The world's largest companies continue to abandon Russia after it invaded Ukraine
LEILA FADEL, HOST:
Goldman Sachs is the first big American bank to announce it's leaving Russia over the country's invasion of Ukraine. It's just one of the latest companies in a growing mass exodus that also includes Apple, McDonald's and Pepsi. As NPR's David Gura reports, this major economic blow also signals a seismic shift.
DAVID GURA, BYLINE: Each company's departure confirms a pivotal chapter in Russia's recent history is coming to an end, some three decades after it got started in January of 1990. That's when the Soviet Union really started to open up its economy after decades of isolation, and global broadcasters, including ABC and the CBC, were there to mark the transition.
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UNIDENTIFIED REPORTER: Well, it's been 14 years in the making, and today, finally, McDonald's threw open the doors to its first restaurant in Moscow.
GURA: That four-story building on Pushkin Square was at first a spectacle, but it became a kind of landmark. Thousands of curious customers lined up on opening day to buy fries and Big Macs - which weren't cheap, by the way, as Bob Edwards noted on MORNING EDITION.
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BOB EDWARDS: At 3 rubles and 75 kopeks, it costs about 13% of the average worker's weekly salary.
GURA: And not lost on the reporters who were there - including Ann Cooper, who was NPR's Moscow correspondent - was the significance of what McDonald's was doing.
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ANN COOPER: It's an ambitious attempt to introduce some basic concepts of capitalism in a state-controlled economy.
GURA: Not long after, as the twilight of the Soviet Union gave way to the dawn of a new Russia, just about every major multinational followed in McDonald's footsteps. Russia became part of the global economy. Starbucks opened its first store in 2007. You could buy cars from General Motors, Harley-Davidsons and Apple iPhones. Then, two weeks ago, Russia invaded Ukraine. Oil giant BP decided to leave Russia, and that led to an exodus. This week, under mounting pressure, McDonald's decided to suspend its operations in Russia. It will close its restaurants in some 850 locations across the country.
DANIEL TREISMAN: It's really a shocking reversal.
GURA: Daniel Treisman is a professor of political science at UCLA, and he was a regular at that first Pushkin Square McDonald's when he lived in Moscow in the early 1990s. At a time when store shelves were bare and there were long lines for bread, he could count on it for a reliable meal. Now that's over.
TREISMAN: The Iron Curtain is coming down again, or a different kind of curtain's coming down. And I think Russians are just horrified at losing connection to this world that they've been living in for the last 30 years.
GURA: This will have a profound effect on the Russian people, Treisman says, and also on Russia's economy. McDonald's says it plans to continue paying salaries to its 62,000 workers, but other companies have not made the same commitment. The unemployment rate is going to surge, and the collapse in the ruble will fuel widespread inflation. So there will be hardship. But Chris Miller, an historian at Tufts University, says it's really more than that.
CHRIS MILLER: It's not just a question of statistics of the economy shrinking a couple percentage points or inflation going up a couple of percentage points.
GURA: Russians will no doubt miss being able to buy electronics and clothing from brands like Levi's. But Miller says the departure of so many companies marks a return to isolation from the global economy.
MILLER: Russia has gotten access to foreign consumer goods and also a lot of technology and expertise from Western firms. And in the past couple of weeks, all that's been thrown into a very rapid reverse.
GURA: Russia has come to rely heavily on imports, and Russian firms, Miller notes, have become integrated with global supply chains. Just like in the Soviet days, domestic industry is not evolved enough to step up.
MILLER: Russia's entire industrial economy is going to face wrenching difficulties as they try - in many cases, I think, fail - to find alternatives to Western products.
GURA: And those wrenching difficulties, he says, will throw into sharp relief how President Putin's gambit has made Russia a pariah.
David Gura, NPR News, New York. Transcript provided by NPR, Copyright NPR.