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Sensemaker: War profiteers

Sensemaker: War profiteers

What just happened

Long stories short

  • Russian jets forced down a US drone over the Black Sea.
  • UK officials said families would be offered free childcare for one and two year-olds in today’s Budget. 
  • President Macron began a 500-day countdown to the Paris 2024 Olympics.

War profiteers

Fifty-five weeks into Putin’s war on Ukraine, many foreign firms have pulled out of Russia but many haven’t. One that’s conspicuous for staying on – France’s Auchan retail group – has this week been forced to deny it’s opening a new store there.

So what? Auchan has become a big part of Russia’s business-as-usual delusion. It has 230 supermarkets and hypermarkets under four brands from European Russia to Siberia, and no plans to leave. Its decision to continue to do business there deserves close scrutiny for simple moral reasons, but also because 

  • it’s the tip of an iceberg of shame: a recent Swiss study found that only 9 per cent of EU and G7 companies active in Russia before the war had divested from even one of their subsidiaries there by last November;
  • their continued presence helps middle-class Russians, especially in Moscow and St Petersburg, sustain the illusion that their country isn’t really waging a genocidal war on its neighbour; and
  • this undermines the idea of collective responsibility for the war despite compelling evidence that many Russians actively support it. 

With the flow. A Levada poll taken last month showed 75 per cent of Russians supported the war, up from 71 per cent last September. And no wonder. For many, sanctions haven’t hit yet. Bloomberg reported yesterday that Russia earned $227 billion from commodity exports last year (mainly oil and gas), largely compensating for the $300 billion of foreign reserves frozen after the invasion. The Swiss study suggests most foreign firms active in the region are keeping their heads down and their investments in place.  

Dangerous liaisons. It wasn’t always so. Last year the Yale School of Management found many companies were leaving and those that did “dramatically outperformed” those that didn’t. But seven months later researchers at the University of St Gallen found companies that stayed are generally more profitable than those that left.

There are clear regional trends in terms of tolerance for Russian atrocities: 

  • The good. In English-speaking countries including the US, UK, Canada and Australia, most companies (79 to 95 per cent) have withdrawn or suspended operations in Russia because of the invasion. 
  • The bad. In Asia, only Japanese businesses curtailed their operations in Russia by more than 60 per cent, while Indian and, especially, Chinese firms have emerged as champions of digging in or buying time in Russia. 
  • The ugly. Half to two-thirds of the largest EU investors (from France, Germany and Italy) have kept their businesses open in some form in Russia while their governments publicly condemn the invasion.  

French salute. Why is Auchan digging in? It says the thinking behind its strategy is

  • to avoid bankruptcy and expropriation, which would “strengthen the Russian economy”;
  • to allow the Russian population to feed itself; and
  • not to abandon employees and customers, in line with President Macron’s avowal that “we are not at war with the Russian people”. 

But the Russian people are at war with Ukraine. 

Care packages for troops. Last March, goods bought at Auchan stores worth $27,000, including socks, toothpaste, lighters and cigarettes were sent to occupied regions of Ukraine as “humanitarian aid”. Reporters for The Insider and Le Monde say it was for the Russian military.  

These allegations are “false and misleading,” Auchan’s Antoine Pernod tells Tortoise. The group says it can’t be held responsible for what its customers do with their purchases, though it says the images published by Le Monde are genuine.  

Good intentions? Auchan says it has provided Ukrainians with €5.5 million euros of humanitarian aid (equivalent to 1 per cent of its turnover in Ukraine), as well as food for displaced persons, support for its employees and jobs in its European stores for those who fled Ukraine. But those Ukrainians lost their homes and jobs because of the invasion.

Auchan has chosen to remain in Russia for the sake of €3.2 billion a year in turnover, or 10 per cent of its global total. Ukraine’s leaders have called for a boycott of Auchan’s outlets, so far to no avail.

To note: in a 2020 survey of French private sector workers only 12 per cent said they thought their employers’ role was to make the world a better place.  

Number of the day: £200.2 million – total value of donations to political parties in the UK since the start of the current parliament, according to the latest update of our Westminster Accounts database.


Parker Review
Ninety-six FTSE 100 members had at least one minority ethnic board member by the end of last year, officially meeting a target set by the Parker Review, a government committee established to improve diversity at the UK’s largest companies. According to a voluntary survey carried out by the review, 190 board members across the FTSE 100 are non-white, up from 164 in 2021 and 18 per cent of the total. This is progress, but those with the most influence in FTSE boardrooms are still overwhelmingly white. A Tortoise analysis of the survey results and our own Responsibility 100 Index data shows that more than a quarter of all board members are chairs or executive directors, but only about 16 per cent of ethnic minority board members hold those positions. The review says it will soon set new diversity targets for the senior management level, to be met by each FTSE 100 member by 2027. Given the unambitious level of the current board target, it’s hard to imagine many FTSE companies will be worried about meeting it – except possibly Frasers, F&C Investment and Unite, the three remaining members of the FTSE 100 which still had all-white boards at the end of last year.


Hot tech
Computer servers submerged in mineral oil should give off enough heat to warm a Devon swimming pool to 30 C for most of the year. The novel heat exchanger has been installed at a data centre near the pool at Exmouth Leisure Centre by Deep Green, a clean energy start-up that hopes to replicate the scheme at pools across the UK. The economics are intriguing: Deep Green charges clients for access to the servers for machine learning and AI applications, but gives the heat they generate to public pools for free, helping them to stay open. The Exmouth pool reckons it’ll save £20,000 a year on gas and cut its carbon emissions by 26 tonnes. What’s not to like?

The 100-year life health, education AND GOVERNMENT

Shells, shells, shells
The EU’s foreign policy chief has floated a €2 billion plan to get more 155mm artillery ammunition to the front lines in Ukraine in time for its spring offensive. In a statement issued yesterday Josep Borrell said since Putin was “obviously not interested in peace,” the EU should answer Ukraine’s calls for shells with €1 billion to reimburse member states that assigned shells for “immediate delivery” and another €1 billion to backfill depleted stockpiles. Borrell, like Nato’s secretary general Jens Stoltenberg, has shown he understands there is no alternative to ensuring a military victory for Ukraine. But considering the task, the EU’s size and the $100 billion so far committed to the war effort by the US, €2 billion isn’t much. 

Our planet CLIMATE AND geopolitics

DeSantis on Ukraine
Most Republican officials strongly back US support for Ukraine against the Russian invasion. But they face a growing rift with the isolationist wing of their party. Ron DeSantis, Florida’s governor and a likely presidential candidate, has now aligned himself with former President Trump on Ukraine, questioning the case for further US support. In a statement to Fox News, DeSantis described the war as a “territorial dispute” and said that becoming “further entangled” was not in America’s “vital national interests”. Republicans including Lindsey Graham and Marco Rubio pushed back: Graham said those who believe Ukraine is not a priority for the US were “missing a lot”. Recent polls show Americans still support aiding Ukraine, but there has been a drop among Republican voters. 


Somalian re-education 
Dhaqan celis is a Somali concept that translates as “return to culture”. In practice, that has come to mean parents sending Somali children – many against their will – to centres that “rehabilitate” them to prevent them being too “westernised”. It’s a practice that has increased in recent years as the children of refugees who fled the Somali civil war in the 90s to the West hit adolescence. As reported by the Guardian, this “re-education” can include beatings, being chained up, solitary confinement and psychological abuse as children are taught to follow strict Islamic practice. One British woman said she was sexually assaulted at a well-known centre in Mogadishu. Parents may not be aware of these practices and are enticed by ads on Facebook and Google that promise to help children who rebel. But the centres have little to no oversight. When the children return, they have few options if they want to take legal action over what has happened – either in the West or Somalia. 

Thanks for reading. Please tell your friends to sign up, send us ideas and let us know what you think. Email sensemaker@tortoisemedia.com.

Nina Kuryata

Additional reporting by Jess Winch, Katie Riley, Giles Whittell and Phoebe Davis. Graphics by Katie Riley.

Photographs Getty Images, Deep Green

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