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Exodus of 'iconic' American companies is taking psychic toll on Russians

"I was in Moscow in the '90s after the first McDonald’s restaurants opened, and I remember the excitement," a longtime Kremlin watcher said.
Image: McDonald's Moscow
People have lunch at a McDonald's fast-food restaurant in central Moscow on Wednesday.AFP via Getty Images

Depending on the Russian, the sight of so many well-known American companies suddenly suspending operations in the wake of Moscow’s invasion of Ukraine is either cause for alarm — or generating disgust.

Either way, Russia watchers say, the corporate exodus is already having a profound psychological impact on a country that is becoming more and more isolated as Russian President Vladimir Putin's attack on Ukraine enters its third week.

“I was in Moscow in the ‘90s after the first McDonald’s restaurants opened, and I remember the excitement,” Matthew Schmidt, an associate professor of national security at the University of New Haven, told NBC News. “So yes, the departure of a McDonald’s or Coca-Cola is bound to have a psychological effect on the Russians.”

Yohanan Petrovsky-Shtern, a Ukrainian native and professor of Jewish history at Northwestern University who studied in Moscow for many years, agreed.

"Bear in mind, in Russian Federation, more than half of the country is pro-Putin," he said. "Many are just laughing at these companies leaving. They declare with bravado, 'Take your Coke and your Pepsi. We can make our own.'"

But, Petrovsky-Shtern said, "more sober Russian observers know that Russia has failed to produce decent-quality mass consumption products. And they say, 'Yes, after the companies flee and we start producing things of our own, we will be consuming Caca-Cola.'"

That, essentially, means crap cola.

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A shopper picks up a bottle of Coca-Cola at an Auchan store in Moscow on Wednesday.Konstantin Zavrazhin / Getty Images

The experts weighed in as the trickle of Western companies abandoning Russia turned in a torrent this week, with Goldman Sachs on Thursday becoming the first major Wall Street bank to exit the Russian market.

Burger King, Crocs and Hugo Boss on Thursday joined the growing list of retailers and fast-food companies that are closing their stores or ceasing operations in Russia, while the Hilton hotel chain shut its corporate offices in Moscow and Sony and Nintendo announced they would stop selling video games and consoles in the country "for the foreseeable future."

Meanwhile, The Walt Disney Company announced on Thursday that it was halting all its business in Russia after making the decision last week to just pause the release of films there.

For the Russians who were around when the Cold War officially ended in 1991 and Moscow started opening up economically to the West, the decision by Yum! Brands to shutter its Pizza Hut restaurants was especially poignant.

Many still remember the 1998 commercial that featured Mikhail Gorbachev, the Russian leader who presided over the final days of the old Soviet Union, having a slice with his granddaughter at a Moscow Pizza Hut and being saluted by his fellow Russian diners, the experts said.

Putin, in a meeting Thursday with his economic advisers, acknowledged the "unfriendly steps" taken toward Russia, particularly the U.S. ban on Russian oil imports that President Joe Biden announced Tuesday. But Putin vowed to soldier on and said Russians would adapt to the new "circumstances."

"We have no doubt that we will keep up our work and resolve these in normal mode," Putin insisted. "And gradually people will adjust and understand there are no issues we cannot resolve."

How Russians react to the exit of big Western companies like Starbucks and PepsiCo depends both on demographics and on how they get their news, the experts said.

People ages 55 and up in Russia tend to get their information from TV and radio, which are wholly controlled by the Kremlin, they said.

"Russians are now living in a country where the newspapers can’t even call what’s going on in Ukraine a war and where Putin controls everything that people see on TV and the radio," Petrovsky-Shtern said.

“Their reaction is likely to be more along the lines of, ‘Good riddance. They’re not real Russia anyway,’” Schmidt added. “But you have to remember that younger Russians grew up with McDonald’s and Pepsi and really like these brands. They’re iconic brands, not just American brands.”

And younger Russians get their news from outlets not controlled by the Kremlin, he said.

“To them, the departure of a McDonald’s will reinforce the feeling that Russia has become an international pariah and is likely to generate a certain amount of shame,” Schmidt said.

Image: An employee stacks shopping carts outside an Ikea store in Moscow on June 9, 2020.
An employee stacks shopping carts outside an Ikea store in Moscow on June 9, 2020.Andrey Rudakov / Bloomberg via Getty Images file

NBC News on Wednesday reported that Russians, particularly Putin political opponents fearing that a new "Iron Curtain" was descending on their homeland, were doing what more than 2 million Ukrainians have already done: flee their country.

But it's not just the never-Putiners who are getting out of Russia, the experts said. It's also middle-class Russians for whom the shuttering or departure of U.S. and other Western businesses was a signal to get out.

Russians, Petrovsky-Shtern said, "particularly those born after 1990, are used to having access to Western goods and Western services, and they are alarmed beyond measure."

"They do not want to find themselves in yet another North Korea," he said. "One of the biggest stories that is not being reported is about thousands of middle-class Russians who are voting with their feet and fleeing the country for Kazakhstan, Armenia, Kyrgyzstan, and Georgia because they fear losing their standard of living and fear being drafted to fight in this war they don’t want."

The Russians who can't leave "are heading to stores like Ikea and Gucci and buying anything they can before these companies completely disappear from the market," Petrovsky-Shtern said. "Those middle-class Russians understand what is really going on. They know their money will soon be worthless, and this is their last chance to get these items."

Schmidt said for younger Russians in particular, the departure of a company they grew up with like McDonald's or Pizza Hut or Adidas conjures up memories of the grim existence their parents and grandparents lived through.

"It will signal to them a return to the old Soviet Union, a time and place younger Russians have only heard about," he said.