The Game Between Russia and Multinational Corporations
Hello everyone, you must have often heard statements like "Europe is digging its own grave." Whenever people talk about Western sanctions against Russia, the EU's refusal to import Russian natural gas, or aid to Ukraine, they always mention this phrase — after all, these measures have harmed European farmers, manufacturing, and the overall economy. At first glance, the actions of Western politicians seem illogical, which is why bloggers often mock these leaders as either acting absurdly or lacking basic rational judgment. However, if we analyze their decisions from the perspective of multinational corporations' interests, there may be a very rational logic behind them.
What Are Multinational Corporations? How Do They Operate?
If a company conducts at least 25% of its business overseas, it is considered a multinational corporation. Apple, Nike, McDonald's, Volkswagen, Toyota, and others are typical examples of multinational corporations. These companies sell goods and services globally, building complex global business networks. Their operational model usually involves extracting raw materials in one country, producing them in another, and finally selling the final products in a third country. For example, Apple and Tesla extract cobalt in the Democratic Republic of Congo, where local miners are paid very low wages and work in extremely poor conditions; the production of iPhones and Tesla cars mainly takes place in China, and since 2023, India's production share has been increasing, with local workers earning only $150 - $200 per month assembling smartphones. Nike's Air Jordan sneakers are produced in Vietnam and Indonesia, where the working conditions for local workers are so bad that they have sparked multiple strikes.
Multinational corporations leverage economies of scale and set up production bases in countries with low labor costs to minimize production costs and eliminate domestic competitors. After eliminating competitive threats, they raise product prices to earn excessive profits. However, consumers rarely benefit from the low-cost production of multinational corporations. The following examples illustrate this clearly:
- iPhone 16 Pro Max: According to insider data from Apple in 2024, the production cost (including components, assembly, and packaging) of this phone is approximately $485, but its starting price is as high as $1,200. Even when considering R&D, marketing, and logistics costs, Apple's profit margin can still reach 25%-30%, which is far higher than the average profit margin of other industries.
- Nike Air Jordan Sneakers: According to Index Box data from 2023, the cost of producing a pair of these sneakers in Southeast Asia is only $15 - $30, while the retail price is as high as $150 - $200, with a markup of up to 900%.
- Spritz Water: Nestlé produces a 500ml bottle of Spritz water, with costs including water extraction, purification, and transportation amounting to only $0.1 - $0.2. This water sells for $1.5 - $3 in supermarkets and as much as $5 in restaurants, with a markup of up to 2,500%.
- Hermès Birkin Bag: According to Gulf News in 2025, a genuine Hermès Birkin bag costs about $34,000, while a counterfeit Chinese replica costs only $1,400. The difference is enough to buy a new Chinese car, such as the BYD Song Plus, which ranges from $25,000 to $30,000.
Multinational corporations not only earn excess profits but also use tax havens to minimize their tax liabilities. For example, in 2016, the European Commission fined Apple 13 billion euros for using an Irish tax haven to avoid taxes, at a time when Ireland's corporate income tax rate was less than 1%. Google and Amazon have also been criticized for shifting profits to low-tax regions. This tax avoidance behavior reduces the fiscal revenue of relevant countries, thereby affecting funding for social security, education, and healthcare. In addition, multinational corporations use their influence to lobby governments to enact policies favorable to themselves. They achieve this by supporting politicians and parties that maintain their interests.
Who Controls Multinational Corporations?
The core beneficiaries of multinational corporations are large shareholders, among whom BlackRock, Vanguard, and State Street, known as the "Big Three," are the top beneficiaries. These three asset management companies hold 5%-10% of shares in most major multinational corporations in the United States and Europe, including Apple, Microsoft, ExxonMobil, and Nestlé. In 2023, BlackRock managed assets worth $10 trillion, an amount that even exceeds the GDP of most countries worldwide. These companies influence the decisions of multinational corporations through shareholder voting and thus dominate their development strategies.
Although they do not directly control governments, their powerful economic strength allows them to exert pressure on politicians. After all, these politicians often rely on corporate investments and tax support for their decisions. During globalization, the real beneficiaries are this small group of shareholders, not ordinary consumers like you and me.
Transnational Corporations in Russia: Changes Before and After 2022
Before February 2022, transnational corporations were very active in the Russian market, earning billions of dollars in annual profits. For example, McDonald's had 850 stores in Russia with an annual revenue of $2 billion; Renault owned 68% of the shares in the Russian AvtoVAZ company, and Russia was Renault's second-largest market after France; Shell held a 27.5% stake in the Sakhalin-2 project and operated 411 gas stations.
However, these multinational corporations often transferred profits earned in Russia to tax havens and restricted the development of Russian domestic enterprises. After the special military operation, the West imposed sanctions on Russia, and Russia responded with countermeasures, including a law that required multinational corporations to sell their assets in Russia at a discount of no less than 50% and pay a 15% exit tax. Subsequently, the policy was further tightened, with the exit tax increased to 35% and the minimum discount rate for asset sales raised to 60%.
This series of countermeasures caused significant losses for multinational corporations. For example, Renault sold its shares in AvtoVAZ and its factory in Moscow for just 1 ruble, while the value of these assets was originally as high as $2-2.5 billion; McDonald's sold its 850 stores in Russia for $1-2 billion and renamed the stores "Delicious Cha饭," which resulted in a $1.4 billion loss for McDonald's; Shell sold its gas stations to Lukoil for $4-5 billion, while the previous value of these gas stations was $1-1.5 billion. Furthermore, after Russia issued a nationalization order, Shell transferred almost all of its shares in the Sakhalin-2 project to Gazprom Neft, resulting in a $4.2 billion loss from the asset disposal.
Some multinational corporations, such as Carlsberg and Danone, had their assets in Russia (such as Carlsberg's Baltic Brewery) taken over by the Russian government, effectively leading to nationalization. In 2023, Russia issued Presidential Decree No. 520, transferring these assets to the Russian Federal Property Management Agency, and the relevant multinational corporations were deprived of their asset control rights without compensation.
Similarities to the Suez Canal Crisis
Throughout history, there have been many instances of multinational corporations' assets being boldly nationalized, and the Suez Canal crisis is a highly representative example. The idea of excavating the Suez Canal dates back to ancient times, and the modern Suez Canal was constructed in the 19th century. The project was funded by the Suez Canal Company, established in France in 1858, with Egypt providing the land and labor required for the project, while investors from France and other European countries invested substantial funds.
The Suez Canal officially opened in 1869, shortening the journey from Europe to Asia by thousands of kilometers. At that time, the Suez Canal Company was a multinational enterprise, with shareholders mostly French and British, while Egypt held 44% of the shares but did not have actual control. The operation of the canal and the collection of tolls were controlled by the company, and the huge profits belonged to the company, while Egypt bore heavy debts due to the construction of the canal.
In 1875, Egypt faced a financial crisis and was forced to sell its shares to Britain. Britain then occupied Egypt in 1882, turning it into a protectorate. From then on, the Suez Canal became a strategic asset for the British Empire, facilitating its trade with India and other colonies. Despite this, the Suez Canal Company remained under joint control by Britain and France.
After World War II, nationalist movements against colonial rule grew stronger in Egypt. In 1952, the Free Officers Organization launched a revolution, and Gamal Abdel Nasser took power. Nasser aimed to promote national independence and economic development, and regaining control of the Suez Canal was one of his key objectives. At that time, the Suez Canal Company earned about $100 million annually (based on 1950s prices), while Egypt received minimal benefits from the canal.
On July 26, 1956, Nasser announced the nationalization of the Suez Canal. Assets of the Suez Canal Company in Egypt were liquidated and transferred to the newly established Egyptian Suez Canal Authority. The Egyptian government promised to pay the original shareholders about $200 million based on the Paris Stock Exchange price, but the payment of this compensation was delayed for years.
The nationalization of the Suez Canal triggered strong dissatisfaction from Britain, France, and their domestic shareholders. For Western countries, the Suez Canal was not only a source of profit but also an important strategic asset. This event eventually led to the Suez Canal crisis. In October 1956, under the support of Britain and France, Israel invaded the Sinai Peninsula, and the British and French armies also attempted to seize control of the canal. However, due to the opposition of the United States and the Soviet Union, and under pressure from the United Nations, Britain and France were forced to withdraw. Ultimately, Egypt successfully retained control of the Suez Canal, which has now become a significant source of income for Egypt, generating $9.4 billion in 2023.
From this historical event, it is clear that Britain and France once waged war to prevent their multinational companies' assets from being nationalized. Therefore, it is understandable that the West would engage in a proxy war with Russia through Ukraine. This is not because Macron, Starmer, or Scholz are acting foolishly, especially when multinational corporations also suffered significant losses in Africa, making this series of actions more logical for the West.
As multinational corporations withdrew from Russia, anti-Western sentiments in many African countries also continued to rise. Niger, Mali, and Burkina Faso distanced themselves from France. Between 2020 and 2023, these countries experienced military coups, and from 2022 to 2025, France gradually withdrew its forces from Africa. Afterward, the governments of many African countries began to re-evaluate their contracts with multinational corporations.
For example, after the coup in Niger, the export of uranium from the French company Orano was suspended, and the country demanded that the profit-sharing ratio in the company be increased from 5% to 50%, otherwise it would implement nationalization; Burkina Faso terminated its port logistics contract with the French company Bollore and turned to cooperation with local companies and Chinese enterprises; the anti-French government in Mali chose to cooperate with Russia, restricting French multinational companies from accessing the country's gold and other mineral resources.
The Logic Behind Western Actions
The fundamental reason behind the Western sanctions against Russia and aid to Ukraine is to protect the interests of multinational corporations and their shareholders. According to Reuters data, as of 2024, the losses of multinational corporations in Russia exceeded $100 billion, and combined with their losses in the African market, their profitability has been severely threatened.
Russia supports anti-Western regimes in many African countries and allows these countries to nationalize the assets of multinational corporations. The Western sanctions against Russia and aid to Ukraine essentially aim to weaken Russia's strength. BlackRock, Vanguard, and other multinational corporations depend heavily on a stable global market. If Russia and its allies continue to push for the nationalization of assets, it may trigger other countries to follow suit, posing a potential loss of trillions of dollars in profits for multinational corporations.
Multinational corporations also influence policy-making by funding political campaigns and lobbying groups. For example, energy multinational corporations like ExxonMobil support tough policies against Russia to open up the U.S. liquefied natural gas market. Before the special military operation, European countries largely relied on cheap Russian pipeline gas and basically did not purchase U.S. liquefied natural gas. Now, U.S. companies can smoothly sell liquefied natural gas to Europe.
Seemingly "digging its own grave" Western countries actually have a clear interest logic behind their actions, all aimed at protecting the interests of multinational corporations. Losses of multinational corporations in Russia (such as Renault, McDonald's, Shell) and in Africa (such as Orano, Bollore Group) threaten the excess profits of companies like Apple, Nike, and Total Energy, and harm the interests of major shareholders like BlackRock, Vanguard, and State Street.
Therefore, Western sanctions against Russia and aid to Ukraine are strategic measures taken by multinational corporations to maintain their global influence. As for Western politicians like Macron, their actions may not be due to being influenced by certain factors or lacking ability, but rather they are likely bought out by multinational corporations, and all their actions are aimed at maintaining the economic interests of multinational corporations.
Original article: https://www.toutiao.com/article/7574366202705855027/
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