin’s authority since he took power a decade earlier, and that it wasn’t immediately crushed gave hope that perhaps change was coming to Russia.
“There has been a phase shift — like water starting to boil — anything is possible from here,” one protestor told me at the time. It was a level of optimism that has not been seen since.
As Russia wages war in Ukraine and deals with crippling economic sanctions that have crushed the ruble, sent prices soaring, and shredded its citizens’ savings, street protests have begun anew, but it is hard to imagine public outcry strong enough to shake the Putin regime.
Over the past decade, the Kremlin has systematically hounded whatever vestiges of the protest movement into silence. Many of its organizers now live abroad. Its most well-known figure, Alexei Navalny, has been jailed.
For the rest of the country, years of increasingly monolithic messaging through state media has further undermined whatever resistance might take root.
“The Russian population has been lulled into a deep political sleep under Putin after being bombarded for years by such lies and misinformation on TV.”
The Russian population has been lulled into a deep political sleep under Putin after being bombarded for years by such lies and misinformation on TV, following decades of a similar approach under Soviet rule. Why bother being engaged if you don’t know what to believe?
Many are convinced that Russia is simply trying to dislodge Nazis who have taken power in Kyiv and that Ukrainian people are welcoming Russian soldiers with open arms. Nowhere to be seen on state-controlled television are images of Ukrainian housing blocks blasted to dust and fleeing civilians killed by indiscriminate Russian shelling.
What little independent media remained has been entirely shut down under new rules from the Kremlin vowing to harshly punish any news outlet that deviated from the official line. Even foreign media has been forced to curtail operations so as not to run afoul of the new rules,
Average Russians have also seen their standard of living improve under Putin following the turbulent 1990s when Russia was recovering from the collapse of the Soviet Union. Wages have risen. Average people can afford foreign cars and annual holidays to the beaches in Greece and Egypt. For years, many had little interest in rocking the boat.
And the brutal stifling of all dissent has driven home to many that there is little upside to being politically engaged, unless you were fully for Putin. As a matter of survival, it was better to just keep your mouth shut.
“The oligarchs don’t pick their leader, Putin picks who his oligarchs are. They have limited influence, so a palace coup from the business class seems unlikely. ”
It is difficult to imagine Russia’s sudden global pariah status and the collapse of the economy quickly changing this dynamic.
The other theory is that sanctions will cause such deep economic pain to the country’s oligarchs, who are seeing their yachts and overseas villas being seized, that they will rise up and push Putin into changing course.
But that betrays a fundamental misunderstanding of Russia’s power dynamics — the oligarchs don’t pick their leader, Putin picks who his oligarchs are. They have limited influence, so a palace coup from the business class seems unlikely.
Putin’s power lies with the country’s all powerful intelligence agencies, defense complex and police force, none of which he is likely to lose anytime soon.
Perhaps sanctions and the threat of global war will rouse long dormant forces in Russia, but it seems unlikely that that will happen swiftly.
Lukas I. Alpert is a financial crimes reporter for MarketWatch, and a former Moscow correspondent for The Wall Street Journal.
Ukrainian woman struggles to get Russian parents to believe that civilians are under attack
Lisa, a Ukrainian woman who escaped Kyiv and is currently in western Ukraine and who also asked that her last name not be used for safety purposes, appeared Monday on Don Lemon Tonight, where she spoke about the effectiveness of the disinformation campaign that the Russian government is currently running on its citizens. Lisa said that her parents live in Russia, and believe the propaganda they are fed on a daily basis. Even her own evidence wasn’t enough to convince them that the Russian military is doing anything wrong.
“They can’t believe that Russians are doing anything wrong. They can’t believe that Russians are hitting civilian buildings,” Lisa said, later adding, “Even when I show the photo of my own neighborhood, which is rocket-launched, they still … they — I can’t understand how it happens.”
The Russian government has recently cracked down on independent journalism and free speech even more than normal in an attempt to spin its own narrative about the war that it started, and Lisa said her parents believe what the government is telling them.
“They really believe what they see on TV more,” Lisa said. “Of course they are afraid for my own safety and for their grandchildren, but I’ve heard from them that even things like Ukrainian army is shooting its own civilians. But who serves in the Ukrainian army? Those who have their homes and their families here.”
Lisa said that even before the war, her parents and other Russians laughed at Ukrainians who took the threat of invasion seriously.
“She told me that Russians are laughing at that panic,” Lisa said. “They believe that Ukrainians are just crazy, that Russia will never attack. So it was just one week before the invasion.”
BUYBACKS, DIVIDENDS, NO CAPEX OPEC Bonds With U.S. Shale Over ‘Dangerously’ Low Oil Spending
Kevin Crowley, Sergio Chapa and Paul Takahashi Mon, March 7, 2022,
(Bloomberg) -- Outgoing head of OPEC Mohammad Barkindo met with U.S. shale producers Monday night in Houston and said both groups are aligned in how they see the challenges posed to the oil industry by underinvestment.
The theme of spending that’s insufficient to keep pace with strong global demand was a recurring one during the first day of CERAWeek by S&P Global, a major industry conference taking place in person for the first time in three years.
The event is happening against a backdrop of surging oil prices as buyers and traders worry Russian supplies may be subject to government sanctions because of the war in Ukraine. Brent crude hit a 13-year high Monday.
“Theres no doubt we need to engage the investment community, the financial community, to address the encumbrances that are turning out to be obstacles on our way to access capital,” Barkindo said in an interview following the dinner meeting.
“The world is gradually but dangerously running out of spare capacity which is the insurance buffer which is absolutely necessary for industry and for the world,” he said. “This is a function of the massive underinvestment in the industry in the last 10, 15 years.”
He said the Organization of the Petroleum Exporting Countries is “on the same page” as U.S. shale. In previous years, both groups have eyed each other warily or engaged in outright competition for market share.
But Barkindo struck a wistful tone after the dinner, which was attended by U.S. industry figures including EQT Corp. Chief Executive Officer Toby Rice, Hess Corp. CEO John Hess, Chesapeake Energy Corp. CEO Nick Dell’Osso, and Credit Suisse Group banker Tim Perry. The shale executives could be seen through the restaurant’s windows applauding Barkindo as he was presented with a bottle of Barnett shale. For Barkindo, a Nigerian, it was his last OPEC-shale dinner as secretary general. Kuwaiti oil executive Haitham al-Ghais succeeds him in the role in July.
“We went down memory lane,” Barkindo said. When he first came to CERAWeek several years ago, “I was not optimistic that I would be welcomed, listened to.” But, he added, “we realized that we had more that binds us together.”
U.S. shale shortages to limit efforts to replace banned Russian oil
A pump jack operates in the Permian Basin oil production area near Wink
Tue, March 8, 2022 By Arathy Somasekhar
HOUSTON (Reuters) - U.S. shale producers are unlikely to replace banned Russian oil imports due to a shortage of oilfield materials, equipment and labor and a dwindling backlog of wells waiting to be completed, energy executives and analysts said on Tuesday.
U.S. President Joe Biden imposed an immediate ban on Tuesday on Russian oil imports in retaliation for its invasion of Ukraine, putting a spotlight on shale producers' ability to boost output to make up for the loss of about 200,000 barrels per day of Russia crude typically imported by domestic refiners.
Shale has a short-cycle - able to add or reduce production relatively quickly - and in the past, producers have delivered explosive growth when prices allow.
In the Permian Basin, the top U.S. shale field, output jumped by 100,000 bpd nearly every month in 2018, according to U.S. government data.
But unlike 2018, there is a lack of oilfield materials, equipment and labor, and the fastest way to increase shale production - completing already drilled but not yet completed wells - has declined.
Shale wells waiting to be completed and turned on have fallen sharply to 4,466, the lowest since January 2014 and nearly half of the highs touched mid 2020, data showed.
"Drilled-but-uncompleted (DUC) wells represent latent potential, and that latent potential has shrunk," said Stacey Morris, research director at Alerian, an energy index provider.
Analysts warned the time needed to drill and complete a new well can take six to eight months.
Even though the U.S. rig count has climbed for a record 19 months in a row, its growth has been slow and oil production is still far from pre-pandemic record levels as many companies focus more on returning money to investors rather than boosting output.
Today's lack of materials, equipment and labor is "not adequately recognized as a significant impediment for growth," Occidental Petroleum Chief Executive Vicki Hollub said.
Oil producers which have not planned for volume growth this year cannot change and abandon commitments to allocate profits to debt reduction and shareholder returns, she said.
"Capital discipline today for oil companies is basically no (production) growth," Hollub said.
Shale companies have set their production budgets for the year and, like Occidental, cannot revise them without investor approval, said Pablo Prudencio, a senior analyst at energy consultancy Wood Mackenzie.
(Reporting by Arathy Somasekhar and Liz Hampton in Houston)
OPEC chief says there's 'no capacity in the world' that could replace Russia's 7 million barrels a day in oil supply
Adam Morgan McCarthy Tue, March 8, 2022 Mohammed Barkindo speaks to reporters in 2019AP
OPEC's secretary general said there isn't enough oil capacity to compensate for the loss of Russian supply.
The oil producer group has no control over the events that are driving prices, Mohammed Barkindo said Monday.
The US is reportedly prepared to go it alone with a ban on Russian oil imports over the Ukraine war.
Russian oil exports are crucial to global supply, and there are no sources that can compensate for the millions of barrels the country contributes, OPEC's secretary general has said.
The US is considering whether to ban imports of oil from Russia over its war on Ukraine, and there are fears Russia could redirect its volumes in response to Western sanctions. That has prompted debate as to whether there are alternatives to Russian oil on deck.
Barkindo, who has been OPEC's secretary general since 2016, was speaking at an industry conference in Houston on Monday as oil prices roared toward 14-year highs.
Brent crude was last up to 1.7% at $125.15 a barrel on Tuesday, rising for the third straight day after hitting $139.13 a barrel the previous session. WTI moved up 2.8% Tuessday.
But Barkindo downplayed the impact OPEC could make in the market as the conflict in Ukraine continues, and as Russia and the West trade moves and threats.
"We have no control over current events, geopolitics, and this is dictating the pace of the market," he said.
So far, OPEC and its allies — known as OPEC+ — have shown no interest in ramping up production, leading some analysts to say that this is contributing to the squeeze on supply.
Meanwhile, oil buyers and refiners have been "self-sanctioning" — staying clear of Russian supplies and looking for alternatives, market analysts have said.
The US is willing to act alone on a ban on Russian oil imports, if its European allies step back, Reuters reported.
But Germany's leader, Chancellor Olaf Scholz, said Russian energy was "of essential importance" to the daily life of its citizens, as he cautioned against the move.
"Supplying Europe with energy for heat generation, mobility, electricity supply and industry cannot be secured in any other way at the moment," Scholz said in a statement.
The threat of an import ban prompted Russia's deputy prime minister to issue a warning and predict oil prices could surge to $300 a barrel.
"It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market," Alexander Novak said on state television Monday.
Russia's Most Important Oil Export PartnersStatista
The US is willing to act alone on a ban on Russian oil imports, if its European allies step back, Reuters reported.
But Germany's leader, Chancellor Olaf Scholz, said Russian energy was "of essential importance" to the daily life of its citizens, as he cautioned against the move.
"Supplying Europe with energy for heat generation, mobility, electricity supply and industry cannot be secured in any other way at the moment," Scholz said in a statement.
The threat of an import ban prompted Russia's deputy prime minister to issue a warning and predict oil prices could surge to $300 a barrel.
"It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market," Alexander Novak said on state television Monday.
COPENHAGEN (Reuters) -A senior member of Russia's ruling party has proposed nationalising foreign-owned factories that shut down operations in the country over what the Kremlin calls a special military operation in Ukraine.
Several foreign companies including Ford and Nike have announced temporary shutdowns of stores and factories in Russia in order to put pressure on the Kremlin to stop its invasion of neighbouring Ukraine and as their supply chains are disrupted.
In a statement published on Monday evening on the United Russia website, the secretary of the ruling party's general council Andrei Turchak said shutting operations was a "war" against the citizens of Russia.
The statement mentioned Finnish privately owned food companies Fazer, Valio and Paulig as the latest to announce closures in Russia.
"United Russia proposes nationalising production plants of the companies that announce their exit and the closure of production in Russia during the special operation in Ukraine," Turchak said.
"This is an extreme measure, but we will not tolerate being stabbed in the back, and we will protect our people. This is a real war, not against Russia as a whole, but against our citizens," he said.
"We will take tough retaliatory measures, acting in accordance with the laws of war," Turchak said.
Paulig Chief Executive told Reuters in an email this would not change its plans to withdraw from Russia. Fazer and Valio did not wish to comment when contacted by Reuters.
Fazer, which makes chocolate, bread and pastries, has three bakeries in St Petersburg and one in Moscow, employing around 2,300 people.
Valio has a cheese factory and employs 400 people in Russia, and Paulig has a coffee roastery and employs 200 people in the country.
Last week, non-NATO member Finland, which shares a border with Russia, agreed to strengthen security ties with the United States as it nervously watches Russia's invasion of Ukraine.
(Reporting by Jacob Gronholt-Pedersen; additional reporting by Essi Lehto, editing by Ed Osmond, Kirsten Donovan and Lincoln Feast.)
Tobacco group BAT suspends Russia capital investments, scales back marketing Signage is seen at the London offices of British American Tobacco, in London, Britain
Wed, March 9, 2022 By Richa Naidu
LONDON (Reuters) - Camel and Lucky Strike cigarette maker British American Tobacco Plc said on Wednesday its business in Russia continued to operate, but that it had suspended all planned capital investment in the country following the Ukraine invasion.
BAT, which has 2,500 workers in Russia and major local manufacturing operations, also said it was "scaling our business activities appropriate to the current situation, including rationalising our marketing activities."
The Ukraine crisis has put pressure on multinational companies to take action, with a growing list of consumer products manufacturers distancing themselves from Russia this week.
BAT's announcement comes hours after Philip Morris International Inc suspended its planned investments in Russia and said it would scale down manufacturing in the country. Smaller London-listed rival Imperial Brands also said on Wednesday that it had paused operations in Russia.
Nestle, tobacco groups, gamemaker Sony join move away from Russia Nestle logo is pictured on the door of the supermarket of Nestle headquarters in Vevey
Wed, March 9, 2022
(Reuters) - Nestle, Philip Morris and video gamemaker Sony joined the list of multinationals stepping back from Russia on Wednesday as pressure mounts from consumers in the West to take a stand against the invasion of Ukraine.
Nestle, the world's biggest packaged foods group, and Mondeleze International, followed actions by rivals Procter & Gamble and Unilever in halting investment in Russia.
But the four companies will continue providing essentials, with Mondelez aiming to help to maintain "continuity" of the Russian food supply.
Similarly, while cigarette maker Imperial Brands suspended operations in Russia, rival Philip Morris only said it would scale down manufacturing, and Camel maker British American Tobacco Plc said its business in Russia continued to operate, even though it had suspended capital investment.
Sony, whose movie studio has already stopped releases in Russia, took additional action on Wednesday, saying its PlayStation gaming unit would stop shipments and operations in Russia. "Sony Interactive Entertainment joins the global community in calling for peace in Ukraine," it said.
Many businesses face difficulty working in Russia due to sanctions and a lack of shipping, in addition to pressure from consumers and investors, and describe ending work in Russia in more practical terms, without blaming the Russian government for attacking Ukraine.
Heavy equipment maker Deere & Co, saying it was "deeply saddened by the significant escalation of events in Ukraine," announced it had ended shipments to Russia two weeks ago, and subsequently to Belarus, and said it would follow U.S. and international sanctions. Caterpillar Inc said it was suspending business as supply chain disruptions and sanctions made business difficult and 3M followed suit after reassessing its business in Russia.
Still, pressure in the West is building.
A Rio Tinto executive early in the day said the miner was working to maintain supplies of Russian fuel to its Mongolian copper mine, but the company later announced it was terminating all commercial relationships with Russian businesses.
Hotel companies Hilton Worldwide Holdings and Hyatt Hotels Corp said they would suspend development in Russia.
Coca-Cola Co and McDonald's Corp halted sales in Russia on Tuesday in symbolically potent gestures. A senior member of the Russian ruling party has warned that foreign firms that close down could end up having their operations nationalised.
McDonald's said the temporary closure of its 847 stores in the country would cost it $50 million a month.
Sportswear firm Adidas also quantified the cost of scaling back its operations, saying it would take a hit to sales of up to 250 million euros ($277 million).
Yum Brands Inc, parent of fried chicken giant KFC, said it was pausing investments in Russia, a market that helped it achieve record development last year.
Carlsberg said it was suspending Russian brewing of its namesake brand of beer while keeping its Russian Baltika brand operating.
"We feel a moral obligation to our Russian colleagues who are an integral part of Carlsberg, and who are not responsible for the actions of the Government," Carlsberg said, adding it was withdrawing financial guidance for the year.
E-commerce company Shopify Inc joined the crowd, saying it would suspend Russian operations and collect no fees from Ukrainian merchants, citing millions of Ukrainian refugees needing support.
'LAWS OF WAR'
In response to the exodus, Andrei Turchak, secretary of the ruling United Russia party's general council, warned Moscow might nationalise idled foreign assets.
"United Russia proposes nationalising production plants of the companies that announce their exit and the closure of production in Russia during the special operation in Ukraine," Turchak wrote in a statement published on the party's website on Monday.
The statement named Finnish privately owned food companies Fazer, Valio and Paulig as the latest to announce closures.
"We will take tough retaliatory measures, acting in accordance with the laws of war," Turchak said.
SANCTIONS
Moscow, which calls its invasion of Ukraine a "special military operation," has been hit by sweeping Western sanctions that have choked trade, led to the collapse of the rouble and further isolated the country.
Banks and billionaires have also been targeted, with the European Commission preparing new sanctions targeting additional Russian oligarchs and politicians, and three Belarusian banks, Reuters reported.
While the war in Ukraine and the sanctions have bolstered prices for commodities that Russia exports such as oil, natural gas and titanium, those sanctions have largely barred Moscow from taking advantage of the high prices.
On Tuesday the United States banned Russian oil imports.
U.S. oilfield services company Schlumberger, which derives about 5% of its revenue from Russia, said the ongoing conflict would likely hurt results this quarter.
Global commodities trader Trafigura Group raised a $1.2 billion revolving credit facility from banks to help address soaring energy and commodity prices.
Norway's Yara, a top fertiliser maker, said on Wednesday it would curtail ammonia and urea output in Italy and France due to surging gas prices.
($1 = 0.9037 euro)
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Ukraine crisis: Which major Western fast food chains are still open in Russia?
The three major brands all announced the move within hours of each other on Tuesday.
In a statement posted to its website, Starbucks announced it is “suspending all business activity in Russia”. Dunkin' Donuts have stores still open in Russia. (Getty) Papa John's stories remain open in Russia. (Getty)
Starbucks chief executive Kevin Johnson said in a statement posted on the website that the company condemns “the horrific attacks on Ukraine by Russia and our hearts go out to all those affected”.
It came just hours after McDonald’s announced the temporary closure of all restaurants in Russia in 850 different communities.
However, some fast food chains with stores in Russia appear to still be operating, with no immediate mention of halting business on company websites.
They are:
Burger King – 550 stores
Domino’s Pizza – 121 stores as of 2017
Papa John’s – 197 stores as of 2019
Subway – Around 600 stores
Dunkin’ Donuts – Around 20 stores McDonald's has announced the closure of all its restaurants in Russia. (Getty)
KFC and Pizza Hut also have stores open in Russia but parent company Yum Brands Inc said they were finalising an agreement to suspend all Pizza Hut restaurant operations in Russia.
Seventy company-owned KFC stores are also set to close, while investment in Russia is set to be paused.
However, with at least 1,000 KFC stores in Russia, many will remain open but the majority are owned and operated independently through franchise agreements, meaning the company has significantly less control on closing those stores.
Yum Brands said in a statement: "Like so many across the world, we are shocked and saddened by the tragic events unfolding in Ukraine.
"Yum Brands has suspended all investment and restaurant development in Russia while we continue to assess additional options." A man walks past a Domino's Pizza restaurant in Moscow, Russia. (Reuters) Many KFC stores in Russia are independently owned and remain open. (Kirill Kukhmar\TASS via Getty) Burger King stores in Russia remain open due to franchise issues. (Getty)
Similarly, Restaurant Brands International Inc, the parent company of Burger King, said that their more than 800 restaurants remain open in Russia as they are owned and operated by local franchisees.
A spokesperson for the company told Yahoo News UK that Burger King has committed $3m to immediately support Ukrainian refugees.
They added: “We are watching the attack on Ukraine and its people with horror and are focusing our efforts in the region on contributing to the safety of Ukrainians seeking shelter and security for their families.” An apartment building damaged after shelling the day before in Ukraine's second-biggest city of Kharkiv. (Getty)
Domino’s Pizza, Papa John’s, Subway and Dunkin’ Donuts have all been contacted for comment.
In an article shared to the McDonald’s website on Tuesday – which was originally sent to employees and franchisees by email – CEO Chris Kempczinski said: “The conflict in Ukraine and the humanitarian crisis in Europe has caused unspeakable suffering to innocent people.”
Kempczinski said it would continue to pay the 62,000 employees in Russia although the company “cannot ignore the needless human suffering unfolding in Ukraine”.
