The longer Western firms continue to do business in Russia, the more likely they are to get burned. Nearly three years into Moscow’s brutal war against Ukraine, the economic, political, and moral costs of staying in the Russian market have become undeniable. By remaining, these companies are not only helping to fund the war through their tax payments but are also placing their assets and revenues at the mercy of the Kremlin’s whims. In hindsight, this strategy was a losing one.
What is undeniably true is that the hundreds of Western firms staying in Russia are helping Moscow finance the war in Ukraine through their payments of Russian corporate taxes. The data tell a striking story: between 2022 and 2023, multinational corporations from G-7 countries, the EU, and other like-minded economies generated roughly $370 billion in revenues in Russia—exceeding the country’s military budget over the same period. More than $11 billion of this went directly into Russian state coffers in the form of corporate taxes. By the end of 2024, that figure is estimated to have risen to $16 billion.
This amount is not just staggering in absolute terms—it also offers a stark comparison. Since the start of the invasion, the taxes paid by Western firms to the Kremlin have roughly equaled Germany’s total military, humanitarian, and financial support for Ukraine over the same period. Yet the consequences extend beyond mere dollars and cents. But money is not the only measure. For Moscow, the continued presence of these firms has a powerful propaganda value, reinforcing the Kremlin’s narrative that the Russian market is indispensable and that Western sanctions are ineffective.
If the moral motivation was not compelling enough, the economic argument to leave Russia is now watertight. The reality is that staying in Russia is not even a sound business decision. For the better part of the war, Western firms have been unable to freely repatriate profits from their Russian operations. Early in the invasion, the Kremlin banned dividend transfers to “unfriendly countries,” including the United States and European Union. Although this restriction has since been slightly relaxed, firms can still transfer no more than 50 percent of their profits. Worse, with mounting economic pressures, Moscow could impose full-blown capital controls, cutting off access to these revenues entirely.
The Kremlin’s tightening grip on foreign assets has further compounded the risks. In August 2022, a decree from Russian President Vladimir Putin required state approval for any sale of Western firms’ assets, particularly in strategic sectors like energy and finance. A year later, the Kremlin had begun outright nationalizing the Russian operations of companies such as French food giant Danone and Danish brewer Carlsberg, wiping out the vast majority of their investments. Most recently, in October 2024, Moscow imposed draconian rules on exiting firms, allowing them to recoup no more than 25 percent of their assets’ value, while requiring a steep 60 percent discount and a 35 percent “voluntary contribution” to the Russian state.
These developments have exposed the folly of the “wait-and-see” approach that many firms adopted early in the war. Betting that they could weather the war and position themselves for a reopened Russian market once sanctions are dropped has proven disastrous. The Kremlin’s actions have made clear that Western companies operating in Russia are effectively managing businesses that are no longer theirs.
The lesson for Western firms is clear: the longer you dance with the devil, the more likely you are to get burned.
