PARIS (AP) — French automaker Renault plans to suspend production at its Moscow plant in an apparent effort to fend off mounting criticism, breaking ranks with other major French companies that have defied pressure to continue operating in Russia after invading Ukraine.
The company’s board of directors voted on Wednesday evening to suspend “activities at the Renault factory in Moscow”. It came hours after Ukrainian President Volodymyr Zelensky accused the company and others in France of aiding Russia’s war effort during an emotional virtual speech in parliament.
Dozens of foreign multinational companies have reduced their operations in Russia, amid sanctions imposed by the United States and its Western allies aimed at crippling the country’s economy.
But some French companies have stood out for their reluctance to leave, underscoring how France – and its companies – often pride themselves on being more independent of the US and UK when it comes to policy towards Russia. It is a position that has begun to unravel as the war continues.
Home improvement giant Leroy Merlin, supermarket chain Auchan and sporting goods retailer Decathlon are among the big brands refusing to shut down operations in Russia. French energy company TotalEnergies issued a combative statement this week, saying it would stop buying Russian oil, but warned that a hasty withdrawal would only benefit Russian partners.
French food giant Danone said on Wednesday it was pursuing local production of essential dairy and infant nutrition products in Russia, saying it had a duty to Russians who depend on the company for food. Danone said it condemned the war and suspended Russian imports, exports and investments and did not expect to receive any profit from its Russian business.
“French companies are much more established in Russia than American companies, so leaving is more expensive,” said Witold Henisz, professor of management at the Wharton Business School at the University of Pennsylvania.
That’s especially true for automakers and parts makers whose European factories could be closed without Russian-made parts, said Henisz, who studies political risk for businesses.
Henisz said French business and political leaders have clung to the long-held notion that their continued engagement with countries of any polity provides France with more political and economic clout and a leadership position in Europe. .
It’s not just French companies that are feeling the heat. Swiss multinational food giant Nestlé sought to deflect scathing criticism by announcing on Wednesday that it would withdraw some brands from Russia, including KitKat chocolate bars and Nesquik milkshake powder, but would continue to supply “essential foods”.
In his speech to the French parliament, Zelenskyy pointed the finger at some French companies, begging them to stop indirectly supporting the war against Ukraine with their presence in Russia.
“Renault, Auchan (and) Leroy Merlin must stop sponsoring the Russian war machine, and the murders of children and women, rapes, robberies and looting committed by the Russian military,” Zelenskyy said. “All businesses must remember that values are worth more than profit.”
Renault, which is part-owned by the French government, had temporarily suspended production at its Moscow plant when the war broke out, citing logistical problems, before resuming production days before Zelenskyy’s French address. The plant manufactures Renault’s Arkana, Kaptur and Duster SUVs and the Terrano model for its Japanese partner Nissan.
The automaker’s failure to shed its subsidiary Avtovaz – which accounts for the lion’s share of the group’s presence in Russia – means it will likely continue to face pressure. Last year alone, Renault sold nearly half a million vehicles through its Russian subsidiary.
Renault said it was not stepping down immediately but was “simply assessing the options available, taking into account the current environment, while acting responsibly towards its 45,000 employees in Russia”.
Leroy Merlin has been more intransigent than Renault and – like Auchan and Decathlon – refuses to close its Russian operations. In a statement, the management of Leroy Merlin reaffirmed its desire for its Russian stores to remain open in a decision supported by French regional political leaders.
Even the destruction of a Leroy Merlin store in kyiv by a Russian bombardment on Sunday evening was not enough to cause parent company Adeo to reconsider its position. Ukraine’s Defense Ministry also accused the channel of indirectly funding the strike by operating in Russia.
“Maintaining our business in Russia is a decision that is not easy,” the company said. “We have no reason to condemn our Russian teams for a war they did not choose”, adding that she still has “a responsibility as an employer”.
TotalEnergies blasted what it called “serious and unfounded accusations of ‘complicity in war crimes'” against the company. He said the sanctions, combined with Russian laws governing foreign investment, have prevented him from finding a non-Russian buyer for his minority stakes in several Russian private energy companies.
“Abandoning these interests without consideration would enrich Russian investors, contradicting the purpose of the sanctions,” the company said. Rivals Shell and BP, on the other hand, were quick to announce exits from their Russian energy projects.
TotalEnergies said it could not avoid buying Russian liquefied natural gas to supply Europe in the short term, citing the continent’s “gas logistics capabilities” and noted that it did not have the same national resources as countries like the UK and the US.
French bank Societe Generale, which owns one of Russia’s biggest private lenders, said this month that it was “conducting its activities in Russia with the utmost caution and selectivity, while supporting its historical clients”. The bank said its exposure to Russia stood at 18.6. billion euros and warned of the possibility of being dispossessed of its local operations.
French companies are playing by the historic rules of a post-war order that has been turned upside down, said Henisz, a management professor.
“The only question companies face is whether they’ll come out early and look brave or be dragged among the last in their industry,” he said.
French companies “will have to pay the price of looking the other way as Russia has signaled its intention to leave the international system,” Henisz added. “Their shareholders and some EU customers will suffer. It’s only a matter of time.”
___
Chan contributed from London.
Thomas Adamson and Kelvin Chan, Associated Press
