Ukraine: Counter-attack close to 'cutting off' Russian supplies
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Carmaker Renault resumed operations at its Moscow plant on Monday, March 21, sparking fury from Ukrainian President Volodymyr Zelensky. In a video speech to French MPs, he said the company, together with Auchan and Leroy Merlin, was “financing the murder of children and women” in his country. Renault has now announced that it will once again suspend all business activities in Moscow.
In a statement sent on Wednesday, March 23, it said: “The Board of Directors of Renault Group met today and approved the following items: Renault Group activities in its manufacturing plant in Moscow are suspended as of today.
“Regarding its stake in AVTOVAZ, Renault Group is assessing the available options, taking into account the current environment, while acting responsibly towards its 45,000 employees in Russia.
“Renault Group reminds that it already implements the necessary measures to comply with international sanctions.”
The French firm had suspended operations in Moscow in late February saying at the time it was due to a “forced change in existing logistic routes”.
The move came after President Vladimir Putin launched an invasion of Ukraine on February 24, although Renault, which has three car assembly plants in Russia, did not specify whether its supply chain had been affected by the conflict.
Reacting to the news Renault was resuming operations on Monday, an EU diplomat told The Daily Telegraph: “Apparently Macron is weighed on a different scale than other Europeans. While the rest of us are absorbing pain of sanctions, he lets Renault and other French companies operate in Russia.”
Renault, which returned to profit in 2021 after two years of losses, is among Western companies most exposed to Russia, where it makes 8 percent of its core earnings, according to Citibank.
In a statement, the French carmaker’s Russian unit said its Moscow production would stop from Feb 28-March 5 amid “some interruptions in supplies of components”.
“Interruptions are primarily caused by tighter border controls in transit countries and the forced need to change a number of established logistics routes,” the unit said, without naming any countries.
Shares in the French carmaker dipped 1.5 percent on Thursday after the company announced it was suspending operations once again.
Ukraine’s foreign minister, Dmytro Kuleba, has called for a global boycott of Renault.
Kuleba wrote in a tweet on Wednesday, “I welcome @renaultgroup’s statement on cessation of industrial activities in Russia. Responsible move against the backdrop of Russia’s ongoing barbaric aggression against Ukraine.”
According to two sources close to the matter, Renault’s board of directors considered different scenarios but decided for the time being to maintain a presence in Russia.
A decade ago, automakers saw Russia as a promising growth market with the potential to be among the ten largest vehicle-buying nations in the world.
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The latest sanctions, and earlier measures imposed after Russia’s 2014 annexation of Crimea, have derailed those prospects.
The French government has said repeatedly it was up to French companies to decide on the future of their operations in Russia, as long as they comply with international sanctions.
Its Russian operations last year accounted for almost 20 percent of total group volume, but Renault Chairman Jean-Dominique Senard said on March 10, two weeks in to the war, that the crisis was unlikely to threaten the French carmaker’s recovery.
Other companies with operations in Russia have suspended or scaled back operations in the face of Western sanctions, but still maintained some ties to their business in the country.
These companies are feeling pressure to further shut down.
US automaker Ford Motor Co said on March 1 it would suspend shipments of components and other support for a van-making venture 51 percent owned by Russian manufacturer Sollers.
Ford has not said what it will do with its 49 percent stake in that operation.
French food group Danone said on Wednesday it would continue local production in Russia of essential dairy and infant nutrition products, but had cut other ties with the country over its war in Ukraine.
Swiss rival Nestle SA said it would halt the sale of a wide range of brands in Russia, including several nonessential products such as KitKat snacks and Nesquik chocolate mix.
It had already halted nonessential imports and exports to Russia.
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