Russia's aggression against Ukraine will have a long-term impact on Russia's economic development, pushing it back at least ten, if not twenty, years in terms of economic and technological development.
Many are now celebrating the decisions of Western companies to leave the Russian market and see this as support for Ukraine. At the same time, no mention is made of those Western companies that evacuated their staff and left Ukraine as a result of the Russian invasion.
It is a purely psychological reaction to see in various facts or events only what everyone wants to see, and not what is actually happening. The announcements that Western companies are, one by one, stopping their exports of goods to Russia are seen in Eastern Europe only as solidarity support for Ukraine.
Unfortunately, this is wishful thinking. International business is driven by the interests of the owners to maximize profits, and therefore also takes reputational interests into account. When Coca-Cola delayed announcing its withdrawal from the Russian market, a movement to boycott the company's products began to grow. After weighing up the reputational risks, Coca-Cola (and, after some time, Pepsi Cola) announced that it would withdraw from the Russian market. Boycotting unfair business practices is a normal expression of Western civilization. For this, Daniel Kahneman (born 1934) won the Nobel Prize in Economics in 2002. One of Daniel Kahneman's conclusions was: "In cases where people have the opportunity to punish unscrupulous businessmen by refusing to buy from them, they are willing to engage in such collective punitive action." The Latvian translation of Daniel Kahneman's book "Thinking, fast and slow" was published by Jumava in 2012.
But decisions not to export to Russia are not always directly linked to support for Ukraine.
To begin with, the EU, the US, Japan, and other countries imposed strict sanctions banning the export of high-tech, military and dual-use items to Russia. These include, for example, integrated circuits, which can be put into a computer or a cruise missile, as well as optical devices, lasers, etc. At the same time, almost all Western companies are leaving the Russian market, including those whose businesses are not directly on the list of banned exports. There are other reasons for this. Following the US sanctions on the use of the US dollar in transactions with Russia and the disconnection of leading Russian banks from SWIFT (the interbank payment system), it is no longer possible to receive payment for products exported to Russia without coming into conflict with the US Department of Justice (I would not wish on anyone to come into conflict with the US Department of Justice; there have been examples in Latvia). These are export restrictions from the West.
On the Russian side, there are additional so-called anti-sanctions measures. Now, any Russian company, when concluding a deal with a natural or legal person from a country that is "unfriendly to Russia", must obtain the authorization of a Russian government committee or, in certain cases, of the Russian Central Bank. Russia has technically restricted any new deal with a citizen or company of any EU Member State, the US, Switzerland, even Australia, Liechtenstein, Monaco, etc.
Now, all those who export their products to Russia under contracts concluded before February 24 can be paid for their deliveries in Russian rubles, but in no way in a freely convertible currency. It is not clear how and at what rate payment for exports would be made. Under such sanctions and counter-sanctions, business enterprises that are not charitable institutions have had to cease all exports to Russia. Legal constructs using Iranian, Vietnamese or Chinese currencies also carry a very high legal risk.
So let us be realistic. The massive refusal of Western companies to export to Russia is not only solidarity with Ukraine, but also pragmatic business decisions.
Although Russia is threatening to nationalize (confiscate) the investments of all foreign investors who cease operations in Russia, reputational risks and rational decisions prevail. The avalanche that has begun means Russia's divorce from international trade, from international technology transfer, and it cannot be stopped. Millions of employees in foreign missions and joint ventures have already lost their jobs, and this will not increase the support for the criminal regime in Russia.
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