By Pam Martens and Russ Martens: March 1, 2022 ~
There is now an international competition for who can land the biggest insult to Russian President Vladimir Putin by severing business, financial, cultural and sports ties to Russia. Add Mickey Mouse to the growing list. Yesterday, the Walt Disney Company Tweeted this:
“Given the unprovoked invasion of Ukraine and the tragic humanitarian crisis, we are pausing the release of theatrical films in Russia, including the upcoming Turning Red from Pixar. We will make future business decisions based on the evolving situation. In the meantime, given the scale of the emerging refugee crisis, we are working with our NGO partners to provide urgent aid and other humanitarian assistance to refugees.”
As tens of thousands of outraged protesters take to the streets in cities around the world, some calling Putin a “war criminal,” and news photos spread of innocent Ukrainian children dying in an invasion that Putin declared for weeks would never happen, a growing number of major corporations are making public announcements that they are severing ties to Russia.
Just in the past 48 hours, energy giants British Petroleum (BP), Shell and Norway’s Equinor have announced plans to end their business operations in Russia.
Yesterday, the Board of Shell announced that it was exiting “its joint ventures with Gazprom and related entities, including its 27.5 percent stake in the Sakhalin-II liquefied natural gas facility, its 50 percent stake in the Salym Petroleum Development and the Gydan energy venture. Shell also intends to end its involvement in the Nord Stream 2 pipeline project.” Shell’s CEO, Ben van Beurden, said in a statement that “We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security.” He added: “Our decision to exit is one we take with conviction. We cannot – and we will not – stand by.”
Getting international packages delivered in Russia will also be more challenging. FedEx reports on its website that it has suspended all “inbound service to Russia until further notice.” UPS states on its website that it has temporarily suspended “all international shipping services” to and from Russia and Belarus. (Belarus allowed Russia to use its land to invade Ukraine.)
According to Bloomberg News, General Motors and Harley-Davidson Inc. said they are halting shipments of their vehicles to Russia.
Dell Technologies has confirmed to Yahoo Finance that it is no longer shipping its products to Russia.
There has also been western retaliation against state-owned media in Russia. Reuters reported that Alphabet, parent of Google, over the weekend banned the Russian media outlet, RT, and other Russian channels, from receiving money for ads on their websites, apps and YouTube videos. Facebook has also announced on its website that it is “providing more transparency around state-controlled media outlets, prohibiting ads from Russian state media and demonetizing their accounts.”
It is also going to be far more difficult for Russians to travel. On Sunday, Air France announced on its website that it had “suspended service to Russia and overflights of Russian airspace until further notice.” That announcement came in close proximity to European Commission President, Ursula von der Leyen, announcing that the EC was “shutting down EU airspace for Russian-owned, Russian-registered or Russian-controlled aircraft.” That action will also negatively impact all those Russian, jet-setting oligarchs flying on their privately-owned planes that are registered in Russia.
All of this shunning of Putin and Russia is coming on top of strangling financial sanctions imposed by the European Commission, the U.S., U.K. and Canada – which include decoupling Russian banks from their ability to use the predominant payment system known as SWIFT and freezing the assets of the Russian central bank so that it can’t use its hard foreign currency to prop up its stock market and currency, the Ruble.
Even Switzerland, typically neutral, wants in on the shunning action. Switzerland announced on Monday that it would freeze Russian financial assets in the country. That delivered a major blow to Russian oligarchs who believed their loot was safely tucked away in Swiss Francs. It’s now safely tucked away – but inaccessible.
The sweeping financial sanctions explain why Russia’s stock exchange, the Moscow Stock Exchange known as MOEX, remains closed for a second day. The MOEX website is still down as well. Ukraine’s IT Army, a community of hackers, has taken credit for taking down the MOEX website.
Unfortunately for Putin, investors around the globe can see where major Russian companies are trading, despite the continued closure of the Moscow Stock Exchange. That’s because many of Russia’s biggest corporations are also listed on foreign exchanges. Yesterday, Russian energy giant, Gazprom, plunged 53 percent on the London Stock Exchange. As of 1:42 p.m. today in London, Gazprom is down another 37 percent. Russia’s largest bank, Sberbank, is now a penny stock in London. After losing 74 percent yesterday in London trading, it’s lost another 10 percent today, trading at 95 cents as of 1:42 p.m. in London.
There is no shortage of similar trading disasters among Russian companies. Before Putin’s decision to invade Ukraine last Thursday, the natural gas producer, Novatek, was trading at more than $150 per share. It’s trading this afternoon in London at $19 – a decline of 87 percent in the span of four trading sessions.
Trading is now so dicey in any company with heavy ties to Russia that JPMorgan Chase has announced that it is suspending redemptions in two of its mutual funds — the Russia Equity Fund (SICAV) and Emerging Europe Equity Fund (SICAV), the Wall Street Journal reported this morning. The same Wall Street Journal article also raised more alarm bells for Russia, writing that: “Some of the financial infrastructure that enables the trading of Russian securities is also being dismantled, with the clearinghouse Euroclear preparing to stop investors from clearing trades involving ruble-denominated securities.”
The Russian Ruble fell as much as 30 percent against the U.S. Dollar on Monday and is down another 3 percent in early morning trade today. It’s now worth less than one U.S. cent.
