With war comes economic sanctions. Instead of sending troops to fight the old-fashioned way, wars are fought with money, and the invasion of Ukraine by Russia is no exception.
The United States, the United Kingdom, Australia, Japan, the European Union, Turkey and a few more have sanctioned Russia in one way or another.
Canada has targeted the banking system and barred Russian airlines from using its airspace. It has also cancelled all export permits and halted new ones, primarily affecting the aerospace industry.
Nobody knows if these sanctions will work, but both the energy and food sectors have been spared so far by all sanctioning nations.
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Sanctions are designed to affect Russian President Vladimir Putin’s regime, not Russia’s people.
Corporations are also potentially affected, as some Canadian companies in the food sector have invested in Russia. American corporate giants Coca-Cola, McDonald’s and Starbucks have pulled out of Russia.
Canadian corporation McCain Foods, which was building a $200-million plant in Russia’s Tula region, has halted construction. The company may decide to completely end the project soon, but it’s been reported that McCain is still conducting business in Russia.
Meanwhile, McCain has announced it will donate $200,000 to relief efforts in Ukraine, making clear that it condemns Putin’s actions.
Maple Leaf Foods doesn’t have any operations in Russia and has given $500,000 in relief funds to help Ukrainians. Good on them.
Convenience store giant Alimentation Couche-Tard just announced it was suspending operations in Russia. The company, which controls the Circle K convenience store chain, has 38 stores and more than 320 employees in Russia.
Some Canadians called for a boycott of Canada-based Mac’s and Circle K stores operated by Alimentation Couche-Tard until the Quebec-based company ceased its Russian operations. The company also donated US$1.5 million to the Red Cross.
Restaurant Brands International, the parent company of Tim Hortons and Burger King, operates 800 stores in Russia. Other than a corporate statement registering concerns about the invasion, it has continued to operate in Russia even as many people took to social media to ask the chain to stop.
Asking these companies to stop doing business with Russia is the most obvious thing to do. The atrocity of the invasion is inexcusable.
But these Canadian companies are part of the food security fabric for the Russian people. On the surface, closing convenience stores or fast-food joints or not selling french fries could be seen as trivial. But any corporate decision to cease doing business in the country would compromise Russia’s access to food, thus penalizing its people.
It’s a delicate balancing act.
The stakes are different when compared with other economic sectors.
Prime Minister Justin Trudeau has been vague about whether his government would compensate Canadian companies hurt by sanctions imposed on Russia. Compensating companies conducting business abroad affected by wartime sanctions would set a dangerous precedent.
The federal government should not compensate Canadian companies hurt by sanctions imposed on Russia, including companies in the agri-food sector. Geopolitical risks are always in the mix when investing abroad, and these companies, not the Canadian people, took on these risks when they opted to invest in Russia.
Moreover, many of these companies have insurance against such sanctions. And sanctions against Russia were actually started more than eight years ago when Russia invaded Crimea.
Canadian companies shouldn’t be surprised by how things are unfolding, and Canadian taxpayers shouldn’t be on the hook for their choices.
Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University. This article first appeared on the Troy Media website. It has been edited for length.
