Russians could soon be drinking Heinekens, eating Domino’s pizza, and buying Volkswagens again.
What happened: President Vladimir Putin has opened the doors for Western companies to potentially return to the country. It’s been three years since Russia invaded Ukraine, which led 1,832 companies to either cut back their presence or leave the market entirely.
- In a reversal from the Joe Biden-era approach, diplomats from both countries met earlier this week to discuss improving economic ties and ending the war in Ukraine.
Catch-up: As some companies ceased Russian operations due to sanctions on supplying goods like planes or semiconductors, many exited on moral grounds, selling or abandoning assets. In their place, Russian owners took over existing businesses and created copycats.
- For example, Starbucks is now Stars Coffee, and McDonald’s is Tasty and That’s It. Putin wants these companies to maintain “certain advantages” over returning ones.
Why it matters: Before the war, Russia was an important emerging market for most major Western multinationals. In leaving, firms lost US$107 billion between February 2022 and March 2024. If the U.S. is cool with Russia again, it could be the green light to recoup this lost revenue.
- Kirill Dmitriev, the head of Russia’s sovereign wealth fund, said he expects some U.S. companies to return as soon as next quarter.
Yes, but: Any full-scale return will rely on the Trump admin rolling back sanctions and Western allies following suit. Even then, companies might find it hard to recapture market share, or they might be put off by fears that they would eventually have to leave again.—QH