The West painted itself into a corner ecologically as well as economically, and it’s confounding to watch as they worsen their conundrums.

March 28, 2022

By: Bobby Casey, Managing Director GWP

Plenty of companies have indeed either left or suspended their businesses in Russia as part of a corporate boycott of that country.

There are several companies, however, that have NOT left. The reasons vary. But it seems like all eyes are on those who dare to continue to operate in Russia. It’s almost as egregious as not changing your corporate logo on LinkedIn during Pride Month.

In some cases, there are franchise agreements that preclude just shutting down and pulling out of the country. But in other cases, their reasons are a little different.

Two such companies are Koch owned Guardian Industries, a glass-making company that employs roughly 600 people; and Finnish owned Nokian Tyres.

Koch released the following statement:

Koch company Guardian Industries operates two glass manufacturing facilities in Russia that employ about 600 people… While Guardian’s business in Russia is a very small part of Koch, we will not walk away from our employees there or hand over these manufacturing facilities to the Russian government so it can operate and benefit from them… Doing so would only put our employees there at greater risk and do more harm than good.

NASDAQ reported the following about Nokian:

Nokian Chief Executive Jukka Moisio told Helsingin Sanomat in an interview published on Monday that the company did not want its Russian factory to end up “in wrong hands” to avoid its Russian factories being used to make tyres for the military.

“In our opinion it is better that the factory is in our control than in someone else’s,” Moisio told the paper.

In both cases there was something that was rather conspicuous: the Russian government nationalizing the assets left behind. Two weeks ago, the Wall Street Journal wrote:

Russian prosecutors have issued warnings to Western companies in Russia, threatening to arrest corporate leaders there who criticize the government or to seize assets of companies that withdraw from the country, according to people familiar with the matter.

Prosecutors delivered the warnings in the past week to companies including Coca-Cola Co. , McDonald’s Corp. , Procter & Gamble Co. , International Business Machines Corp. and KFC owner Yum Brands Inc… The calls, letters and visits included threats to sue the companies and seize assets including trademarks…

This definitely puts these businesses in a bind. It’s like a very nasty divorce and all the kids are forced to pick a side… OR ELSE.

And there’s no good choice. There’s just varying degrees of consequences. Stay and suffer backlash at home or leave and lose your assets to Russia. Some businesses have said they are “suspending” their operations, ostensibly until the end of the war. But the odds of them getting back into the Russian market after abandoning their posts so unceremoniously are questionable at best.

Western countries are turning to OPEC (which isn’t exactly comprised of the most savory nations) begging them to tap into their reserves or produce more oil.

OPEC isn’t answering the call, or if they have, their answer was no:

The real answer from both OPEC leaders was very clear indeed, at this moment they will not change their production and export strategies and they will not endanger their strong relationships with Russia’s leader Putin.

This really isn’t about who the good and bad guys are. That’s irrelevant. This is about how everyone who IS NOT Russia or Ukraine is handling this. Russia’s behavior is rather par for their course. Nationalizing whatever is left behind shouldn’t be a surprise move from a country whose leadership pines for the old Soviet Union days.

Ukraine is doing what it needs to do.

Rather than take this as a sign to get our respective houses and affairs in order, the Western countries have been oddly confounded.

Germany decided to pledge to “shut down all coal-powered plants by 2038, and a decades-old decision to aggressively phase out nuclear energy, have made the country reliant on Russian gas, which has been cheaply flowing toward German shores for decades,” writes Fortune.

The article goes one to say:

Natural gas makes up 25% of Germany’s total energy consumption, and the country relies on Russia for 55% of its gas supply.

As if having a Green agenda wasn’t ill-timed enough, their Green strategy is similar to that of the US: outsource energy production to countries with lower ecological expectations and performance. It’s like scraping all your veggies onto the dog’s plate and declaring how you ate it all up.

The US response is nothing short of predictable at this point, with its congress talking about “gas price stimulus checks“.

One proposal is the “Gas Rebate Act 2022”:

The congressional lawmakers propose the Gas Rebate Act of 2022 where Americans would get an energy rebate of $100 per month (and $100 for each dependent) for the rest of 2022 in any month where the national average gas prices exceed $4.00 per gallon.

Another proposal is the Stop Gas Price Gouging Tax and Rebate Act:

Under his proposal, companies will pay a one-time, 50 percent windfall profit tax on any adjusted taxable income (ATI) in 2022 that exceeds 110 percent of their average ATI during pre-pandemic levels between 2015-2019. Revenue, raised by the windfall profit tax, will be returned to consumers as a monthly, advanced, and refundable tax credit that will be phased out by income.

Basically, the solution to inflation is more inflation.

Why wasn’t economic independence a higher priority than simply shifting the dirty work out of the West and toward developing countries? Hypocrisy doesn’t begin to describe the nonsense.

But while corporations are being faced with no win situations, politicians are digging themselves deeper into their own manufactured problems.

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